The right staff for your pharmacy can make or break your business and having the right people for the job is important. We know for many independent pharmacy owners that there have been many challenges in finding high quality staff for their pharmacy.
The truth of the matter is that having the right people working for you can increase the efficiency and profitability of your pharmacy. You are setting your pharmacy up for success and making it easier to sell with higher profit margins, making reaching your target retirement goals achievable.
Staffing Decisions are Tough.
We all know that making the right decisions for your business can be challenging, especially when it comes to finding and managing the right people for the job.
Are You Using the Eye Test?
The eye test is the best way to mark if you run an efficient pharmacy with a dependable staff. If you have never heard of the eye test, simply stand in a spot that gives you an overview of the pharmacy and begin to observe what is happening in each area.
Questions to ask yourself when evaluating how efficient your staff is in the day-to-day workflow.
- Is your pharmacist doing the jobs of technicians and assistants?
- Do you have too many front store workers? Can you justify the cost?
- What other inefficiencies do you see that are impacting your bottom line?
- Finally, are you employees engaging with customers, or staring at their phones?
If you answered yes to any of these questions, then you might be spending too much on wages, have a highly paid pharmacist doing the work of employees that should be doing it at a lower cost, and have front store registers that have very little revenue to show for all the person-power. This means all of this is chewing away at your bottom line.
Do You Set Benchmarks for Your Pharmacy?
How do you know for sure whether you are spending too much on staffing?
Simple answer: measure and benchmark.
For the dispensary, one common metric we use is wages as a percentage of gross margin (WPGM). WPGM can be calculated by dividing your total wage cost by your gross margin. Industry-wide, the average WPGM is 45%.
Another good metric to benchmark is prescriptions filled per labour hour. To calculate this, you add up the total prescriptions filled (you can do this by month, or for the full year) then divide this by the number of hours worked by all dispensary staff. An average dispensary should fill about six prescriptions per the total of pharmacist, technician, and assistant hours worked.
It is important to note, however, that averages are not necessarily benchmarks.
Your pharmacy’s location, adoption of automation, prescription volumes and local labour force pressures, among other factors, can mean higher or lower than average wage costs and efficiencies. Furthermore, sometimes changes are not totally within your zone of control. So, it is recommended to work with an experienced advisor who can help you produce relevant industry comparators to develop achievable, realistic efficiency metrics.
Address Staffing Issues Sooner than Later.
Many pharmacy-owners put off the tough discussions with their staff and this is understandable especially when you are working in the trenches with them on a day-to-day basis.
But as a pharmacy owner, you must be realistic. If you are spending too much on wages, it will undermine your pharmacy’s profitability and long-term health.
If this is the case, you jeopardize your business and your employees’ jobs. The solution is to right-size your pharmacy staff without layoffs. If you create enough time, the natural attrition of people will allow you to reduce hours or combine roles.
Implement a Staffing Program that Works for You
Now is the time to implement right-staffing solutions that work for your business. The longer you wait, the more drastic measures you may have to take down the road, like laying off staff or drastically cutting hours. Your end goal should always be to maximize your business’s market value by getting the right staff working efficiently and in the right role leading to more satisfied customers.