This past week, a pharmacy owner asked me what it would actually cost to replace a key employee at one of his pharmacies. He said he was trying to calculate the cost but there were so many variables it seemed almost impossible. His assessment was correct as he disovered there are many more costs than just financial ones. There are productivity costs, opportunity costs, market capital costs, and more.
The question immediately reminded me of a program I facilitated about pharmacy succession planning and how to protect the value of the pharmacy. This program dealt with securing key employees by putting a pharmacy "golden handcuffs" plan in place. I polled the audience about how much they thought it would cost to replace their staff pharmacist. I gave them three choices:
A) Under $100,000
B) Between $100,000 and $500,000
C) Over $500,000
80 percent chose A, 10 percent chose answer B and 10 percent chose answer C. I then asked the audience members that chose answer A why they thought this was the case. The answers I received all suggested the pharmacy had systems and processes in place to not miss a beat if someone of this significance had to be replaced. I then asked them the following questions:
1) How much business would be lost because of the loss of the key employee?
2) How much productivity would be lost in the time period required to train and assimilate the new hire into the culture of your pharmacy?
3) What would be the opportunity costs to the pharmacy of you having to spend more time training the new hire?
All of the participants looked at me like deer in the headlights as they realized there were way more variables to consider when replacing a key employee, in this case the staff pharmacist. I then polled the audience again with the same multiple choice question from above. The answers this time were much different: 60 percent answered B and the other 40 percent answered C.
With all this now understood, what would you answer if I asked you the same multiple choice question? Have you ever considered the questions above when thinking about the cost of replacing a key pharmacy employee? Have you ever considered what would happen if one of your key employees left?
Our next few blogs will explore why it is much more cost effective to keep a key employee than replace one.
It is our mission to help independent community pharmacy owners remain independent. One of the biggest threats to your independence is the loss of key employees. If you are able to take some time away from the pharmacy, would that change if you lost your staff pharmacist or pharmacy manager? For most of the owners we ask, they say yes. If that is the case, then we better have a great understanding of what it costs to replace each key employee.
We have created a new tool that can help you determine the cost to replace key employees. Please click on the button below for more details.
Why do we do what we do?
Our mission is to help independent community pharmacy owners achieve all their goals and dreams, inside, outside and after their life in pharmacy. In doing so, we are helping independent community pharmacies remain independent and thrive for many years to come.
When a pharmacist reaches out to us for information and help, we give them as much free value as possible. In addition to providing educational, self-assessment and strategic planning tools, we invite qualified pharmacists into our formal discovery process.
The first step of the process is completing The Inspired Goals Workshop. This complimentary and private 90-minute session enables us to deliver a free, detailed and personal Inspired Independence Blueprint. The blueprint provides a roadmap for achieving your goals and enables you to fully understand the value of joining The Inspired Independence Program.
If you wish to learn more about any aspect of our work, the free value we offer, or to be considered for The Inspired Goals Workshop, visit our web site at www.waypointus.com or call 843.873.4420 and ask for Ben or Matt Coakley.
At Waypoint Pharmacist Advisors, we take care of you!