Episode 10 | Keeping your veterinary practice independent through Employee Ownership

author

Jack Peploe
Veterinary IT Expert
July 13, 2021

Topics

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In this week’s episode

  • Only a handful of veterinary practices in the UK have made the leap into employee ownership, one of these is Pennard Vets, a practice in Kent with over 90 employees across six sites. But what inspired this change and how did they make it happen? 
  • This week welcoming back Matthew Flann from Pennard Vets who will be talking to us about turning his practice into an Employee Owned Trust.
  • Plus on the show this week, Jack talks about procrastination and his top tip to get things done… the Zeigarnik effect!

Show Notes

  • Out every other week on your favourite podcast platform.
  • Presented by Jack Peploe: Veterinary IT Expert, Certified Ethical Hacker and dog Dad to the adorable Puffin.
  • Jack introduced the Zeigarnik effect and how it helps him tackle his procrastinatioin problem! 
  • Jack’s special guest was Pennard Vets' Matthew Flann who spoke to us about turning his practice into an Employee Owned Trust.
  • Many thanks to Silvia Janska, founder and CEO of Flexee for recommending our book of the week "Outliers" by Malcolm Gladwell.
  • In our next episode Jack will be welcoming VidiVet's Ben Sweeney, veterinary Entrepreneur who will be talking to us about using digital services to improve patient care.
  • Please send any questions, ideally in audio-form (or any other feedback) to jack@veterinaryit.services.

Transcription

Jack Peploe:

Coming up on Modern Veterinary Practice...

Matthew Flann:

The traditional routes of succession weren't really viable anymore. We really wanted to remain independent. We wanted to leave a sustainable business. And the thing employee ownership lends itself to a sustainable business structure.

Jack Peploe:

Welcome to Modern Veterinary Practice. I'm your host and veterinary IT expert, Jack Peploe. In this week's episode, I'll be welcoming back the wonderful Matthew Flann from Pennard Vets to talk about their incredible decision to become an employee owned trust. I'll also talk about procrastination and my top tip to get things done, the Zeigarnik effect.

Question for you, do you procrastinate? Perhaps you can get back to me on that one. Yeah, okay. That's kind of a dad joke, isn't it? But we all procrastinate, all of us, and yet procrastination, it's the killer of productivity and we have so many readily available distractions for us right now and it's really easy to give into those. It's really easy to just go in and check your email or just have a quick look at Facebook, or maybe for you it's allowing the distractions from your team members.

When you try to do something important and something that will actually build the practice working on the business that's when we're most at risk of procrastination. Because it's when we're doing the jobs that push us out of our comfort zone, when we're doing something that we're not necessarily good at, which you could argue the vast majority of business growth activities you're not good at because you just don't do them regularly enough. And certainly I find myself, when I'm doing brand new things that grow my business that I've not done before, I'm either really excited and super engaged with it or I find myself procrastinating and just checking my email and just finding every other little thing that I can do. But procrastination is actually quite easy to beat. The secret to avoiding procrastination is so simple you'll just not believe it. All you need to do is just get started on a task.

You see, once you've started a task you're dramatically more likely to complete it because it's going to be at the front of the mind. It will nag at you and your brain loves completed tasks. It loves completed tasks and it hates uncompleted tasks. So by getting started on a task, what we're doing is leveraging something known as the Zeigarnik effect, which is named after a Soviet psychologist called Bluma Zeigarnik. She noticed that waiters who had taken orders but not yet fulfilled the orders were more likely to remember what the orders were. And then the second that they had actually completed the order they're more likely to forget it. Essentially, you can put it like this. You're twice as likely to remember a task that's been started and interrupted than one that you've completed. So it's like our brain is carrying this constant tally of things that we have started but haven't yet finished. Do you know what I mean by tally? It's the unfinished tasks. They really do hang over us.

So this is how you avoid procrastination. You get started. In fact, if you can find the time of day where you are most likely to get started on something, for me, it's early in the morning. I find it really easy to start new projects early on when I'm fresh and raring to go. Whereas afternoons and evenings, there's just no point. So when is the time for you? Maybe you're more like that in the afternoons or the evenings. Maybe you're a night owl and you find it easier to start new projects at night. Whatever it is that you've got to do, that big thing that's going to make a real difference to your business, all you've got to do is get started. The Zeigarnik effect will help your brain to nag you enough that once you've started it, you'll want to see it through to completion.

Voiceover Artist:

The interview.

Matthew Flann:

Hello. So my name is Matthew Flann. I am the managing director of Pennard Vets. We are a six site, independent practice. We have a hundred strong team plus an emergency service and a cattery and we have recently become employee owned.

Jack Peploe:

Hi there, Matt. Really great to have you on the show again. Welcome back to the podcast. How have you been?

Matthew Flann:

I've been fantastic. Thank you very much. It's been a very exciting period of time since I last spoke to you.

Jack Peploe:

I bet. So on that, on our last episode we obviously focused on how you've adopted consultation inclusive health plans, which was obviously a bold move for Pennard Vets. However, I believe also at the time of the recording, Pennard Vets had also made another major move in becoming obviously an employee owned trust. Now, correct me if I'm wrong, but your inbox must have been flooded with questions around that move.

Matthew Flann:

It has been. I've spoken to lots of practices and other business owners since then from within industry and outside of the industry as well. It seems to have created a little bit of a stir and it's very interesting and I'm so pleased that it has inspired some other people who are asking these questions.

Jack Peploe:

Well, we said we were going to get you back on and we have, so I'm really pleased to have you here again. Now, obviously this is a massive topic. For those of us who don't understand the specifics, would you mind sharing the types of employee ownership as well as what specifically is needed to structure one?

Matthew Flann:

Okay. So there's three types of employee ownership, as far as I understand. You can have direct employee ownership, which is where the employees directly own shares, or there's indirect employee ownership where the shares are held on behalf of the employees, typically in a trust. And that's what we've done. And the trust structure is called an employee owned trust. And the third type is a mixture of both, to be honest with you. So there's the three types, but the most common type, as far as I understand, is the EOT structure.

Jack Peploe:

And is that specifically within the veterinary world or is that just in general? It's-

Matthew Flann:

Yeah, that's in general, there's some specific legislation which enabled this in 2012 under the coalition government. And effectively, my understanding is that the government commissioned research into employee ownership and the outcome of that was that employee owned businesses tend to add a lot to the economy. They are very successful at being profitable. They tend to be more profitable than normal businesses. It's better for the community, better for society and the government wanted to encourage it so they put it into legislation to make it easier to do and to encourage business owners to transition their businesses into an employee owned structure.

Jack Peploe:

That's cool. So within the industry, there must only have been a handful of practices that have adopted the employee ownership route. What was the drive around Pennard Vets becoming employee owned?

Matthew Flann:

Yeah, you're absolutely right. There are a few other practices that are employee owned and they transitioned, as far as I understand, soon after legislation became available. From our point of view, unfortunately, I hadn't heard of them. I wasn't aware of them, unfortunately. And our driver, if you like, was that we wanted to look at other options for succession or for exit or the long-term prospects of the business, if you like. So the traditional routes of succession weren't really viable anymore. We really wanted to remain independent. We wanted to leave a sustainable business and I think employee ownership lends itself to a sustainable business structure. It's a nice legacy to leave. And it enables us to look after our work family. At the end of the day, I know it's a bit of a cliche, but we've all grown up with our teams.

I've been here for 22 years now. And my other two co-owners, if you like, or previous co-owners, now we've got a hundred co-owners, Andy and Caroline were in school uniform when they first started with Pennard's as work experience. So all three of us have literally grown up with the business, and so that was good. And the last thing is, the other driver for us really was that in this situation we get to carry on the rest of our careers working in a place that we absolutely love and we know it is in safe hands.

Jack Peploe:

Yeah. No, a hundred percent. It all makes sense. So how has your employee family taken the news to becoming employee owned?

Matthew Flann:

To be honest with you, the immediate reaction was they were really delighted that their future is certain. We have quite a few colleagues who have joined us from other practices after the ownership had changed in them and they found themselves working with us. And they had always been anxious given our kind of size and location and everything else that they were fearful that we would go down a route to sell to a third party. And this was a concern for a few of them actually, or for quite a few people. We had been asked this a lot. So the immediate response was, "Thank goodness the practice isn't changing." In terms of the employee ownership element and all, that's going to take time, I think, to really settle in and it is early days. We haven't so far had a payout yet to the team. It's going to hopefully happen sooner than later. And it will be great when that happens. That said, though, the benefits really aren't about money. The benefits are about the psychological safety, the engagement, the literal ownership or responsibility, if you like-

Jack Peploe:

Well, they're a part of something which is amazing.

Matthew Flann:

Yeah. So yeah, so we'll have to see how it all goes.

Jack Peploe:

Yeah, that's cool. So other than the benefits to the practice and the team, are there any other areas that benefit from the practice becoming employee owned? You mentioned a couple with regards to the environment and things. Is there anything else?

Matthew Flann:

Yeah, from our point of view it's really good for the local community. I know clients have become increasingly aware of the ownership of their practices, and that's been making some headlines in the last week or so, hasn't it?

Jack Peploe:

Yeah.

Matthew Flann:

And so I think many of our clients been reassured by the action we’ve taken and that's great. The other thing is on a community aspect, the money that is generated, the profit that is generated, is returned to the community. The money that is spent with us is then spent locally and it goes directly back to the community where it came from. And I think that is a good bonus. In terms of the environment, and we talk about business sustainability, in terms of environmental sustainability, there is some lovely ideas out there or information, if you like, that employee owned businesses are much more likely to have and to follow through on environmental goals, sustainable environmental goals. And because at the end of the day, the employees own the business and they're responsible for the business's own footprint, if that makes sense. Because they have this really direct relationship with the business itself, employee owned businesses are more likely to have a much more positive impact environmentally, which [inaudible 00:11:15] seen already, in all honesty, which is super interesting and really to good to see.

Jack Peploe:

Yeah. No, cool. So I know I've said this before, but becoming employee owned is quite a feat. Where did you go for your support?

Matthew Flann:

Yeah, this is good actually in a way because we obviously had these ideas that we wanted to look for an alternative succession model. We wanted to look for alternative ownership or a different route, if you like, to sell to a third party. And we looked around, we obviously looked around outside the profession and we saw John Lewis. Obviously, everybody knows John Lewis. It's the bastion of employee ownership in this country. So it's quite interesting. We quite liked that idea. We also took some inspiration from other things as well. There's a book called Maverick by Ricardo Semler and I know it's a bit of an old classic. I think it was written in the eighties, but that is quite interesting and then that was good. So we kind of liked those kind of ideas.

So we started asking around the usual sources, if you like, where one would ask a typical business owner, your typical advisors and we didn't really get a lot of information back. And there was musings that it wasn't really possible or it wouldn't be fair and all these other things. But we knew it existed, right? So we ended up taking some inspiration from a few of our clients and we went to Google and we literally Googled "Employee ownership in the UK." And we came across a wonderful organization called the Employee Ownership Association, the EOA. And this is a national body across all industries and it represents employee ownership. And more importantly, it speaks to government about employee ownership as well. So they have a conference. I think without pretty much thinking about it, we just booked onto it to find out some more information.

So we went along there incognito and we sat at the back of lectures and we talked to other business owners who had sold into employee ownership trust and we talked to the advisors that were there actually as well and we got more information. And actually we liked what we saw. We liked what we heard and it felt really comfortable and we learned some more information about it, basically. So that was great. The only thing, at that time, that we hadn't really met an advisor we felt comfortable working with. There were some lovely, lovely people in the EOA world who were very helpful and we were very grateful to them, but it wasn't until, by coincidence, completely randomly, we met somebody who I think their first words to us once they found out we were vets was, "Do you know what? Veterinary surgeons or veterinary practices would make a great model for an employer owned business." And it was like, "That's interesting. You're thinking the same thing as well." And about six months later, we engaged with them a little bit more and that helped in our journey.

Jack Peploe:

That's cool. So obviously in the process, I can imagine that you've come across some hurdles and challenges along the way which other vets might be worried about if they're considering doing something similar. Would you mind sharing some of these and how you overcame them for our listeners?

Matthew Flann:

Of course. Yeah, I think the main issue was we just hadn't about the other practices that were employee owned and had I heard about them I would probably be more likely to have cut out all that work in the middle and gone straight to the source, if you like. So the main issue we faced was the lack of knowledge in the industry. And if there had been an organization to inspire and inform practices about employee ownership then I think that would have been a lot easier. Certainly, now we've spoken to quite a few practices and we can just help them cut to the chase and say, "This is the overview and these different advisors," or, "This is it." So we can punt information in an hour and it's actually not that complicated. But it's just different to what people know about at the moment. So, yeah. That was it.

Jack Peploe:

Cool. No, that's fine. And has much changed in the day-to-day running of the practice? Would you say that there's been a shift in some ways since you became employee owned?

Matthew Flann:

Not really, in all honesty. Not so much at the moment. Something in my mind, a good business is a good business whether they're employee owned or not employee owned. And what makes it a good business is things like transparency, employee engagement and all those types of things. And we were fairly transparent beforehand. We would like to think we've got a fairly engaged team. And certainly if a business was not on a good footing, if the team wasn't very engaged, if there wasn't much value alignment, if there wasn't much transparency or anything like that then I think that would make that journey to employee ownership that much harder, because you've really got to have all of these things as employee owned.

So at the moment, not a huge amount has changed. In terms of transparency and things like that, obviously with COVID many of the businesses have kind of put a filter on that kind of stuff because communication has just not been that easy. But once all the dust settles from COVID, we'll get back to an even higher level of transparency and go from there. So in short, not much has changed at the moment, but I think as time goes by, it's going to get even better.

Jack Peploe:

Yeah. No, I couldn't agree more. And what about the wider veterinary community? I've seen a fair amount of coverage in various publications and blogs. Do you get the sense that you might have started a bit of a revolution?

Matthew Flann:

I'm not sure I would say that, but we have spoken to a lot of practices and I can only hope that we can inspire other businesses to become employee owned. Not only within our industry, but I have been talking to people from outside the industry that have come across our news, which is fabulous. But it just feels right that employee ownership fits well within our profession. I think it just resonates with a lot of our values. People going to vet school have other options in life and they've become vets for a reason. It's the same with nurses. Nurses can go and earn much better money elsewhere doing other things with their acumen, if you like. So the vet team choose this industry for very specific reasons and I think employee ownership dovetails very nicely with that. So, yeah. So we will have to wait and see. Hopefully, there will be more employee owned veterinary businesses before too long.

Jack Peploe:

Yeah. No, I couldn't agree more. Ultimately, from what I can understand, I think it's going to provide a different dynamic with regards to employee progression, which is something that I think the corporates are going to struggle with, because obviously there's always that limit. And I think this is where it's going to be really interesting. So I am really, really intrigued.

Matthew Flann:

And actually, sorry to interrupt.

Jack Peploe:

Go ahead.

Matthew Flann:

It's not one of the reasons why we did it, but obviously we did think about it is that we have an inbuilt sustainable succession model, if that makes sense. So in the past, the leadership succession was really dependent upon if you were going to buy into the practice and do that. Whereas now, people who would have not been able to buy in but who are good leaders can actually step up and take their leadership roles within the team, which I think is fabulous. And so it does lead to sustainability with leadership as well and provide other pathways. Not only for vets but for nurses and nonclinical colleagues and the one vet team gets to have it's say at the leadership level.

Jack Peploe:

No, I think it's awesome. Do you have any advice for our listeners who have heard you talk about becoming employee owned and are thinking about following your footsteps?

Matthew Flann:

Yeah, so the one thing I would say is, if possible, don't wait and act now. So I as somebody who likes to think about things and procrastinate about things, just actually take some action straight away. It will take you two minutes to write an email. Just do it now. From an employee ownership point of view, also the earlier one does this in one's career I think the better it will be because you'll be around longer to enjoy it, if that makes sense. And this isn't necessarily an exit plan. This is actually a strategic move to ensure your business's long-term survival. So the sooner you do that, the better.

In terms of reaching out, just to just reach out and speak to us. We have a lot of information that we can impart and give away and we can save people a lot of time and effort. We've done all that hard work already. We were told no several times, and we didn't listen to people. We just found out more information. So we have that and we're more than happy to help other people. So there's a couple of ways. You can just email me directly or you can connect with me on LinkedIn. Or to make it even easier, very shortly we'll be launching a not-for-profit organization which will hopefully inspire people. So we're going to launch the British Veterinary Employee Ownership Association, which is a bit of a mouthful. But we've shortened it to the BVEOA and the purpose of this organization is literally just that, to inspire and inform on all matters employee owned in the profession.

And it's got four founding members at the moment. If you don't reach out to us at Pennard's directly or to me personally, then you can reach out to the BVEOA. So leave your details on the website and we'll get back to you shortly.

Jack Peploe:

Awesome. Can you tell me what the website address is?

Matthew Flann:

It is bveoa.com.

Jack Peploe:

Cool. Awesome. Well, Matt, thank you so much again for coming on the podcast. As always, it's really, really great speaking to you. Yeah, it's a really interesting story and I'm really keen to keep in touch and see how you guys get on with your journey, because you always seem to be pushing the boundaries and it's fantastic to see it.

Matthew Flann:

Thank you. Thank you, Jack. And it's lovely to speak to you. It's always very enjoyable and pleasurable doing so. And thank you.

Voiceover Artist:

Recommended Reading.

Jack Peploe:

Every week we ask veterinary professionals and experts to suggest a best business book for our listeners. This week's recommendation is from Flexee's Silvia Janska.

Silvia Janska:

Probably one of the most influential, and I read this ages go, but it was Malcolm Gladwell's book, Outliers. I'm not sure I can tell you exactly why, because it just left a mark. I guess it kind of gave me the confidence that it's okay not to fit in with the status quo, because although I'm a vet and I sort of label myself as that I do have a lot of ideas that are outside of the box and are not always met with enthusiasm to start off with. And yeah, I think this book just kind of said, "Do you know what? That's absolutely fine. And do what makes you happy. And if you're a happy person, then you will make the world a better place in some way."

Jack Peploe:

Coming up next week, we welcome Ben Sweeney, a vet entrepreneur, to the Modern Veterinary Practice Podcast to talk to us about the pros and cons of digital veterinary services.

Ben Sweeney:

All of these factors that contribute to the fact that the pressure is on the day-to-day team, coupled with expectations of pet owners, pet parents, pet guardians, however you choose to identify them nowadays, and that is their expectations have changed. And actually that expectation has changed, ironically enough, because of the improvements in the level of care that we're offering.

Jack Peploe:

That's it for this episode. All links and recommendations we talked about are in the show notes. Don't forget to subscribe and share the podcast if you found it useful. In the meantime, thanks for listening and see you next time.