Al Cleinman's Blog

Some Thoughts on The Art of Recruiting

During our recent Cleinman Performance Network meetings, I’ve shared the importance of investing in your team and that these are opportune times to recruit. 

Often, I hear frustration about the recruiting process that’s expressed as:

“We can’t find people – let alone qualified people.”

“Where do you find great people?”

“When you find someone, how do you know they’re the right one?”

After 35+ years as an employer, I have a few insights to share. If you open your mind to a new way of recruiting and selecting people, you will find the entire hiring process to be a more productive foundation for a winning team.

1. Recruit every day, everywhere.  You never know when or where you’ll meet up with a great candidate: The store, the bank, a patient, your neighbor’s child or mother. Always be alert for the opportunity to make a connection.

2. Be prepared. At the least, carry business cards and hand your card to folks that impress you. Mention that you’re always looking for quality team members. One of my clients carries a special business card that says: I’ve been impressed by your superior customer service, I’d be honored if you’d consider joining our team.

3. Recruit for the future. I’ve known some of our team members for decades, but they just joined our team in recent years. When you meet a great candidate, make a mental note and stay in touch. One day you may have the perfect opportunity for this individual.

4. Watch the horizon. If you know you’re going to lose someone in a year, don’t wait for them to give notice before hiring the replacement. In fact, you should make replacing oneself a part of each team member’s job (if you continue to grow, you will need more people even if no one leaves).  In our firm, replacing oneself is “job #1.”

5. Keep a Bench.  It’s the second string that makes the first string work harder.  For most of our clients, you need at least one extra team member just to cover absences. 

6. Advertise regularly. I’m a big believer in running consistent classified advertising. Here’s an example for optometrists:

Our patients have rewarded our superior patient care with continued growth. We are seeking people pleasers interested in a career opportunity with the most advanced eye care facility in the area.

Here I’m combining patient marketing with team recruiting, because that display ad is also communicating with patients and prospective patients.

7. Offer recruiting bonuses. Your existing staff and network of acquaintances can help recruit and will have “ownership” in the result.  Make them aware of the ongoing need, and motivate the entire team to work on networking.  In recent months, I’ve spoken before our local Chamber of Commerce, Rotary and Kiwanis clubs offering a $500 reward for a referral.  It’s worked!  One of our most recent additions comes from that effort.

The interviewing process doesn’t have to be a mystery. Start by asking people to apply in person. Why? So you (or your staff) can get that first impression. Ask the applicants to come and complete an application. Give the person a tour of the office. If you don’t end up hiring the candidate, you are likely to have gained a patient.

When you look at resumes, look for skills rather than specific job experience. I prefer people who are coming to me with other skills that can be useful to the business. The candidate may apply for one thing but be better for something else.  Indeed, in today’s world, arrows in the back (even bankruptcy) can be a mark of someone with the right experience. 

For an eye care practice, telephone screening is absolutely critical. You do not want someone with a horrible telephone voice or presence, even if that would not be the person’s primary interaction with patients. In the telephone screen (this can be done before or after the first meeting), take five to seven minutes to ask the person about himself or herself, why the position interests them, etc. You are looking for clear communication and a warm, pleasant voice.

When you call the best candidates (narrow it to 3) back for an interview, ask deep questions that will help you know the person:

Take me back to 11^th grade in high school, what was your life like?

What’s your life look like in 5 years?

What are you passionate about?

What ticks you off?

At the end of the final interview, here’s a question that will help you tweak out information you can’t ask directly:

Before we start our due diligence and call references, is there anything that you want to share with me that might surprise me?

Use pre-employment screening.  Behavior Profiles are a good tool to understand how individuals behave in various situations and help ensure that you’re hiring the right person for a particular position.  An ounce of prevention is worth a pound of cure.

My conclusion, after 35+ years of recruiting and hiring, is that it’s an art form, not a science. The more you do it, the better you get at it.  But you’ll likely only make the right choice 50% of the time.  So be very diligent in properly assessing capabilities and cultural fit in the first few weeks.  My experience is to go with your gut.  Build the fact that you may make a mistake into your plans. 

Growing the Eye Care Pie...Great Idea???

At the recent Global Leadership Conference, "we need to grow the pie" was a common theme that emerged from many of the speakers.  On the one hand, I chuckled because this is something I've been saying for many years (and, through our work at Cleinman Performance Partners, accomplishing).  On the other hand, I'm pleased that there seems to finally be emerging a consensus that the industry must pool its resources and focus attention on market growth vs. individual companies battling it out over their piece of a static pie.  I've often said that ours is a $60 billion dollar industry that's still at adolecense, generating less than half its current potential. Why, with all the technology and increased distribution that has emerged in the past decade, has our industry been flat for many years?  This seems ludicrous to me when our clients revenue growth is, on average, about 3 times the rate of inflation.  Where's the disconnect? 

I offer up a few observations and suggestions:

a) Until we improve the customer care and service acumen of the employees and professionals who work in the industry, much of the investment at the top may be wasted or worse. You can't grow an industry with just top down effort.  Successful practices, and outstanding employees, are developed one at a time.

b) The typical consumer thinks of their eyewear purchase experience at about the level of buying a used car..."everyone's got a deal and I better be focused on what deal I'm getting."  The major promotions in our industry can be summerized as price oriented (BOGO, 50% discounts, etc.).  And now, individual consumers can buy "vision care insurance" that provides one thing and one thing only...a discount.  The consumer has lost trust as a result.  In the absence of anything else, price prevails.  We must focus our efforts on selling benefits vs. price.

c) Until we make our individual retail positions "careers," we will face a continued revolving door of employees.  Ours is a technical industry and requires significant training.  We must convince the ECP to invest in staff and staff training (and provide adequate margins to do so).  Contrary to popular belief, maintaining <20% payroll costs is NOT a KFS (Key Factor of Success).

d) It's obvious that the product side of our industry thinks "managed care" is a significant answer to growing the market.  Sure, providing eyecare and eyewear as an employee group benefit is a reasonable growth strategy.  But providing those benefits at every decreasing reimbursement levels (as adjusted for inflation) is the kiss of death.  Our studies clearly show that ECP income has NOT kept up with inflation over the past decade.  Managed Care brokers can't drive margins to a level that won't allow reinvestment.  ECPs have to invest tens of thousands of dollars annually to maintain the quality of the patient experience (training, instruments, technology, facilities, etc.) and that investment is increasing as new technologies (which help improve the health of our populace) are introduced.  If the Managed Care Powers don't drive reimbursement levels up to support these investments, the entire industry will lose as the patient experience erodes. 

f) The industry doesn't appear to understand its own customers.  In the product and insurance world, there are significant economies of scale.  A frame company can increase it's production with more machine and multiple shifts.  Insurers can process more claims by shifting work to the providers and improving technologies.  However, ECPs don't realistically have these same opportunities.  The average ECP can handle about 2000 patients per year.  Top Performers (the docs on roller skates) can handle 5000 patients a year, no more and remain healthy.  All the technology in the world can't replace that which is the lifeblood of our industry...personalized...really personalized...service.  Without the time and margins to provide such service, all of the great frame, lens, contact lens and other technology that the supply side introduces can't make it through the time bottleneck.  Reimbursements levels are driving down margins which can't readily be made up on volume! 

e) Want to improve the patient experience and unleash the power of competition at the same time, eliminate "closed" systems.  Remove restrictions for Providers on using the plans frames and the plans lab.  The "law of the marketplace" will ensure quality and value and eliminate huge amounts of provider animosity toward these restrictive plans.  More providers will return to providing edging services on site (read "service").  The consumer, and our industry's brand, will benefit as a result.

f) Eliminate required discounts on multiple pair sales for managed care patients.  That forces the use of a percentage discount as the only offer possible. Open the door for more creativity in promotions (a Gucci bag, Movie Tickets, etc.).  This discounting has only resulted in a deterioration of value of our industry's brand (see B above) and certainly hasn't improved multiple pair sales.

g)  The industry appears to lump the entire ECP community together in one big bucket.  The reality is that there's a HUGE difference in the quality fo the patient experience location to location.  Our industry's brand is determined by these experiences.

h) Understand that it's the overall patient experience that drives the value quotient, just as in any other similar business (ex; the restaurant business).  Every ECP has access to the same frames, lenses, contacts, instruments, etc.  What makes the difference?  It's all about the doc, the staff and the office environment...build the value of the patient experience and our industry will build the value of its brand. 

The industry appears to be preparing to invest potentially hundreds of millions of dollars in consumer promotion to drive market growth.  That's likely a good thing.  But that effort could well back-fire if the entire delivery system isn't healthy, trained, motivated and philosophically alligned. 

Determining the Recession's Bottom and Being Opportunistic

Jeff Johnson is a very interesting optometrist.  He doesn't see patients.  He doesn't teach optometry.  He's not even in the profession.  No, for the past six years this very bright man has been a Senior Research Analyst for Robert W. Baird and Company, a leading wealth management and private equity firm with client assets of more than $66 billion. Dr. Johnson follows the ophthalmic industry, among other health categories, writing about eye care stocks and the industry's performance from an investment perspective. 

During his talk, he shared an interesting assessment.  According to Dr. Johnson, the dental industry..and by extension the ophthalmic industry...appears to trough six months following the low-point in unemployment.

So, based on his assessment, with unemployment still climbing and likely not to peak until later this year, it's reasonable to plan that the current growth that most of our clients are experiencing will deteriorate in early 2010.  What Dr. Johnson is saying is that the impact of this recession is delayed for most of our industry.

I'm not sharing this to be a gloom and doomer.  No, for me, this spells opportunity.  What are you doing to be prepared?  Many of our clients have maintained an assertive and diligent practice-building stance for the past year as we've entered the downturn.  And many are seeing growth way in excess of 10%.  This growth appears largely fueled by managed care, as employees at risk of losing their jobs use up their benefits.  This phenomena may lull you into a false sense of security.

What you can't do is let up as the economy improves...because, according to Dr. Johnson, the impact of the recession will be delayed.  That's the bad news.  He also stated that health care is usually the last to be impacted in a recession and the first to recover.  That's good news!

What are you doing to take advantage of the opportunities? 

Happy Hannah and The Power of Facebook

As is typical for me, I was on a flight yesterday; this one from Dallas to Washington.  As I got off the plane, I noticed an Ipod in the seatpocket, obviously left by a passenger landing at DFW sometime that day.  Luckily, there was a name engraved on the Ipod...we'll call the owner Hannah O'Reilly.  Remembering the time when a young lady drove all the way across Manhattan to return the cellphone that I'd left in a taxi, I wanted to do what was right.  Somehow, I had to get Hannah her Iphone.  I was on a mission.

I had a choice.  I could give the Ipod to the flight attendant and hope that it would somehow find its way to Hannah.  Tapping my cynical side and remembering my experiences with airlines in doing anything that's outside their systems, I felt I had a better chance of success by handling the situation myself.  Hmmm, what to do?

Enter Facebook, the social networking phenomena that has caught the attention of 175 million subscribers in just 5 years (and 145 million of those in less than two years)...including yours truly.  I figured that with such an unusual name, there couldn't be more then a few dozen Hannah O'Reilly's on Facebook.  I was right.  

So, I jumped on Facebook last evening and pumped out messages to Hannah O'Reilly's

"If you are the Hannah O'Reilly that lost your Ipod on an airplane recently, please contact the undersigned with flight number, seat number and description and I'll return it."

What was interesting was that Facebook blocked me from sending the solicitation after about the 7th attempt...good security.  But my message got through and I just now received a response from Hannah...and just mailed her Ipod to her.

Consider the implications.  With virtually no effort and only a single name and some information like knowing that the individual flew into Dallas, I was able to connect with one of the 180+million people who own an Ipod.  I found the Ipod at about 8pm on Sunday in Washington, DC and had it on its way to Dallas to its rightful owner by 10am on Tuesday.  WOW!

What are the implications of this phenomena called Facebook? 

An Rx for Insurance Costs

Why has the cost of health care risen so dramatically in our country?  Why is it that our health care system is ranked only 37^th in the world (just above Slovenia and below Costa Rica)?  Why is it that our heath care costs are the highest in the world?  It’s this author’s opinion that our performance as a society is the result of a combination of employer-based insurance combined with a treatment-oriented payment system.  As a result, we’ve removed healthcare decisions from the very people who use the service. 

 

Well, I’m not one to wait for the government to accomplish anything.  So, a few years ago, we set out to take a stab at reducing our healthcare costs).  And we’ve succeeded!  Since 2006, we’ve reduced our firm’s per employee health insurance bill by 41%.  Yep…a 41% decline during a period when health care costs have increased by about 20%.  Oh, and while we were at it, we took about $3000 per employee from the good hands of “allstate” (read “the insurance company”) and gave it directly to our employees.   And we accomplished this daunting task without any impact on quality of care or access (indeed, our team has more access than under the previous plan).

 

How?  By doing what we need to do as a country.  By placing health care decisions directly in the hands of the system’s users.   We simply implemented a Health Savings Account (HSA) system.

 

An HSA changes the dynamic from “big brother pays the bill” to “the cost comes out of my wallet.”  That’s a not-so-subtle and very impactful change.

 

 If you’re not familiar, here’s how an HSA works:

 

·         The Company adopts an HSA plan, which is basically a high deductable insurance policy combined with a pre-tax savings account.

·         The plans generally start with a $2000 deductable (single) and go up to $5000. 

·         Employees are encouraged to deposit funds (pre-tax) into their HSA account to cover their deductable and can do so up to a pre-determined limit.

·         Employees then pay their health costs, up to the amount of their deductable, directly out of their own account.

 

Now, in our case, back in 2006, we were paying $4334 to cover 100% of primary insurance.  We provided no spousal or family coverage, although employees had access to it.  With 23 employees, that’s almost $100k a year for insurance.  Ouch! 

 

But my problem with typical insurance is that it generally provides “first dollar coverage.”  In other words, excluding small co-pay, typically 100% of the bill is covered by the plan.  “Great,” say the employees.  “Ouch” say the employers.  The reality is that typical insurance isn’t covering the risk associated with medical care…the vast majority of payments are for “first dollar coverage.”  Said another way, in our particular case, we saw $100k going out the door to an insurance company and less than $10k a year in aggregate medical costs (we’ve a pretty young population) being actually paid to medical providers.  The excess dollars went to fund the expenses of less healthy populations and the profits of the insurance company.

 

We wanted our employees to take more responsibility for their own health and to drive down the cost of insurance.  This was important to the employees, too, as they have a profit-sharing plan.  It’s amazing what happens when you provide incentives.  Here’s what we did:

 

a)      We began a process of reducing our premium coverage from 100% to 75% over a five year period with the first year providing 100% coverage (so the employees could get used to the system).

b)      We initially adopted a $2000 deductable HSA, which caused our insurance premium to drop from $4334 to $2700 for a gross savings of $1664.  

c)       We took much of the savings and gave it directly to the employees as a deposit to their HSA account ($1000).  We saved $664 a head.

 

The result of our initial pass at this was very positive.  Most employees didn’t use up their deductable because they saw the $1000 sitting in their account and spent it carefully…it is, after all, their money. 

 

So happy was everyone with the result, the following year we upped our deductable to $5000.  The result was that our insurance costs dropped like a rock to $1339.  The employee, in keeping with our plan to reduce coverage, sprung for an additional $149 (for the whole year) for their portion, making the total insurance bill $1488 as compared to the $4334 we started with…for a premium savings of 38%...taken right out of the mouths of the insurance giants.   In turn, we deposited $1200 directly into the employee’s HSA account.  Now, a $5000 deductable can be a bit scary to employees.  So here’s how we mitigated the employee’s risk:

 

a)      First $1200 of deductable covered by employer ($$$ directly deposited in employee’s personal HSA Account)

b)      Next $1200 of deductable covered by employee ($$$ deposited at employee’s option)

c)       Any cost in excess of $2400 up to the $5000 deductable is covered by us. 

 

Our calculation was that the risk associated with self-insuring the excess deductable over $2400 was the equivalent of paying $10,000 for a $50,000 risk…very expensive.  It was a risk we were willing to take.  Over time, we will increase our deposit to the employee’s HSA to $1500 and eliminate the excess coverage; allowing the employee time to build up their HSA account.

 

The result is a win-win.  We’ve saved a fortune in insurance costs and many of our employees have, by now, saved enough to cover their $5000 deductable.  They look at their savings account balances with the clear understanding that it’s THEIR money.   And they spend it accordingly. 

 

While I can’t hope to change the healthcare system, I can take action to change its impact on my firm and our team.  For additional information about HSA’s, contact your insurance broker.  Cleinman Performance Network members will find a whitepaper on the subject on your Resources website.

 

 

Wal-Mart Slashes Prices on Contacts and Children's Eyewear

This from Vision Monday:

Wal-Mart Launches New Programs to Boost Value for Contact Lenses and Children’s Eyewear

BENTONVILLE, Ark.—Wal-Mart Stores (NYSE: WMT) took a bold step today in putting its vision business into the spotlight by announcing the launch of new, nationwide programs which slash prices on contact lenses and children’s eyeglasses and simplify the purchasing process.

The mass merchandise giant said its new program with 1-800 Contacts will save customers as much as 12 percent to 50 percent on the costs of a yearly supply of contact lenses. Additionally, Walmart is offering frame-and-lens packages for children age 18 or under for as low as $39.

At a press conference with national media this morning, Walmart executives touted the move as a further step in the company’s efforts to “provide greater value, more convenience and better healthcare for consumers.”

“Working with our suppliers and 1-800 Contacts, we have found a way to help our contact lens customers spend less and save more,” said Dr. John Agwunobi, senior vice president and president of Walmart’s Health and Wellness division. “By offering greater accessibility and affordability, we believe the customer savings could reach $400 million during the first three years of this alliance.”

Agwunobi said the roll-out of the contact lens program follows a successful pilot program which involved about 1,000 Walmart Vision Centers. The program, along with the youth eyewear offering, will be available in 1,500 stores by the end of the month and will be expanded to 3,000 locations.

Walmart and 1-800 Contacts estimate that customers "have already saved more than $25 million since it began rolling out the program nationwide in January.”

“At a time when every penny counts, contact lens wearers want to save money and get brand name contact lenses conveniently,” said Jonathan Coon, chief executive officer at 1-800 Contacts. “We are proud to be working with Walmart. Together, we have eliminated the hassle of mail-in rebates and replaced them with instant savings at the register. Our alliance improves access and lowers costs –enabling contact lens wearers to replace their lenses more frequently and live healthier lives.”

The new program, the outgrowth of an alliance originally announced by the two companies last year, enables Walmart customers to purchase their contact lenses either at Wal-Mart stores, through the Web or by phone. 1-800 Contacts is providing order fulfillment and customer support.

Jeff McAllister, Walmart’s senior vice president for health and wellness, said that customers who participate in the contact lens program will be examined by independent eyecare practitioners affiliated with Walmart.

McAllister noted that the program is designed so that consumers buy the appropriate amount of contact lenses instead of “stretching” the wearing period of the lenses beyond what is recommended by the manufacturer. He added that customers will be able to purchase multiple boxes of contact lenses and an annual supply. The program includes popular brands such as Johnson & Johnson Vision Care’s Acuvue Oasys, with prices ranging from $19 to $29 per box, McAllister said.

In the youth eyewear program, designed to “help families during tough economic times," Walmart Vision Center customers can choose among 18 different frame styles and colors for $10. Executives did not detail which frames or brands would be included in the $10 program. Three different single-vision, scratch-resistant polycarbonate lens options are being offered, starting at $29 and ranging to $49 with Platinum anti-reflective, smudge resistant coating and $79 for Transitions photochromic lenses with Platinum coating. Walmart will provide a one-year guaranteed free replacement if the glasses are damaged.

In addition to the special $10 offering youth frames, Walmart cited other popular frame brands that are available at its everyday low prices. The brands mentioned include Baby Phat, Phat Farm, Body Glove, Nickelodeon, Hanna Montana, Turbo Flex, Umbro and Oscar de la Renta. This summer, Walmart will add the Daisy Fuentes brand frames to the mix, its announcement said.

Said Agwunobi. “This offering draws directly from our commitment to help families save money so they can live better.”

Ophthalmic Medical Technicians - New Classification

This just published by Ophthalmology Times is important information for those of you who recognize people as your most critical asset and invest in your team's career development...which should be everyone.

___________________

St. Paul, MN—The Joint Commission on Allied Health Personnel in Ophthalmology (JCAHPO) announced in a prepared statement that it has received approval for a separate occupational classification, ophthalmic medical technician, from the U.S. Bureau of Labor's 2010 Standard Occupational Classification (SOC) committee.

"This is a historic milestone for the ophthalmic allied health profession," said JCAHPO President William F. Astle, MD, FRCS(C). "Ophthalmic medical technicians are important in the eye-care team as ophthalmology becomes more technologically oriented and confronts the challenges of an aging patient population. This is a significant measure of how much this profession has evolved into its own, and [it is] an empowering validation of this occupation's professional merit."

Federal statistical agencies use the 2010 SOC system to classify workers into occupational categories to collect, calculate, and disseminate data, according to the statement. For an occupation to be included in the system, it must meet a required set of uniquely identifiable skills.

Every 10 years, the occupational listings undergo an extensive review; ophthalmic medical technicians, classified as other health-care support occupations (medical assistant) in 2000, are now classified under the major category of health technologists and technicians. The SOC listing encompasses all three levels of JCAHPO certification: certified ophthalmic assistant, certified ophthalmic technician, and certified ophthalmic medical technologist, the organization said.

The JCAHPO also announced in a separate statement that employment of ophthalmic assistants and technicians remains one of the leading areas for job growth.

Data from the U.S. Department of Labor indicate medical assistants and technicians in fields such as ophthalmology rank third on the list of the 30 fastest-growing occupations in the United States. A 36% increase in employment opportunities until 2016 also is expected, according to the statement, and this growth will result in more than 150,000 new medical assistant jobs in the United States.

"In this period of economic uncertainty, it is critical that ophthalmic organizations take aggressive strides to ensure that the existing ophthalmic personnel shortage gains exposure," said Dr. Astle, who also is Diplomate, American Board of Orthodontics. "We see these statistics as an opportunity to address several problems currently facing the eye-care industry."

The number of adults aged 65 years or more is estimated to reach upward of 70 million by 2030. The result is that jobs for ophthalmic personnel will remain in high demand for the next several decades, the JCAHPO said.

Recession = Opportunity

Certainly, there's a recessionn going on.  But my perspective is that this recession, like all before it, spells "opportunity."  And you're reading about that opportunity almost daily as major and minor companies alike go through downsizing.  In the face of all this bad news, it's my belief that many companies use this backdrop to take actions that they might think twice about during growth periods.  

What do I mean.  If Corporation X announces that they're trimming staff by 10% during non-recession times, it will be front-page news and have many negative repercussions.  During recessionary times, the news hardly makes the paper. Thus, it's this author's belief that alot of our current downsizing is opportunistic vs. necessary.

Which brings up some interesting points.  According to the Bureau of Labor Statistics, at the end of October, 2008, there were 33 people looking for work for every 10 openings in the U.S.  Contrast that to the data at the beginning of 2008, which was 19 job seekers for every 10 positions.  Certainly, the number is now likely approaching 4 to 1.  

That means that you should have some good opportunity to readjust your staff if necessary.  Certainly,it's my belief that this should rarely be the case if you're hiring right.  If you've done your homework, the only people on your team should be top performers.  But let's assume that you've one or two staff members that aren't performing as they should.  Are they in the right job?  Are they with the right firm?  Now's the time to make that decision.

But what of those employees who are only biding their time until something better opens up outside of your firm?  As reported in INC. Magazine, Zappos.com takes an interesting tack.  During the first month of training with Zappos, new employees are offered $2000 to quit.  Yep, I said to QUIT!  Why?  Zappos recognizes that training a new employee is expensive.  They want people on their team who want to be there and who are passionate about customer service and the culture of the firm.  Those that are not generally leave after six or nine months and, by that point,Zappos has invesed far more then $2000 in their training.  Further, they recognize that employees who don't share their culture breed negativity.  

So, ask yourself this question:  Who on my team would leave if I offered $2000 for them to quit?  If you come up with some names, perhaps it's time for you to take action? 

Managed Care Math

Here's an interesting depiction that might explain the ongoing struggle over profit margins in the managed care environment.  Perhaps, what ECPs are faced with, is a misunderstanding over basic math.

Download Managed Care Math

America's Economic Problem is Simply Explained

There's much that's been written to explain our current crisis and it's root cause.  While the pundits dialogue about derivitives and sub-prime mortgages; and Washington wrestles over whether our grandchildren need a $1trillion...$2trillion...or $3trillion haircut (plus interest), I think I've figured out what's caused our problems.

It's really pretty simple. 

Ever wonder why your bank sends you books of checks with 30 checks and only 3 deposit slips?