Managing Social Media Behavior at Your Veterinary Practice

Originally Published by Today’s Veterinary Business, December 2018

Use of the internet, particularly social media, can be a double-edged sword, especially in the workplace. On the plus side, it can be a wonderful vehicle for marketing your practice and otherwise connecting with clients and potential clients. On the darker side, what happens when an employee posts content that can have a negative impact on the practice? Should you respond? If so, how should you respond? If a post is offensive, do you have the option of disciplining, even firing, that employee?

Because people in general are so openly sharing thoughts and opinions on social media, it’s not surprising that many experts believe that terminations based on employees posting inappropriate content will continue to increase. Handling this type of issue at your practice can be challenging for your human resource team, given that this is a fairly new type of problem to tackle – but, finding the right approach is crucial, given that just one post has the potential to blow up into a public relations and human resource disaster.

So, how do you respond to, say, a sexist-sounding post on an employee’s page? Although you don’t want to over-react or react emotionally in the moment, and you don’t want to micro-manage your employees, here’s the crux of the situation, distilled into just one sentence. How much potential damage could a particular post have on your practice’s reputation?

What’s important is that you respond fairly, not allowing one person who, say, has a knack of being humorous in his or her posts more leeway for the same type of material that another employee posts in a more serious manner. And, if you choose not to respond, be aware that you’re still really responding – giving the message that you either are fine with the posts or you aren’t concerned with the messaging. And, although a non-response is sometimes the right choice, in today’s business environment, your practice could also be harmed by this more passive approach.

What You Can – and Cannot – Do

At a minimum, you should create a policy about your employees’ use of social media while at work. Be clear about what an employee can and cannot do, and then consistently adhere to that policy. You have the option of banning social media use entirely while on the job. If, of course, someone’s job includes posting for the practice, you’ll have to clearly delineate what is and isn’t permissible during work hours.

However, you cannot ban employees from talking about work-related issues online when they aren’t at work, and they are legally permitted to discuss topics with one another on social media that fall within protected concerted guidelines. Employees can, for example, discuss their dissatisfaction about management style at the practice, how much they’re getting paid and so forth on Facebook or Twitter, as just two examples.

Employees are not protected and can be fired, though, when they discuss these issues online with someone outside of the practice, as this no longer falls into the category of co-worker dialogue about the workplace. They can also be terminated for sharing information that is deemed confidential, including but not limited to trade secrets.

Employees aren’t protected when talking about a workplace topic that isn’t related to employment terms. If someone calls a manager “lazy,” that communication may ultimately be protected. If the employee posts, though, that the manager is “fat,” then that may open the employee up for termination. Or if an employee posts that “my veterinary office is full of ugly people,” this is leaving the realm of employment-related discussions.

It can be difficult to discern when a post crosses the line, so your practice may need help with an attorney experienced in this type of law to determine legalities of particular posts. Note that laws can differ by state so, if your company has practices in more than one of them, you may not be able to make blanket social media policies. Employee protection is especially strong in California, Colorado, Louisiana, New York and North Dakota. Also, be aware that employee protection about social media postings applies to unionized as well as non-unionized employees.

Hate Speech and Protected Classes

You can fire employees who engage in hate speech. Sometimes a post clearly contains hate speech, while at other times, it is borderline. Hate speech is defined as communication that has no purpose or meaning other than expressing a feeling of hatred for a particular group, perhaps focused on race, ethnicity or gender, sexual orientation, national origin, religion and so forth.

When Creating a Social Media Policy for Your Practice

Your policy should contain clear guidelines about what is and isn’t permitted while at work, and also explicitly state that trade secrets and the like must remain confidential. The policy should ask employees to not use social media to post defamatory material that could create a hostile work environment. It is also reasonable to ask them to preface any social media remarks made about the practice online with a disclaimer that you don’t represent your employer’s point of view. It makes good sense to be proactive, too, and run your social media policy past your practice’s attorney.

As a creative solution, some companies are providing social media breaks for their employees throughout the day, perhaps 15 minutes in length, a couple of times per day. This can give everyone a chance to relax and refresh their minds. The goal isn’t to completely restrict your employees from ever using social media (which isn’t do-able, anyhow) but to encourage moderate use in appropriate ways. If you want to use this strategy, outline specifics in your social media policy.

Sharing Your Social Media Policy with Employees

How you share the news about your social media policy can go a long way in determining how well it is received. For example, you could pick a day to get some pizzas for your employees, and use that as an occasion to have a discussion on your social media policy. Explain why having the policy is so important in today’s times, and educate them on the problems that can arise when this form of communication isn’t appropriately used.

As you share the role that social media and its messaging plays in your practice’s culture and values, using a helpful approach is more likely to be successful than leaving the impression that you don’t trust your employees and plan to monitor their every message. And sometimes, by simply educating employees on privacy setting options in social media, you can help to prevent an unpleasant situation.

Share examples of appropriate/acceptable posts and ones that cross the line, and be open to questions, concerns and employee feedback. Getting employees to buy into your policy is a big step forward.

Monitoring Social Media

In general, avoid monitoring a specific employee’s social media accounts to watch for inappropriate comments. If you’re aware of a controversial comment, let that employee know how you plan to investigate and then review the situation with him or her. Then do exactly that.

When you follow up with the employee, get his or her side of the story. In some cases, the comment is so inflammatory that termination may be the only response. Other times, what the employee has to say may provide context that allows for lesser forms of discipline. Remember to be consistent and to follow up appropriately with everyone involved at the practice. As needed, update your social media policy and share it with all of your employees.

To view article on Today’s Veterinary Business, click here.

 

Key Factors to Consider in Appraisals and Assessing Practice Value

Written By:David McCormick, MS  Simmons Mid-Atlantic & Great Lakes
Stephanie McGinness, DVM Candidate, 2012

What are the key factors you should consider when assessing practice value?  Profitability and appraisals are both important parts of the process and the following is a list of guidelines and topics to help guide your future research.

 

Practice Value:

  • Profits drive the value of a practice. They are the return on owning the practice and it is the return that is being purchased.  The greater the return, the greater the value. Practices have appraised for anywhere from 110% to 15% of gross revenue.
  • “Profits” are what you would get if you owned the practice only – meaning you don’t work there and you don’t own the real estate (i.e., fair market compensation for your veterinary work, fair market rent and clean financials).
  • If a practice is financially healthy, it will have profitability in the range of 14-18% of revenues.
  • If a practice is financially healthy (14-18% profitability) then it will probably have a value that will end up being between 55% to 80% of revenue.
  • Asking what a practice will go for is like asking what the cost of surgery is; it is such a broad range that it’s tough to be accurate. The recent average of a practice sold by Simmons has a value of roughly 72%, however, they’ve been sold in a range from 30% to 95% and there’s even one on the market now at 110% that will close this month (June 2011).
  • The average practice these days has a profitability in the 8-11% range and thus is likely has a value that will end up being between 30% and 50% of gross revenues (if that).
  • Practice values in general have been decreasing. There’s greater pressure on profitability: increased support staff costs, increasing benefit costs, higher-end pharmaceuticals that can’t be marked up as much, etc.
  • The economy has also impacted values. If the practice was managing for revenues instead of profitability then typically the revenues *and* the profitability took a hit. Profits go down – so does the practice value.

Assessing Profitability & Practice Appraisals

  • It is best to have your practice appraised every 3-5 years for management and planning purposes. If the value is low, the profits were low.  If the profits are low it has to be a revenue and/or expense issue and we can help identify the problem(s).  Fixing the profitability improves the practice’s cash flow, increases the practice profitability and its financial health, and increases the overall practice value.
  • An appraisal is an opinion of value – and anyone can give you “an opinion”. These are big decisions.  If you want a good opinion you need to know where it’s coming from and select a qualified veterinary appraiser.
  • To assess a potential appraiser, request veterinary references and inquire about their experience level (particularly in the veterinary industry), accreditation and credentials (i.e. ASA, CBA, CVA, AVA, AIBA) with the understanding that they don’t guarantee competency, and compare their report to those prepared for you by previous appraisers to assess their report writing competence.
  • Any decision on value should be defendable and is based on the appraiser’s judgment, the financial analysis, and the conditions in the market for that area (assuming here that the goal is fair market value).
  • Free resources for estimating your practice profitability are available on the NCVEI.org website. Find the Profitability Estimator under the Benchmarking tools.  It was developed by the Veterinary Valuation Resource Council (VVRC) and is free.  It helps you go from the practice tax return to an estimate of your true practice profitability.  This is a similar practice to what we do in the No Lo Workshops hosted by VVRC at the major conferences.
  • If you’d like more in depth information, please visit the VetPartners website at www.avpmca.org

14 Issues Your Veterinary Practice Partnership Documents Should (Have) Address(ed)

What happens when you die? Will your heirs receive a fair price, or any price for your investment in the practice? Will they remain locked into that investment forever? Will your heirs collect profits from the practice? What if the other partner (who is getting paid under his practice employment contract) has voting control and decides not to distribute profits?

If your heirs are to be bought out, who sets the purchase price? How and by whom is it paid? If part of the purchase price is paid with a promissory note, is same secured? How? What if the practice is not profitable enough to pay the note?

What happens when your partner dies? Your deceased partner’s heirs are now your new partners.

Barring a fluke, your new partners will not be veterinarians. Does your State permit non-veterinarian practice owners?  Will they want to be bought out or stay and collect profits from the practice?  (Without contributing to profit generation of course.)  If the deceased partner was a large shareholder, or the majority interest holder, the heirs will also inherit your deceased partner’s voting rights.  Do you want to share practice management with, or be managed by, such persons?  What if the heirs squabble among themselves, leading to management paralysis and/or litigation? Do you fancy having the practice run by a court-appointed receiver?

If the heirs are to be bought out, who determines the purchase price? How and by whom is it paid? If there’s a note, is it secured? How?

What if you are permanently disabled? Will you receive a fair price, or any price for your investment in the practice? Will you remain locked into your investment forever? Will you collect profits from the practice? What if the remaining partner decides not to distribute profits?

If you are to be bought out, who sets the purchase price? By whom and how is it paid? If there’s a note, is it secured? How?

What if your partner is permanently disabled? Will your disabled partner want to be bought out or stay and collect practice profits (without generating any of same)? A disabled partner’s interests will be different then yours, so if he was the managing and/or majority partner, how will he run the practice? Will he be able to run the practice? What if the disabled partner is mentally disabled?

If your disabled partner is to be bought out, who determines the purchase price? How and by whom is it paid? If there’s a note, is it secured? How?

What if your partner goes nuts? You don’t want a mentally unstable person practicing veterinary medicine. But if such partner is the majority partner you can’t fire him, because he, not you, controls the practice entity. The same problem arises for equal partners. Sure your mentally disabled partner could voluntarily remove himself, but can you rely on that? What if the majority partner has a guardian? How will the guardian run the practice? What if the majority partner or guardian fires you?

What if your partner should be fired as veterinarian-employee? Suppose your partner becomes lazy or his child becomes ill and decides to work significantly less hours or stop working altogether. Suppose your partner becomes a substance abuser and consequently unfit to practice veterinary medicine. Or he steals from the practice. Or he harasses employees and/or abuses clients and/or patients.  The foregoing would be grounds for terminating a veterinarian employee.  But if your partner is the majority or an equal partner you can’t fire him (as explained in the preceding paragraph).

What if you no longer get along? Should the practice be dissolved? If not, who should leave? At what price should the departing partner be bought out? How and by whom is it paid? If there’s a note, is it secured? How?

In a 50/50 practice how are disagreements handled? What happens when each party has equal voting/management rights and a serious disagreement arises? How will the resulting deadlock be resolved?

What if your partner wants to drop out, buy a boat and sail around the world? Should your partner be permitted to withdraw? If not, how do you keep your partner from just resigning as an employee (in light of the constitutional prohibition of involuntary servitude)?

What if your ex-partner discovers he’s chronically sea-sick and comes back to set up a veterinary practice next store (using the client list he kept when he left)?

If a partner is permitted to withdraw, who determines the purchase price? By whom and how is it paid? If there’s a note, is it secured?  How?

What if your partner divorces? If the divorced spouse has, or is awarded, a portion of your partner’s practice equity interest, the divorced spouse becomes a partner. Ménages à trois make great literature and film themes but ALWAYS end badly.

What if your partner goes bankrupt? Do you fancy your partner’s creditor as your new partner? It won’t be fun to have a bank running, or having a say in running, the practice. Worse, the bank likely will want to sell your partner’s share to a competitor. 

Who’s got the land? The small animal practice’s most valuable asset is its location, because most clients won’t travel far for pet treatment. As zoning restrictions get ever tighter, good practice locations become ever rarer (and more expensive). If, as is frequently the case, one partner owns the practice premises, what happens when he dies, is disabled, withdraws, resigns, divorces and/or goes bankrupt?

What if another veterinarian wants to buy your partner’s interest in the practice? Should your partner be allowed to sell without your approval?  Should you have a right of first offer?  A right of first refusal?

IF YOUR PARTNER IS NOT YOUR RETIREMENT PLAN, THEN WHO IS? If you don’t have a firm  agreement with your partner to sell your practice interest to him (or someone else) upon your retirement, then how are you going to retire using your investment in the practice as your nest egg?  What if both partners want to retire at the same time?

Practice Entity-Which Organization Is Best For You and Why it Matters

Choosing the correct structure for your veterinary practice is an important decision with consequences reaching far into the future.  Selecting your practice structure is definitely not a “do it yourself” project.  Substantial tax, legal and accounting expertise is required.  Veterinarians nevertheless need to stay active in the process to ensure the experts’ narrow technical proposals get folded into a coherent plan that reflects your needs and goals.

  • It’s Mostly About Tax. Tax considerations are the primary drivers in choosing a legal structure for a veterinary practice.  The two key aspects are taxation of income/profits and taxation upon the sale or transformation of the practice.  Don’t paint yourself into a corner by choosing a business structure without establishing a succession or exit strategy.  Exit strategies should focus not only on your richly deserved retirement, but also on contingencies such as death or disability).  Since the transformation of an existing business structures in anticipation of a sale or the buy-in of a new partner usually triggers adverse tax consequences, it is usually better to choose an initial structure with the necessary flexibility to handle new arrivals, departures and divestitures at minimum fiscal cost.
  • Liability Shield. In some structures such as partnerships, the owners are personally liable on their individual assets for the debts of the business.  In others their personal assets generally are not at risk.  Business structures, however, do not insulate veterinarians from liability arising from malpractice claims.[1]  But the shield works for almost all other claims, which in our litigious society are increasingly frequent.  Unless you are an equine or food animal veterinarian, you generally have greater exposure to claims from your client’s “slipping and falling” in your hallway, than malpractice.
  • Flexibility and Formalities. Some structures allow more management flexibility and/or are less burdensome to administer than others.  Veterinarians generally tend to ignore formalities which is a serious mistake.  Courts regularly have looked past the liability shield and held owners personally liable when the owners have failed to observe the formalities separating their personal affairs from those of the practice entity.

AN OVERVIEW

The accompanying table compares the more common business structures from a liability, management and formality perspective (in simplified form).  Following is a brief and much simplified overview of the tax characteristics of each entity.

  1. Sole Proprietorships.  Since sole proprietorships are not legally separate from the single owner, there is no separate tax return.  The practice’s profits are included in owner’s total income and are taxed at his ordinary income tax rate.  In addition to federal and (if applicable) state income tax, the owner must also pay self-employment tax equivalent to the payroll taxes due as if the owner were an employee of the practice.

Upon the sale of the sole proprietorship practice’s assets, the IRS will recapture all depreciation/amortization deductions taken by the owner/seller thereof and tax such amount at the seller’s ordinary income tax rates.  In the unlikely event that any gain remains on the assets (after adding back any depreciation/amortization to their respective “bases”[2]) they will be taxed at the lower 20% long term capital gains rate (assuming the relevant holding period is met).

The buyer receives a “step-up” (increase) in his basis in the assets proportional to the amount of (purchase price allocated thereto) allowing him to re-depreciate/amortize them.   Thus, asset sales usually are a better deal tax-wise for the buyer than for the seller, and all other things being equal, buyers will prefer to purchase assets rather than stock (in a C corp).

  1. Partnerships.  Partnerships are “pass-through” or “flow-through” entities for tax purposes, meaning that each partner includes in his own taxable income the profits (or losses) of the partnership, which are taxed as ordinary income at the partner’s individual rate (much like the owner of a sole proprietorship).  Note that each partner’s share of partnership income is taxable each year, whether such share was distributed to the partner or retained in the partnership.  If the latter, then the partner may not have the cash to pay the tax.

A consequence of the pass-through principle is that the sale of partnership interests are treated for tax purposes similarly to the sale of the underlying assets of the partnership (i.e., the assets are subject to depreciation recapture as in sole proprietorships).

  1. Corporations.  All corporations must file separate tax returns.
  • “S” Corporations. “S” corporations are corporations that elect to be taxed as a partnership. As “pass-through” entities, profits will be taxed in the hands of the shareholders whether distributed or not. An advantage of S corporations is that shareholders may take a portion of their profits as “S corporation profit,” free of payroll or self-employment tax (i.e., subject only to income tax).  Profit corresponding to what the veterinarian shareholder would have earned as an employee is subject to payroll taxes in addition to income tax.  (Sole proprietorships on the other hand must pay self-employment tax on all profits.)  S corps are popular with veterinarians for this reason.
  • “C” Corporations. “Plain vanilla” corporations (called “C” corporations to distinguish them from “S” corps) are not “pass-through” entities and are subject to corporate income tax, usually at the 35% rate for veterinary practices.[3]  Distributed profits (dividends) are taxed as ordinary income in the hands of the shareholders.  This “double taxation” discourages the distribution of C corporation profits.  On the plus side, C corp profits are not taxed until distributed, pension plan contributions are not subject to the S corp limits, and employee-shareholders’ health benefits are not taxed.  Veterinarians wishing to maximize their benefits will choose a C corp over an S corp.

If the holding period requirement has been met, the sale of C corporation stock is taxed at the favorable 20% long term capital gains rate.  The buyer does not receive a step-up in the basis of the underlying assets since he is buying the corporation stock. (The buyer can under certain circumstances elect to treat the transaction as an asset sale for tax purposes (a.k.a. a Section 338 election).)

  1. Limited Liability Companies.  Limited Liability Companies are very quite tax-wise.  Single member LLCs can elect to be taxed either as a C corp or a sole proprietorship.  Multi-member LLCs can elect to be taxed either as a C Corp or a partnership.  Unfortunately, not every state allows veterinarians for form LLC (ie, California).
  2. A Word Regarding Real Estate.  If the practice owns its own real estate it’s better placed in a separate entity held by the owner(s) or held individually by the practices owner(s).  This allows the owners to receive rent (which will be deductible from the practice’s income).  Moreover, placing the real estate and the practice in the same legal entity frequently leads to problems because the buyer can’t afford to buy the real estate in addition to the practice.

Choosing the correct business structure for your practice is important.  Don’t treat it lightly.

SIMPLIFIED PARTIAL COMPARISON OF DIFFERENT BUSINESS STRUCTURES

(Ex tax issues)

Structure or Entity Type\Issue Liability Formalities/Flexibility
Sole Proprietorship

No entity; business co-mingled with personal assets

No liability shield

 

None.  Just open your door and you’re in practice!
Corporations (“C” or “S” Corp)  A Professional Corporation (“PC”) is identical to a C Corp in all respects except that only members of the same profession (e.g., vets) can own its shares

 

Shareholder not liable for debts/liabilities of corporation (unless “corporate veil is pierced” because shareholders fail to separate their personal affairs from corporations (e.g. by ignoring formalities) Must file documents with state secretary of state.  Formalities are the most cumbersome of all entities. Less formal flexibility re management/profit sharing issues
Limited Liability Company (LLC)

(Created to provide more management flexibility than S Corp and “pass through” tax treatment )

Member not liable for debts/liabilities of LLC (subject to piercing corporate veil doctrine) Must file documents with state secretary of state; but management, profit sharing can be flexible.
General Partnership[4] Partners liable for debts/liabilities of Partnership; no liability shield Must file documents with state secretary of state, but management; profit sharing can be flexible.
[1] Salvation lies in adequate malpractice insurance.

[2] The basis of an asset is it’s original cost to the owner, as adjusted pursuant to IRS rules.

[3] Because veterinary practices usually are personal service corporations.

[4] Limited partnerships are different from general partnerships.  An LLP generally is formed among several limited partners who are normally passive financial investors and one general partner responsible for managing the enterprise. Limited partners normally are not liable for the debts/liabilities of the LLP, whereas the general partner is.  Contrary to the motion picture business, real estate or oil and gas exploration, LLPs may not be appropriate for a veterinary practice where all the members are actively engaged in the enterprise.

Anatomy of Negotiation: Talking to Corporate Consolidators

Everyone becomes involved in a negotiation at some point in their career, whether or not they initiate it. A negotiation is a process in which two or more parties attempt to resolve differing needs and interests through a series of communications. It is a fact of life, especially in business, that people have conflicts that need to be resolved through a sometimes uncomfortable discussion, but there are strategies that can help you through the process.

Why Are Negotiations Needed

An employer may want to offer someone higher wages, but needs to consider the overall profitability of a practice. Meanwhile, an employee may understand and support the need for a thriving practice, but also needs to earn a certain wage to support his or her family. Employers and employees negotiate because they each have what the other one needs, and they believe they can obtain a better outcome through the process than if they simply accept what the other party is offering.

Sometimes, negotiations occur because the status quo is no longer acceptable for one or both parties. Negotiations take finesse because, besides dealing with specific tangible points (wages, insurance benefits and workplace perks, as just three examples), emotions play a part and ongoing relationships are involved. The parties are choosing to try to resolve their different positions through discussions, rather than arguing, ending the relationship, having one person dominate the relationship or taking the dispute to another party with more authority.

Negotiation Forum

Negotiations can take place in different forums and choosing the right forum can be a critical factor in a successful negotiation. These forums are not mutually exclusive and the value of each depends upon different factors, including the location of the parties, the time available for negotiation, and each party’s comfort level with negotiating. One of the most effective methods of negotiation is the face-to-face negotiation. This is particularly true if the parties are sophisticated and experienced negotiators. The advantages of negotiating face-to-face include that the parties can devote all or most of their attention to the negotiation without distraction; being in the same room increases the urgency to achieve a resolution, and savvy negotiators can read the body language and facial expressions of the other party, which is very useful in negotiation. A face-to-face negotiation is often not possible if the parties are in different jurisdictions or cannot commit a block of time to negotiations.

If the parties are unable or unwilling to meet face-to-face, negotiation can be done by telephone, email or text. In this day and age of increasing technology, this is how most negotiations take place today. As a side note, video conferencing can have many of the same benefits of face-to-face negotiation if the parties are in different locations. One downside of these non-face-to-face negotiations, especially email or text, is that it is often difficult to explain fully a party’s position on an issue with these methods, which can lead to misunderstanding and distrust, two characteristics that can be poisonous to negotiations. It can also take longer to complete negotiations as the parties can respond at their own pace to emails and texts. A savvy, sophisticated negotiator can use these delays to their advantage by preying on the insecurity and anxiousness of an inexperienced negotiator, who will often feel pressured or hurried into making a deal to avoid losing the opportunity.

Negotiation Terminology

Using the example of wages, employers and employee alike have a target point, which are the wages they would like the other party to agree to. The difference between what an employee wants to be paid and the employer wants to pay is the bargaining range. Meanwhile, the resistance point is where a party would walk away from negotiations; if too low of a wage or raise is proposed, an employee may begin job searching or a job candidate may decline an offer; the employer also has a point at which he or she will reject a wage request and end negotiations.

When the buyer (employer) has a resistance point that’s above the seller’s (employee), this situation has a positive bargaining range. The employer, in this case, is willing to pay more than the employee’s minimum requirements, so this situation has a good chance of being satisfactorily resolved. With a negative bargaining range, though, one or both of the parties must change their resistance point(s) for there to be a possibility of resolution.

In a wage negotiation scenario, either the employer will offer a starting wage or raise, or an employee or job candidate will request a certain dollar amount; the first person to name a dollar amount is making the opening offer. If at least one of the parties has a BATNA – best alternative to negotiation agreements – then he or she will probably approach the discussions with more confidence, having another alternative. So, if an employer offers someone a job, but has another excellent candidate waiting in the wings, the employer has another alternative and can set a higher and/or firmer resistance point. Conversely, if an employee or job candidate has a unique set of skills that are needed in today’s practices, that person probably has more options in the job market – perhaps even other pending offers. The quality of a negotiator’s alternatives drives his or her value by providing the power to walk away and/or set a higher and/or firmer resistance point.

Bargaining Styles

There is more than one type of bargaining style. One way to differentiate them is to divide them into distributive bargaining and integrative bargaining.

In distributive bargaining, parties’ needs and desires are in direct conflict with one another’s, with each party wanting a bigger piece of a fixed tangible such as money or time, so these negotiations are typically competitive. Parties are not concerned with a future relationship with the other person. A slang term for this type of negotiation is “playing hardball” or “one upping” someone. Strategies often include making extreme offers, such as an employer offering a very low wage or a job candidate asking for an exceptionally high one. Tactics include trying to persuade the other party to reconsider his or her resistance point because of the value being offered – in this example, the job candidate might say that a high salary was required because of his or her abilities or an employer could say that lower wages would be compensated by a great work environment.

With integrative bargaining, though, the goal is win-win collaborations that will provide a good opportunity for both parties. The employer would acknowledge the employee’s value and need for a decent wage, and negotiate accordingly, while the employee or job candidate would recognize the value of working at a particular practice as well as the fact that the employer has numerous other financial commitments to fulfill. They recognize that they need one another to maximize their respective opportunities and negotiate from a place of trust and integrity, with a positive outlook that recognizes and validates the other party’s interest in the transaction.

Here’s an interesting psychological truth. Negotiators are more satisfied with final outcomes if there is a series of concessions, rather than if their first offer is accepted; that’s because, in the latter, they feel they could have done better.

Negotiation Styles

To successfully negotiate, it’s crucial to clearly define the issues involved, and to prepare for the negotiations. Each party should be clear about his or her target point, opening offer, resistance point and BATNAs.

Multiple negotiation styles exist, each on the spectrum of assertiveness and cooperativeness. Here are summaries of common styles:

  • Competing (high in assertiveness, low in cooperativeness): these negotiators are self-confident and assertive, focusing on results and the bottom line; they tend to impose their views on others
  • Avoiding (low in assertiveness and cooperativeness): these negotiators are passive and avoid conflict whenever possible; they try to remove themselves from negotiations or pass the responsibility to someone else without an honest attempt to resolve the situation
  • Collaborating (high in assertiveness and cooperativeness): these negotiators use open and honest communication, searching for creative solutions that work well for both parties, even if the solution is new; this negotiator often offers multiple recommendations for the other party to consider
  • Accommodating (low in assertiveness, high in cooperativeness): these negotiators focus on downplaying conflicts and smoothing over differences to maintain relationships; they are most concerned with satisfying the other party
  • Compromising (moderate in assertiveness and cooperativeness): these negotiators search for common ground and are willing to meet the other party in the middle; they are usually willing to give and take and find moderate satisfaction acceptable

As long as both parties are committed to the business relationship and believe there is value in coming to an agreement, negotiations can typically proceed. If one or both parties, though, are unreasonable, uninformed or stubborn – or listening to advisors with those characteristics – negotiations can fall through. Other challenges exist when one party doesn’t necessarily need the deal, isn’t in a hurry or knows that the other party is without other options and/or in a time crunch.

Negotiation Fears

You may dread negotiation. If so, you’re not alone. Common reasons for this include:

You have not yet solidified your position: in this case, more preparation is clearly needed.

Fear of looking stupid: nobody likes looking foolish, so some people will avoid negotiations altogether rather than taking the risk of not negotiating well.

Liking people and wanting to make them happy (but perhaps not being able to give them what they want!)/not wanting to affect someone else in a negative way: if you are interviewing for a promotion at a practice, say, and you really like the practice manager, you may worry that negotiations will upset the manager or put her in a difficult position.

Fear of failure: some people would prefer to not negotiate at all, rather than making an unsuccessful attempt.

Feeling uncomfortable with money: some people were taught that it wasn’t polite to talk about money!

Some people have an aversion to conflict, overall, and so they avoid the potential of it by not negotiating. Yet, others feel vulnerable when negotiating. People tend to feel more confident during negotiations when it focuses on an area of their expertise and/or where solid evidence exists to back up the negotiations.

Women in particular are reluctant to negotiate, with only 7 percent doing so. They suffer the costs associated with not negotiating because they tend to have lower expectations, fear being considered a “bitch” and being penalized for negotiating. As a solution, women can consider framing their wants into the value that they will bring to the other party, and share how they can solve the underlying problem of the other party.

Areas where negotiating may not feel as intimidating include:

  • Negotiations for resources, whether it’s asking for more equipment or for a practice to hire more people
  • Negotiations about how to use resources; with a common purpose, solutions can be reverse engineered fairly easily
  • Negotiations where you have expertise
  • Negotiations with big companies where nothing is personal
  • Negotiations where you have evidence to support your position, including facts, data and logical reasoning

Salary and Benefits Negotiation Tips

Even though the examples given so far have focused on monetary compensation, when negotiating, don’t focus solely on wage or salary. Also discuss benefits offered and workplace perks – meaning the entire package. This can include, but is not limited to, health care coverage, life insurance, retirement programs, vacation time and flextime. If you’re job hunting, investigate what companies are offering. Where do you think the place you’re interviewing falls on that spectrum? What is the minimum pay level that you’re willing to accept? What is your preferred wage? What benefits are important to you?

If you want to work at a particular practice, but the pay rate isn’t quite what you want, ask if you can have a salary review in, say, six months. This doesn’t mean accepting a salary that is clearly sub-par, nor does it mean that you should try to put more pressure on a potential employer who is already offering you a good deal. It is simply something to consider in relevant circumstances.

What workplace perks might be desired? Would a company cell phone help you? Better equipment or software? If so, you could consider accepting somewhat lower pay if you get more tools to do your job.

Although telecommuting is seldom an option for veterinary staff, outside of perhaps financial or other purely admin functions, you could negotiate coming in half an hour later so that you can take your children to school or schedule a lunch break that coincides with when you need to pick them up. If you bring crucial skills to the negotiating table, you’re more likely to get these concessions than if you are entry-level.

If relevant, ask about practice policy if you become pregnant. How acceptable is the policy to you? How important of a negotiating point is this for you? What about if you are injured in the workplace? Educate yourself on your workplace rights before negotiations occur, as well as company policy. If you are valuable to the practice, perhaps you can negotiate some additional flexibility.

Who should be the first to make an offer? Some experts believe that, if you allow the other party to provide a starting dollar figure, he or she has shown his or her hand. But, research indicates that final figures tend to be closer to the original number stated than what the other party had originally hoped.

Negotiating with Corporate Consolidators

Your negotiations today are likely to be with a representative of a corporate consolidator. These individuals typically have business background, training and experience, often in banking or private equity. They are sophisticated negotiators. Be aware of the psychology involved in these types of negotiations, as these negotiators will tell you what you want to hear to gain your trust and confidence, and then will provide you with a written agreement that is vague and broadly written. This will work to their advantage as corporate consolidators have “deep pockets,” with experienced and tenacious lawyers on their side who are not averse to litigation. This alone can act as a deterrent to someone with fewer resources and less time to fight back. If you ask for more specificity in the agreement, they will say, “Trust me, things will be as I said.” They also may use pressure, either subtly or overtly, to get you to agree to their terms. For example, they will say that, if you do not sign this contract by a certain date, we will pull the offer and go with another candidate we are considering.

As mentioned above, a key element of an employment agreement that must be negotiated carefully is the restrictive covenant. This is even more critical when a corporate consolidator is the employer. In these instances, the covenant is typically broader and even more restrictive. One way this is done that is often not readily apparent on its face is in the definition of the location of the facility for the measurement of the geographical scope of the covenant and the definition of employer with whom you cannot compete or solicit employees, clients or referral sources. Since the corporate consolidators often have multiple locations in a geographical area, they try to measure the geographical scope from all of these locations, even though you may not be working at all of them. This can broaden the restriction greatly. Similarly, the definition of “employer” often includes the specific practice at which you will be working as well as the parent company, affiliates and subsidiaries of such practice. This is particularly troublesome with non-solicitation covenants, as you may not know the clients, employees and referral sources of all of these companies and thus could inadvertently violate the non-solicitation covenant. These tactics require careful negotiation on your part to limit the restrictions to the location where you will be working at and to your employer only.

Employment with corporate consolidators may seem attractive because of the many benefits they can offer. However, often these benefits are illusory. The employment agreement will typically provide that the employer can change any of these benefits at its sole discretion at any time. When negotiating this provision, the employer’s ability to change benefits should be limited to those provided to all employees, such as health insurance or retirement plans, and not to individually-negotiated perks such as paid time off, signing bonuses or payment of membership dues and licenses.

Although entering into an employment agreement with a corporate consolidator may give you the peace of mind that you have a secure and stable job, the reality is often different. Most employment agreements with these employers are for “at will” employment, meaning that the employer may terminate your employment at any time for no reason or advanced notice. Furthermore, while you may have limited job security in this scenario, you are even more at risk because you would be subject to the restrictive covenants upon termination. Attention should be paid to trying to limit the term of the restrictive covenant to the term of employment if less than one or two years. You could also try to negotiate that the restrictive covenant does not apply if you are terminated without cause. This may be difficult to achieve. You also want to negotiate a reciprocal termination right so that you are able to leave your employment without penalty upon notice to your employer.

For Best Results

Success is achieved when you first:

  • Determine the interests of the other party.
  • Embrace compromise.
  • Observe the Golden Rule, treating others as you would like to be treated: fairly and reasonably, without defensiveness.
  • Be prepared, both in factual information and in strategy.

Terms to avoid using during negotiations:

  • “Between” – giving a range tells them how low you would go.
  • “I think we’re close” – a savvy negotiator will recognize “deal fatigue” on your end and stall in the hopes that you’ll concede.

Following these guidelines will empower you to successfully negotiate for yourself with finesse. This will help you to resolve differences with whomever you are dealing with down the road, in all areas of your life.