The Real Value and Cost of Mentorship
Originally Published: DVM NewsMagazine
It is hard to put a price tag on mentorship, but it can be a money-saving strategy for practice owners and the crown jewel in a new graduate’s benefit package.
According to the U.S. Department of Labor, the number of veterinarians employed in the United States is expected to increase at a higher rate than the average for all U.S. occupations during the next seven years. The demand for associates indicated by this report will be occurring while the average career length per associate is decreasing. Logically, this situation will result in an increase in the hiring of associate veterinarians who have practiced for a relatively short period of time.
Therefore, progressive practice owners must determine how they will address the heightened probability that the next associate they hire will be a recent veterinary school graduate. Will this development mean that owners can expect an influx of cheap labor? Don’t get your hopes up. The labor market might be inexperienced, but not cheap.
18 month Mentor/Employment Contract Program
The demands and requirements that new graduates place on prospective employers are changing. To this point, practice owners have largely relied on hiring incentives that have been most effective in the past (i.e. salary, time off, CE and health insurance). However, practice owners who continue to compensate using only traditional methods may soon find that increasing these incentives is costly, ineffective and frustrating.
According to the Dec. 1, 2004 and the Jan. 15, 2000 editions of JAVMA, the mean starting salary for 2004 graduates entering private practice was $49,635 compared to $38,533 in 1999. This difference represents a 29-percent increase in starting salaries during the last five years compared to a 13.5-percent increase in the most commonly used Consumer Price Index during the same period. Also, approximately 53 percent of 2004 graduates entering private practice reported receiving additional compensation at an average value of $7,454 compared to 30 percent of 1999 graduates receiving additional compensation with an average value of $5,625. The average dollar value of additional compensation packages when spread across all graduates would thus be $3,951 per graduate in 2004 and $1,688 per graduate in 1999. The average additional compensation amount per new graduate has thus risen 134 percent since 1999. Put simply, the amount of money practice owners must offer to attract new graduates is going up fast.
Why is this situation developing? The reasons are numerous. At a theoretical level, the growth of all practices is in part limited by their ability to expand their veterinary staffs. A general shortage of veterinarians can therefore push up starting salaries through simple supply and demand. Veterinarians seeking employment are in high demand from expanding veterinary practices, and as a result, the majority of new graduates (52.6 percent of 2004 graduates according to the same 2004 JAVMA survey) have multiple job offers. Consequently, competition to hire new associates may push starting salaries above the attainable production levels typical of new graduates.
Dr. Gerald Snyder’s “Rule of 45” states that no more than 45 percent of the gross revenues for a veterinary practice should be spent on veterinarian, support staff and management salaries combined. The most common benchmark for total support staff salaries is 20-22 percent of gross revenues with another 3-4 percent allocated to management. Thus, if we accept the rule of 45, veterinarian salaries should comprise no more than 19-22 percent of gross revenues. Given the desire of many practice owners to attract and retain clinical and non-clinical staff members during this time of rising salary and benefit costs, one can easily see how the addition of an associate could push a clinic, even one experiencing moderate to rapid growth, well into a violation of the Rule of 45.
Generally speaking, if an associate does not increase the practice’s gross income by an amount equal to five times his or her salary, then this associate’s presence will detract from the profitability of the clinic. Many new graduates are not ready or able to enter the work force with the level of productivity required to make themselves profitable to their employers. As a result, practice owners may find themselves frustrated that the productivity of these recent graduates cannot increase gross production to levels that justify the salaries required to hire them.