Why Smart Employees Underperform: 7 Hazards to Avoid

Human Resources, Managing Others

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Really intelligent employees who consistently underperform can leave us scratching our heads.  Here are 7 potential issues to look at to discover what the underlying problems might be. It’s the first step to make your diagnosis.

  1. Inadequate Capability

Capability refers to the skills, tools, and experience that a person needs in order to successfully perform their job. When any of these factors are missing, there is an increased chance that the employee will underperform.

It isn’t uncommon for hiring managers to overlook these basic factors, especially if a candidate has previous experience, solid academic credentials and comes across as intelligent and confident in a job interview. Furthermore, it’s no secret that most candidates exaggerate their abilities on their résumés and job applications.

Diagnostics that help you identify if an underperforming employee has adequate capability:

  • Skills – Do you know what skills are needed to perform the job and whether the employee possesses those skills? If they don’t possess the necessary skills, how will you help them acquire the skills, and how long do you expect that process to take? Skills training takes time and money, and results are never guaranteed unless there is adequate commitment from both the practice owner and the employee.
  • Tools – Even if an individual has the skills and experience to do the job, do they have the tools to deliver peak performance?
  • Experience – Just because an employee has the skills to do a job doesn’t mean that they have the experience to apply those skills in a specific position. This is especially true for recent graduates, outside hires from different industries, and internal hires that were tasked in areas not related to the new assignment.
  1. Poor Job Fit

Many people fall into the trap of choosing a profession or job that is a bad fit. We are who we are. Our “mental DNA” is influenced by both our genetics and our early life experiences, and it is almost completely formed by the time we are 20 years old. Rather than trying to understand ourselves so that we can choose a calling that builds on our strengths and aligns with our interests, we choose jobs because of peer pressure and societal influences.

It is important to understand a person’s innate behaviors and interests when trying to match a person with the right job. Know the job, know what type of person is successful in that job, and then hire those who have the behavioral traits that fit that job. This is easier said than done because it is difficult to gauge behaviors in a job interview, but behavioral assessments can be extremely helpful to close this gap and remove a lot of the guesswork.

Behavioural assessments are widely used by the Fortune 500 companies and can be very expensive. However, new technology solutions can bring these tools into the hands of small business owners at a very reasonable cost and be very cost effective when compared to the costs of making a bad job fit hire.

  1. Fuzzy Goals and Accountabilities

Employees need to be very clear about their responsibilities and about the results you expect them to achieve. Daily work and priorities are easily affected by the crisis of the day, new requests, or changes in direction. Setting and tracking smart goals helps your employees focus on what is most important to your business, and clear accountabilities help ensure that the work gets done with minimal conflict.

  1. Poor Relationship with Manager

Managers and employees who understand each other’s preferred styles will better understand how to communicate and work together effectively. We have identified seven factors that strongly predict the compatibility between a manager and their workers: self-assurance, self-reliance, conformity, optimism, decisiveness, objectivity, and approach to learning. Assessing a manager and employees allows them to use objective information about themselves and co-workers so that they can work more effectively toward a common goal.

  1. Poor Relationship with Coworkers

There are four primary factors that harm relationships among coworkers:

  • Insensitivity toward others
  • Unclear accountabilities
  • Poor cultural fit
  • Incompatible styles
  1. Health and Wellness Issues

Approximately $260 billion in output is lost each year in the US because of health-related problems. Whether an employee is absent from work altogether, or present but working at a reduced capacity, employees suffering from physical or mental illness have difficulty performing at their peak.

  1. Physical and Environmental Factors

Numerous behavioral studies have proven that a pleasant and comfortable work environment improves worker productivity and reduces turnover. For example, indoor temperature affects several human responses, including thermal comfort, perceived air quality, sick building syndrome symptoms, and performance at work.

Researchers in Finland showed that when the interior air temperature was 30 degrees C, worker performance was 8.9% below worker performance at the optimal temperature of 22 degrees C.

When an employee you know has the smarts starts to go off the rails of good performance, step back and make your diagnosis. These 7 factors are likely to point toward a root cause.  Only once identified can a corrective action plan be put in place.

JAN G. VAN DER HOOP

Jan is the co-founder and president of Fit First Technologies, a company that applies its predictive analytics to the task of matching people to roles. Those algorithms drive platforms such as TalentSorter, FitFirstJobs and Eyeployment.com, which are relied upon by organizations to screen high volumes of candidates for “fit” in their open positions.

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4 Top Reasons Millennials Might Choose Corporate Optometry

Practice, Resources

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With their degree in hand, there are a number of options available to the newly minted Doctor of Optometry. Corporate optometry is, increasingly, an attractive option and here’s why it is gaining in popularity.

  1. Opportunity for Financial Savings

High student loans are no stranger to recent grads. Life’s goals, such as home ownership and marriage are additional financial burdens that many face. And money in the piggy-bank, particularly immediately after graduation, is simply not there!

Corporate optometry has the benefit of a fixed and regular 40 hours per week paycheque, as well as benefits that can ease life’s financial burden. Regular days off may also provide an opportunity to work other locations and build up savings.

  1. Get out of Debt

When there are loans and monthly bills to pay, debt can easily grow. And interest rates are not guaranteed to be low for ever. Increased interest rates may add additional financial risk.

A new grad can work hard and earn extra money to pay off these debts. Corporate Optometry provides a great opportunity to learn the industry with little to no risk yet still leaves the door open to other options, including building a patient base for the pursuit of independent practice if that is a goal.

  1. Stability and Security

As a new grad, the first thing you may seek is stability; a place to get comfortable and build your career and professional image.

Corporate Opticals aren’t going anywhere any time soon. You can easily asses what the optical is grossing and their track record. It’s hard to lose a job when you’re firmly in place within the optical. Job security is a great help towards stabilizing your goals, providing peace of mind as well as a platform from which to launch your vision for the future.

Corporate optometry is less risky than other options. You have a place to build your confidence, skills and experience. Even if you transfer to a sublease environment, the risk is minimal as your business knowledge expands.

  1. Favoured Employment Model

A recent study found that many millennials prefer employment over self-employment. And while Corporate Optometry opportunities vary by each jurisdiction and there are different corporate optical models, Corporate Optometry positions offer generous salaries and benefits. This is what appeals to young graduates. Many ODs enjoy providing clinical care to patients without the hassle of administration duties.

With the employment and financial security, less risk and a simplified career, it’s not a surprise that Corporate Optometry is a choice increasingly made by young ODs.

MARIA SAMPALIS

is the founder of Corporate Optometry, a peer-to-peer web resource for ODs interested to learn more about opportunities in corporate optometry. Canadian ODs and optometry students can visit www.corporateoptometry.com to learn more.

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Beating the Winter Blues

Human Resources, Managing Others

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January and February are often tough months for many people. After the excitement of the holidays, the reality of a long, dark winter is hard to accept.  It is never more important than now to ensure that your team is feeling engaged and rewarded at work.

The beginning of a new year is a great time to touch base with staff and discuss what their goals are. What things would they like to learn or achieve this year? How can the practice help them achieve their personal career goals? Not every employee has goals so be sure to come to the meeting with some ideas of what might be possible to provide some additional training or responsibility.

Offering the opportunity to build new skills or enhance existing talents with training and professional development is a great way to rejuvenate staff. There’s a bonus in it for you, too, because you’ll end up with more well-rounded staff who are better able to handle a variety of roles.

If you don’t have a system in place already to acknowledge a job well done, there’s no better time to start than the beginning of the year, when many employees struggle with motivation. Reward deserving staffers with sincere, public praise, or offer them something more tangible, such as bonus pay, time off, or tickets to shows and sporting events.

In fact, maybe you want to make it a team outing. Christina and I recently tried out a Salt Cave Spa experience together. It was SO good for us! Lots of laughs and some down time made us much more productive for the rest of the week. It is hard to take time out of our busy schedules, but the reality is this down time often pays off in spades.

Our diet also plays a big part in how we feel. Rather than bringing that box of leftover chocolates from the holidays to the office, try to get your employees back on a healthy track by providing fresh fruit, squeezing juice instead of brewing coffee, or starting up a salad-sharing club.  Getting back on track is much easier when it’s a group effort!

At the same time, promoting physical fitness can be a big help in lifting people’s spirits. Whether it’s lunchtime jogs, weekly yoga sessions, or a simple group stretching routine every morning, getting the blood flowing is a great way to shake your staff out of the doldrums.

We have been working hard to clean our home lately. There is a certain show that has inspired me to pick up everything we own and determine whether or not it sparks joy. It turns out that this is a great time of year to purge! Very little is passing the “spark joy” test. The truth is, things start piling up and you stop noticing them. Just like at home, this is a great time of year to schedule some time for your employees to clear away any accumulated junk, piles of paper, and other distractions from their work space. Make it fun event if you want, with a booby prize for the person who tosses the most in the trash.

Finally, a lack of daylight is one reason that many people struggle with their mood once the holidays are done. The solstice has come and gone, and the days are gradually getting longer again, but it’s still tough to see the sun slip below the horizon so early every evening. Consider investing in a few light therapy lamps and let your staff take turns basking in their bright glow. Sometimes, just the acknowledgement that others are feeling the effects from the shorter days too helps everyone to mentally cope with the long, cold winter.

KELLY HRYCUSKO

is the co-founder and managing partner of Simple Innovative Management Ideas (SIMI) Inc. and expert Practice Management contributor for Optik magazine. She can be reached at info@simiinc.com.

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Six Keys to Making a Partnership Agreement Work

Finance|Wealth, Resources

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Many optometric practices are set up as partnerships. It’s a great way for the business to benefit from multiple owner’s diverse knowledge, skills and resources. With more than one person making decisions and affecting outcomes, however, different aspects of starting and running the business need to be addressed upfront.

When Kelly and I first started out, we took the time to write out our expectations for as many scenarios as we could think of, wrote it out and signed it. We strongly recommend that our clients who are forming a partnership do the same. Create a partnership agreement that details the business ownership and responsibilities today and in the future.

A quick internet search for “partnership agreement templates” can get you something to use as a starting point. You will want to make this agreement as detailed as possible to reduce conflict in the future. Having a lawyer read over your final agreement it is likely the most prudent approach. This document will serve as the road map for your decisions both day to day and years to come – it deserves a significant amount of your time, energy and resources to develop.

There are a number of crucial areas that should be addressed in your agreement.

Contributions
You will want to make it clear, and likely equal, in terms of how much each partner invests financially, at the beginning of the partnership. It is just as important to discuss how purchases will be made in the future. These discussions should include the clear delineation of what each partner will do for and in the practice. Will one take on more of the staff management while the other will take care of the accounting?

Distributions
When you are just starting out, you are happy if your bills are getting paid. But it is also important to define how profits will be divided when the time comes and if and how much of a salary each partner will draw from the practice. You may want to talk about a 3- or 5-year plan as well. How much money will be coming into the practice before you increase your draw? How will you pay for large expenditures? Do you intend to save or use credit?

Ownership
It is hard to imagine ever leaving the practice when you are first starting out but there are a lot of circumstances that should be considered. What if someone gets sick and can’t continue working? What if someone passes away? What if one partner becomes independently wealthy and wants to walk away? One option would be to sell the stake in the practice. What is your position on taking on a new partner? What are the options for buying out the other partner? Who will take on the responsibility of getting the practice valuated? It is also important to sign a non-compete. In the honeymoon phase of a partnership, it is hard to imagine things going south. But in the case of a tough split, it is better to have a written agreement to follow and a non-compete clause to protect the interests of the business.

Decision Making
As both partners get busier and have other stressors come into play, making decisions together will get harder and harder. You need to define how day-to-day management and long-term decisions will be made. Who gets the last say? Identify what types of decisions require a unanimous vote by partners, and what decisions can be made by a single partner. By setting up a decision-making structure that everyone understands and has agreed to, you’ll have the foundation for a more friction-free business.

Dispute Resolution
While everyone hopes to avoid a major falling out, it is important to plan for it so that everyone understands what will happen from the outset. You might agree that if the two parties are at a complete impasse, mediation might be the first step, followed by arbitration.

Critical Developments
Kelly recently had a health scare and was hospitalized. There was no question as to how we would proceed – and that made it easier on everyone. She could look after her health, I kept the ship going in her absence. It wasn’t something we had to talk about at that time because the expectations were already clearly defined from the beginning. Having a partner to share the ups and downs with is a blessing. Setting it up properly right from the beginning allows you to navigate the years of your business together with peace of mind.

 

CHRISTINA FERRARI

is the co-founder and managing partner of Simple Innovative Management Ideas (SIMI) Inc. and expert Practice Management contributor for Optik magazine. She can be reached at info@simiinc.com

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Fearlessly Face Career Challenges in Corporate Optometry – Here’s How

Human Resources, Practice, Resources

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“Young professionals shouldn’t have to let a fear of failure hold them back; they should feel emboldened to take on challenges in creative ways.” – Cathy Englebert, renowned business executive, and CEO of Deloitte.

Successful careers in corporate optometry are forged by taking on challenges, succeeding and sometimes failing, but always learning from mistakes. These hurdles teach you about life, work, our industry and, most importantly, about yourself.  It’s your determination to overcome challenges that define you and shape your success in the future. This is true in optometry as much as it is in other industries.

I’ve compiled some tips to for young optometrists aspiring for successful careers:

Leverage fear into an advantage
Pursuit of a goal outside of your normal comfort zone can be disabling, even paralyzing. However, don’t let that fear define you. Take that fear and use it to your advantage.  A shy comedian can use that trait as part of their routine. A motivational speaker with a fear of public speaking can build confidence through continuous practice and using power poses.

You’re able to apply the same principles if you are anxious about taking the leap from employed OD to self-employment. If you fear that a retailer may turn your sublease location into an employment position, leverage that fear to define a path to your future.

Control your own destiny
Many Corporate ODs tend to rely on the regional manager or optical manger to help with office scheduling, growing the business or adding new services.

Understand that you are the driver of your business and that you cannot rely solely on others to help grow your business. Do not rely on the company to implement programs critical to your success, such as marketing your practice or training the staff about your optometric business. Take it on yourself.

Pursue continuous learning
People in their 60s, or older, can continue to learn, so why not someone who is still in their 20s?  Accountants can master a new software program and marketers can learn new social media skills or graphic design.

You can always use a new fresh day to learn a new skill-set which helps you achieve more success in life.

There is always something new to learn and you can be assured that it will help you in the future. Just because your focus is on patient care doesn’t mean that you shouldn’t be learning the commercial or optical side in corporate optometry. Learn all the administrative tasks and understand how retailers sell eyewear, retain patients, market to potential customers and foster their brand’s strength.

Rise to the challenges
There will always be limitations in your journey that create anxiety and signal you to slow down or take a step back. You’ll will have to work your way around these challenges. If your team is facing a particular challenge, gather your team, communicate clearly, and build trust in each other before you take the next step.

Make the tough choices
At some point in your career you will be faced with a transition decision. This decision point might seem very risky at first but by surrounding yourself with the right people i.e. those who have previously worked in the field you are aiming for, you can make a successful transition.

Success is a long journey but with the right moves and decisions, it will be easier and well worth it. Don’t let fear hold you back.

 

MARIA SAMPALIS

is the founder of Corporate Optometry, a peer-to-peer web resource for ODs interested to learn more about opportunities in corporate optometry. Canadian ODs and optometry students can visit www.corporateoptometry.com to learn more.

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Napkin Valuation

Accounting Basics, Building Wealth, Finance|Wealth, Real Estate, Resources

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A business owner asked me to give him a brief estimate of the value of his business. He had all the financials in front of him and he needed a number for a conference call he was having with his advisor in 20 minutes. I asked if he had the business appraised before. He said no and just needed a rough value so he could do retirement planning.

I cautioned him that it would be very rough and I asked that he never hold me to it and I qualified it as a napkin valuation. The napkin valuation is a term used when a business appraiser sits down with an owner and use a napkin and a pen to make quick notes which results in an estimated value of the business.

The estimate is based on a limited set of criteria. Primarily, for small businesses, the owner reveals last year’s gross income or this year’s projected gross income. A short discussion about expenses and an approximation of a profit margin follows. Then a quick look at the whole industry and finally the appraiser picks a multiple of the earnings.

In this case, the annual sales in the previous fiscal year were about $3,000,000. He readily admitted that expenses were a higher than he had hoped, but he was estimating they would have a profit margin of between 8% and 10% of the revenue this year. Last year, the profit margin was about 11%, but due to some cross-border taxation issues his cost of materials went up this year.

At that point, using five times the normalized earnings, I estimated the business to be worth approximately $1.5 to $1.75 million. The owner seemed satisfied although he thought the business would be worth more after all his years of hard
work.

I suggested a more thorough appraisal may reveal some aspects of the business that would improve value but based on his input and the limited time we had to complete this valuation, that was the number I was prepared to release over the phone.

He called his financial advisor and given the calculations he had was told he could not retire comfortably. if he sold the business in the next 1-2 years, he would end up with just over $1,000,000 of net proceeds, not enough, based on his other assets and future income sources. He was disheartened and said he was five to ten years away from retirement. The next day, I contemplated whether I should encourage him to spend money on a complete appraisal of the business, which may yield other important elements  of value, such as intellectual property, patents or trademarks, equipment and machinery that was not mentioned on the balance sheet of the company nor readily available to see in retained earnings or un-depreciated assets of the corporation. I thought about normalizing financial statements to look for income and expenses that are not essential to the day-to-day operations, that could purify his financial statement. Before calling him, I decided to take a look at his particular industry to see what the prevailing ratios of income and expenses and normalized earnings were.

A reliable business service I use provided information that suggested his industry’s profit margin was higher than his estimates. Therefore, because of time restrictions inherent in a napkin valuation, we had not determined the true hidden value or profitability of his business.

We agreed to commence a letter of opinion, whereby the appraiser has the opportunity to review the financial statements in detail. After four hours and running some spreadsheets, including the research I had done earlier, I determined his business was worth $3 to $3.5 million. I qualified my letter of opinion value with a plus or minus of 15% in either direction and sent it to him.

He was ecstatic because the valuation was the same number his advisor suggested for retirement in 1-3 years. I said it was better than the previous napkin valuation but it was still an incomplete appraisal.

He is re-evaluating his circumstance, and I hope he will invest in a detailed appraisal to identify the hidden components of value that are not revealed on a financial statement.

Napkin valuations are useful for quick calculations but a 15-minute phone call with someone like me is insufficient to go to an advisor to complete a retirement plan. If you own a business, hire a professional and get a proper appraisal done. Your financial and retirement plan is dependent on an accurate value of your business and what it would sell for in an open, arm’s length, unrestricted market situation. It is worth the investment.

 

TIMOTHY BROWN

is Chief Executive Office of ROI Corporation Canada’s national professional practice and brokerage firm.

Jackie Joachim, COO ROI Corp

JACKIE JOACHIM

Jackie has 30 years of experience in the industry as a former banker and now the Chief Operating Officer of ROI Corporation. Please contact her at Jackie.joachim@roicorp.com or 1-844-764-2020.

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New Year, New Goals

Finance|Wealth, Human Resources, Practice, Practice Metrics & Benchmarks, Resources

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Whether or not you believe in making resolutions, the beginning of a new year offers a perfect opportunity to reflect on what went well in the past year and what you would like to see improve or change in the coming year.

Intentionally focusing on specific priorities for the new year helps you to create a defined path. This gives you clarity and purpose.

What are your purposeful goals for 2019? Do you want to start preparing for retirement? Do you want to increase your eyeglasses capture rate? Do you want to introduce a specialty branch to your clinic? Maybe you want to open your own clinic or a second clinic?

Once you have determined what you want to do in 2019 to consider it a successful and fulfilling year, flesh out a plan to achieve them. What needs to happen on a weekly or monthly basis for your goals to be realized? Make the plan as detailed as possible.

By way of example, let’s consider the goal of increasing your eyeglasses capture rate. The plan may look something like this:

  • Week 1: Set up a tracking system to follow your capture rate every day.
  • Week 2: Set up a weekly meeting to review the capture rate results with the whole team.
  • Week 3: Do a cost comparison of lens companies. Which company offers you the best value? Create a lens offering with these products.
  • Week 4: Set up a training session to ensure all team members are familiar with the product offerings and pricing.
  • Week 5: Invite your lens rep in for product training.
  • Week 6: set up a bonus system to acknowledge the team’s efforts as the capture rate increase – this will be tied to the tracking system from week 1 and the accountability meetings you set up in week 2.
  • Week 7: practice your handoff. What works well? What can be improved? Would it help to have a dispenser assigned to a doctor every day?
  • Week 8: Team training at the weekly meeting. Walk through the handoff. What could be improved? Share success stories – let’s repeat those! Any gaps that needs to be closed on pricing strategy?
  • Week 9: What are some of the common objections in the dispensary? How can we overcome them?
  • Week 10: At the weekly meeting, be sure to review results – where are we and where do we need to be to achieve bonus? What could we do/offer to improve our results? Are we offering a second pair option to every patient?

Whatever you envision for 2019, take the time to flush out a plan to help you achieve it. Don’t be afraid to only focus on one goal. As they say, Rome wasn’t built in a day. The more time and effort you put into your plan now, the more likely you are to achieve it. So whether you believe in resolutions or not, take advantage of a time of year that lends itself well to reflection and purposeful goal planning.

 

KELLY HRYCUSKO

is the co-founder and managing partner of Simple Innovative Management Ideas (SIMI) Inc. and expert Practice Management contributor for Optik magazine. She can be reached at info@simiinc.com.

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Associate, Buy or Start Up – What Is Best For You?

Buying-Selling A Practice, Practice, Resources

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“You have brains in your head. You have feet in your shoes. You can steer yourself any direction you choose. You’re on your own. And you know what you know. And YOU are the one who’ll decide where to go…” – Dr. Seuss, Oh, The Places You’ll Go!

Graduating is definitely the goal. So, with a fresh license in hand what is next?

Depending on your personal confidence, financial condition, family situation and other factors unique to you, there are a few options available. Will you work for a while for someone else? Buy an existing office? Or dare to open one from scratch?

As you embark on this exciting chapter of your life, I would like to assure you that ROI Corporation is here as a resource that you can count on. We have been working with healthcare providers since 1974 and we service clients across Canada. ROI  Corporation appraises and sells optical practices. We are happy to provide suggestions and answer to any questions you might have. As such, we would like to offer a little advice.

Don’t rush into anything:
If you decide working for someone else is the best option, it is important that you take a bit of time to
explore where you want to work geographically. If ownership is in your cards, you do not want to limit
yourself in the future because of the non-compete you sign today. Any owner of a practice will expect
you to sign a contract, which is reasonable, so make sure you do not impact your future decisions.

Consider opportunities outside urban areas:
Some of the best practices to buy are located outside of major cities. Most people buying always want
store-front, major cities and within an hour of where they presently live. Smaller towns boast
opportunities for practitioners as they enjoy a higher net profit, less competition and lower cost of living.

Be prepared:
If you are not experienced at owning a business, use the next 12-18 months to learn as much as you can
about entrepreneurship. Attend business seminars, focus on your communication skills and speak to
many accountants, bankers, brokers and lawyers to establish your key group of advisors.

All buyers are encouraged to register on our NLS (New Listing Service). By going to our website – www.roicorp.com,
and registering, you will be advised whenever there are new opportunities. Even if you are not ready to purchase, this will help you get familiar with key industry stats.

If you have any questions, feel free to personally contact me at jackie.joachim@roicorp.com. Always happy to help.
Good luck!!

 

Jackie Joachim, COO ROI Corp

JACKIE JOACHIM

Jackie has 30 years of experience in the industry as a former banker and now the Chief Operating Officer of ROI Corporation. Please contact her at Jackie.joachim@roicorp.com or 1-844-764-2020.

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Should staff be able to use personal cell phones while at work?

Human Resources, Managing Others

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In our last article, we discussed the importance of having an Employee Handbook. This time, we wanted to specifically address an issue we often get asked about: what the rules around cell phone, office computer for personal things, and accessing personal email should be.

Technology has introduced an interesting quandary: while technology can improve office efficiency and productivity, there is also a concern that personal use of technology can decrease an employee’s efficiency and productivity. Let’s begin by addressing cell phone use. There are some programs now that require an employee to sign into their EMR account with a two-step process that includes receiving a code on their phone to gain access. In these cases, the employees must have access to their cell phones at all times. And access will inevitably mean use.

Many owners worry, rightly so, about the loss of productivity in these cases. However, there is another school of thought. What if having access to their phone increases their workplace satisfaction and that happiness translates into more productive employees?

According to Forbes magazine in an article entitled “Promoting Employee Happiness Benefits Everyone” dated December 13, 2017, Happy employees are also good new for organizations: The stock prices of Fortune’s 100 Best Companies to Work for rose 14% per year from 1998 to 2005, while companies not on the list only reported a 6% increase. Perhaps the best course of action is to set some clear expectations around discrete cell phone use. Many offices find it helps to implement a policy of keeping cell phones in drawers – out of sight out of mind – when not needed.

It is imperative that employees are discouraged from using practice computers or email for personal use. This restriction has less to do with decreased productivity and more to do with the risks associated with viruses and breaches in security. Setting up a practice email is fairly easy through email. This way the owner or office manager can also keep an eye on email transactions to make sure nothing slips through the cracks.

Almost everyone uses Google, both for business and personal use. In order to create clear line between the two, consider setting up a laptop in the “staff area/lunch room” that can be used for personal searches. This type of set up will set up the right expectations and make it easy to do so.

Whatever your policy is, make sure you outline every detail of it in your employee manual so that your expectations around this is very clear. Technology is changing the face of how we do business and how we organize our personal lives. We need to embrace technology in our practices to stay relevant in today’s marketplace. Setting clear expectations for personal use of technology will make it easier for all involved.

 

KELLY HRYCUSKO

is the co-founder and managing partner of Simple Innovative Management Ideas (SIMI) Inc. and expert Practice Management contributor for Optik magazine. She can be reached at info@simiinc.com.

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The Right of First Refusal vs. The First Option To Purchase

Finance|Wealth, Real Estate, Resources

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By Timothy A. Brown, CEO, ROI Corporation

Throughout my career I have heard lawyers, doctors, and property owners talk about giving a tenant the first right of refusal in a premise lease. The result: If the building should come for sale at the landlord’s discretion, the tenant has the first right of refusal to purchase the building.

The following definitions are reprinted with permission from Commercial Investment Real Estate published by CCIM Institute:

Option to Purchase.
This provision grants the holder the right to purchase an indicated property during the term of the option without respect to the owner’s desire to sell. In other words, the holder can force the owner to sell the property by exerting the option. Options to purchase often include specific terms

Right of First Offer.
Sometimes referred to as a right of first opportunity or first right to purchase, this provision requires the owner to give the holder the first chance to buy a property after the owner decides to sell. Unlike the option to purchase, the holder cannot force the owner to sell

Right of First Refusal. 
Sometimes referred to as a right of first opportunity or first right to purchase, this provision requires the owner to give the holder the first chance to buy a property after the owner decides to sell. Unlike the option to purchase, the holder cannot force the owner to sell

Let’s explore precisely what the first right of refusal actually means. In order for a tenant to have the right to refuse to buy a building, the property owner must actually take the property to the open market and bring other buyers into the fold. They can do this privately or they can do this through the services of a real estate and business broker. In this process, the owner must reveal that there is an existing tenant and disclose the terms of the lease. Potential buyers would typically want to explore the property inside and out, often get their own appraisal done on an independent basis and in some cases have a property inspection performed.

Thereafter, the purchaser or the multiple purchasers (given the current overheated market reality) would present their offers to the owner and/or through his/her agent.

At this juncture, the owner is obligated to approach the tenant who possesses the  first  right of refusal  and show them the highest and/or the most attractive bid to see if the tenant will actually refuse or agree to match that offer.

Think this process through from both sides. If you are the tenant, do you want your landlord parading potential purchasers through your rented space while he or she is attempting to attract open market offers in  order to find out how much you may be prepared to pay?

If you are the landlord, do you want to “use” the market knowing that you must disclose that this first right of refusal for the tenant actually exists in the leased premises?

A licensed and qualified broker must dis- close that your tenant has the privilege of matching any offers the market may actually present. What kind of offers are people prepared to make knowing that they may be matched or surpassed by the tenant and therefore, these potential purchasers may actually feel they are being used in order to motivate the tenant to buy the property.

As a landlord myself, as well as someone who buys property, when I know a tenant has the  first  right  of refusal, my interest  in the property is diminished. If I do make an offer, I will not spend a lot of time or money preparing the offer nor make the best offer I think the market would bear, knowing that it is possible that my offer will be matched or bettered by the tenant.

Now let’s consider an alternative option I have promoted over many years, yet failed to get agreement on by both property owners and lawyers. It is called the first option to purchase. Essentially, what this means is that the lease afforded to the tenant will basically say if I as the landlord decide to sell this property, I will come to you, the tenant, with the first option to purchase the property. I do not engage a real estate agent. I do not put  it on the open market. I do not parade anybody through your exclusive use rented space in order to drive up price and try to get the market interested. I come  to you and only you and I approach you first as you possess the first option to purchase. After a specified period of time, say 30 to 60 days, if we do not come to agreement in the terms of sale, I still reserve the right as the landlord  to put the property on the open market in the usual and customary process of selling real estate.

The result is you have been respected as the tenant. You were the only individual that I as the owner negotiated with. I may get an appraisal at my expense. You are certainly entitled to get one at your expense. If we can successfully negotiate, a deal struck. The open market, real estate agents and potential buyers have not been used to put us at odds. As an owner, I am not trying to drive price  up and you have not been annoyed with my bringing potential purchasers through the property and we both accept the fact that I really just wanted to do business with you in the first place.

I consulted with Todd Slater, founder of The Simple Investor, and a past contributing author to Profitable Practice magazine on this topic. Todd owns and/or manages over 1,000 income properties.

I  am a client of Todd’s firm. He completely agrees with me! As well, I surveyed several leading lawyers who agree with me, but they find it  difficult to alter the thought process and language of the legal profession that has been fixated on this absurd, outdated concept for decades… I hope this article helps to change the mindset.

The first right of refusal—or—the first option to purchase? If you are a landlord, what do you think is fair? If you are a tenant, which would you prefer?

 

TIMOTHY BROWN

is Chief Executive Office of ROI Corporation Canada’s national professional practice and brokerage firm.

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