{"id":77496,"date":"2025-02-28T17:53:47","date_gmt":"2025-02-28T22:53:47","guid":{"rendered":"https:\/\/todaysveterinarybusiness.com\/?p=77496"},"modified":"2025-02-28T17:53:47","modified_gmt":"2025-02-28T22:53:47","slug":"employee-ownership-022825","status":"publish","type":"post","link":"https:\/\/navc.sitepreview.app\/todaysveterinarybusiness.com\/employee-ownership-022825\/","title":{"rendered":"Why Employee Ownership Fails in Consolidation"},"content":{"rendered":"

I founded Galaxy Vets in 2021 as a response to the rising veterinary burnout and the rapid corporatization of our industry. With private equity money pouring in and non-veterinarians calling the shots, I wanted to bring veterinary medicine back to veterinary professionals through employee ownership.\u00a0<\/span><\/p>\n

We used a classic acquisition model but added our own secret sauce to make Galaxy Vets truly stand out. Central to our approach was the Employee Stock Ownership Plan, giving every team member \u2014 not just veterinarians \u2014\u00a0 a stake in the business, with no direct contributions required from employees. We also integrated a burnout prevention strategy built on findings from our <\/span>annual burnout studies<\/span><\/a> and proven management practices from human health care and other industries. Some of its components included salary-only compensation, open-book management, quarterly and yearly goal-setting for every team member and department, a bottom-up idea system, and a gamified rewards structure. We even experimented with forward-thinking concepts like unlimited paid time off.<\/span><\/p>\n

Our thesis was that employee ownership can help tackle the six triggers of professional burnout \u2014 lack of control, conflict of values, work overload, insufficient reward, unfairness and community breakdown \u2014 by giving people autonomy, control, a sense of belonging, equitable rewards and alignment with shared values.<\/span><\/p>\n

Fast-forward to today, I can say that employee ownership fails in the acquisition model. But it shines in de novo.<\/span><\/p>\n

The fundamental problem with acquisition is that the team didn\u2019t choose you. They were sold. And you, as the buyer, didn\u2019t truly choose them either. During due diligence, you can analyze the financials, review the technology stack and check for legal red flags, but there\u2019s no real way to evaluate the most critical factor in a business\u2019s success or failure: its culture.<\/span><\/p>\n

We assumed our newly acquired hospitals would be excited about becoming co-owners. But in reality, giving employees a stake in the entire network doesn\u2019t immediately translate into an owner\u2019s mindset. For example, in one practice, after we moved veterinarians to salary-only \u2014 a change <\/span>I strongly believed<\/span><\/a> would help mitigate burnout \u2014 doctors began blocking off their calendars and heading out early.<\/span><\/p>\n

A year ago, Galaxy Vets pivoted to building urgent care veterinary hospitals across North America. We stayed true to our employee ownership and burnout prevention framework, but this time, we\u2019re partnering with like-minded individuals who share our entrepreneurial spirit and core values from the start.<\/span><\/p>\n

Employee ownership can help create an incredible environment \u2014 one built on accountability, belonging, innovation, and engagement \u2014 but it can\u2019t fix pre-existing culture issues within an established organization. In one of our acquired hospitals, toxic relationships among co-workers made cross-department collaboration and open idea-sharing impossible, even when it was obvious that such efforts would lead to bonuses for everyone. By contrast, in our newly formed teams, we see an average of 50 new initiatives per quarter, all driven by employees and aligned with the group\u2019s objectives.<\/span><\/p>\n

As opposed to our initial experience with acquisitions, our bonus structure has proven successful in de novo practices. Inspired by <\/span>The Great Game of Business<\/span><\/i> by Jack Stack, it focuses on building business acumen among employees and tying bonuses to team contributions. We identify \u201ccritical numbers\u201d that drive success, with each department setting goals aligned to these metrics. This ensures every team member understands how their work impacts the group\u2019s financial outcomes and the bonus pool. However, when you acquire a business<\/a> where bonuses are simply \u201cgifted\u201d at the end of the year, implementing this system tends to generate significant pushback.<\/span><\/p>\n

Introducing fundamental cultural changes in mergers and acquisitions is a lose-lose situation. On one hand, you can\u2019t change everything overnight without risking an exodus of employees and you need the business to keep running. On the other hand, meaningful change is impossible if not everyone is on board. That\u2019s why classic consolidation often feels like a flipping game \u2014 quick ROI wins out over the long-term effort needed for real improvement.<\/span><\/p>\n

When we started out, we were cautious about overwhelming the teams, so we delayed some of the training. That was a mistake. Typically, employees have little to no involvement in practice financials, let alone access to the books. But for us, it was vital to change that as soon as possible. Financial literacy is the cornerstone of ownership culture. As co-owners, understanding the numbers is essential \u2014 it\u2019s what ties their everyday decisions to the success of the practice.<\/span><\/p>\n

Now, every veterinarian, technician, assistant and client service representative learns to track four key numbers: revenue, profit, expenses and average check transaction (ACT). In just five to six months, team members who previously had no interest in finances are fully engaged, saying things like, \u201cLet\u2019s not toss that extra garbage bag,\u201d \u201cLet\u2019s order syringes without a luer lock because they\u2019re cheaper,\u201d or \u201cLet\u2019s use normal saline instead of plasma-lyte because it\u2019s more practical.\u201d They became mindful of expenses because those expenses are <\/span>their<\/span> expenses.\u00a0<\/span><\/p>\n

To summarize, we\u2019ve proven our methodology is viable, but its success hinges on one crucial factor: People need to choose to be part of it from the start.\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Acquiring a business and offering a stake doesn\u2019t make you their chosen employer.<\/p>\n","protected":false},"author":23,"featured_media":77497,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"iawp_total_views":0,"footnotes":""},"categories":[90],"tags":[],"class_list":["post-77496","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-online","column-online-exclusive","clinical_topics-practice-ownership"],"acf":{"hide_sidebar":false,"hide_sidebar_ad":false,"hide_all_ads":false},"yoast_head":"\nWhy Employee Ownership Fails in Consolidation | Today's Veterinary Business<\/title>\n<meta name=\"description\" content=\"Employee ownership can help create an incredible environment but it can\u2019t fix pre-existing culture issues within an established organization.\" \/>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, 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