Pharmacy Practice requires a clearly defined infrastructure (physical and conceptual) before the product of a pharmacy practice can be delivered.
Since the bottom of the last pharmacy business cycle in 2012 there has been a general realisation that pharmacy culture must change to a new paradigm and deliver a new end product – but a starting point and direction has been difficult to establish.
What is needed is a knowledge transference process – large volumes with a rapid delivery and understanding with the infrastructure to deliver new systems and products from the knowledge generated – from the bottom up.
i2P believes the starting point for a contemporary pharmacy practice is to appoint an advisory board of skills not readily available within the practice.
Pharmacy companies were legally able to become part of community pharmacy infrastructure following the Wilkinson Review conducted almost sixteen years ago.
The initial recommendations allowed for some form of non-pharmacist appointments to a pharmacy company board and some non-pharmacist shareholding.
Debate prior to legislation being enacted removed all non-pharmacists from pharmacy companies and so the thought of being able to appoint “experts” to a pharmacy board of directors as a sort of in-house think-tank, through a well-rounded group of directors, slowly faded.
Initial uptake for company ownership format was quite slow, because potential family tax benefits had been stripped out, and strategic stimulation for future directions had been “blunted” through the removal of non-pharmacist directorships and shareholdings.
Large public companies have never had this form of restriction, and this has been one of the reasons for large rates of growth, compared to smaller restricted pharmacy companies
When a special form of expertise was required, a large company could simply appoint an expert director, and remunerate that person with director fees and shareholdings at discount or at no charge, creating ownership in decision making.
Pharmacists have also numbered a high percentage of entrepreneurs among their ranks, but while they had abilities to build businesses, they always shared their businesses reluctantly.
Two types of pharmacists suffered from that approach:
* Young pharmacists coming on to the market were exploited through lowest wages and lack of skills development.
* Senior pharmacists with progressive mobility restriction, but still with active strategic minds and generational memories, were shut out.
The entrepreneurs also eventually slowed down because their entire managerial, emotional and financial resources became consumed by their business, and growth eventually contracted.
Some of these people employed management consultants and dependent on the quality and reach of those consultants, business expansion once more took on a momentum.
Those that remained had to gain insights from their leadership organisations or franchised marketing groups – none of which completely embraced their needs and the ever-present “four-walled” syndrome took control and submerged creativity and innovation.
Businesses of all size have the need for in-house expertise and for its cost to be at a reasonable level.
The need is greater with SME’s like community pharmacies, and the solution exists through the establishment of an advisory board under a simple charter document
An effective advisory board properly composed and structured, can provide non-binding but informed guidance and serve as a tremendous ally in the quest for superior corporate governance.
It should have a minimum of three members and a maximum of nine members to be efficient, but more could be appointed depending on the range and complexity of projects being undertaken concurrently.
Nobody can build a great business alone, and whether it’s a start up or an established industry leader, having access to high-quality advice can enhance an organisation’s odds of success.
Entities needing advice can obtain it through a diverse board of directors, consultants or networks of one sort or another.
Increasingly, attention is being given to advisory boards.
However, before moving to the establishment of an advisory board some self-evident questions needs to be answered internally.
* What skills do we need to recruit that do not already exist within the company board?
* If a skill exists within the company board does it need enhancing because of the complexity of the current company program?
* Will the advisory board act as a feeder system to the company board in terms of knowledge transfers to help create future directions, or will the advisory board simply respond to a range of crafted questions devised by the company board, or will it be a mix of both.
Most advisory boards simply respond to questions and are required to answer from their existing knowledge and understanding without the obligation for additional research.
* Will an advisory board member be requested to make themselves available as a consultant under a separate contract?
* Will the advisory board members be recruited to fill vacancies or be appointed additionally to existing numbers on the company board?
* Will the advisory board be available for individual company directors to approach to “test-drive” a project before presentation to the company board?
If there is sufficient trust and respect for the advisory board a “test-run” function may hasten a decision through the company board given that it now has expert and external advice attached to it.
* Similarly, will authorised senior staff have access to the advisory board for advice that may expand their responsibility or assist in the presentation of an idea or project they may wish to submit to the company board.
Again, another “test-run” which could facilitate creativity and innovation within a pharmacy company.
* Sometimes external investors want to hold a company directorship to better supervise the spend of money being advanced to a client.
Unless the investor is a pharmacist, that cannot happen.
Will a membership to the advisory board be an option to be offered in such circumstances?
* Will the advisory board be supported as an instrument of change rather than as a passive response group, and encourage communications with authorised people, and indeed whole teams that form part of management, from within the pharmacy company?
* Advisory boards are often created with a focus on a single issue.
Will the advisory board be allowed to expand its focus to other issues, or indeed the entire business by expanding its charter, and if required, increasing the advisory board membership with new people embracing the skills required?
* Will the advisory board include one or more members who are actual consumers of the pharmacy company’s products and services?
This could provide some excellent input for brand preservation and consumer expectations for current and future services.
* Will the advisory board include one or more senior pharmacists who are retired or progressing to retirement as a means of accessing “corporate memory”.
Seniors embrace a lot of pharmacy history and are often in a position to comment when “history repeats itself” in a slightly different guise.
Senior wisdom can sometimes moderate safer decisions.
* Will the advisory board include a recent graduate (within five years after graduation) to provide a perspective on what academics are teaching students in their curriculum and indeed foster links through the graduate to academia to establish research links?
Having someone at this stage of their career on an advisory board can develop their leadership skills and also provide a pool of talent that can be recruited to responsible positions within the pharmacy company.
* How many times a year will the advisory board meet?
I guess that will evolve as a measure of value.
An advisory board that is accelerating change and growth will need to meet more frequently.
Suggested is four meetings per year – less if stimulus is not occurring but more frequently if activity volume is increasing.
This item should be listed under the charter agreement, but subject to change as necessary.
* At what rate will an advisory board member be paid?
This type of compensation would be lower than the market rate for a top consultant that operates within the pharmaceutical industry, but higher than a senior manager within your company
If the desired benefit is to be obtained from an advisory board, compensation must be for a full day of meeting (six to eight hours with a meal break) plus individual costs involved to attend an advisory board meeting (some members may live some distance from the meeting point and may need accommodation, air transport/taxis etc. to reach a meeting venue).
Commitment by the pharmacy company board must be substantial given the investment in time and money that may be required.
However the results that become reflected in the pharmacy company’s bottom line should be a measure of a successful advisory board contribution, which is the second measure of productivity for the advisory board (after meeting frequency), provided the pharmacy company board has listened to their advisory board and acted appropriately.
* Will the advisory board be asked to support fiduciary issues that might arise through the pharmacy company’s directors, collectively or individually?
Advisory boards can address fiduciary duties and other liability concerns.
Directors expose themselves to a variety of legislated liabilities (responsibility for unpaid wages, unpaid taxes, environmental damage, etc.) and to fiduciary and other duties that can lead to civil or regulatory liability.
It is most unlikely that an advisory board member could be subject to duties of this sort involving the pharmacy company.
The legislated responsibilities apply to corporate directors only.
An advisory board would have to take a much more active role in the management of a business than should ever be contemplated before there could be any realistic risk that non-statutory liability could be attached to advisory board members as such. Accordingly, qualified individuals who may not be prepared to expose themselves to director responsibilities might well be encouraged to assist enterprises as advisory board members.
Advisory boards operating around limited partnerships represent a distinctive and different case, in which liability (through the loss of limited partners’ limited liability) can be a serious risk.
However, the practice of how advisory boards function in these cases is well developed, and the risk is therefore obviated.
The advisory board charter should include indemnification by the pharmacy company to cover instances where a member may become the subject of a legal challenge.
Pharmacists are not receiving the specialist advice they need to run what is now a business with a high degree of compliance issues.
And given that it is now a business vulnerable to disruption through the advancement of technologies, there is a need for economical, but skilled advice, tailored to your own pharmacy enterprise.
This cannot be met in its entirety by the PSA, the PGA, your friendly wholesaler or your franchised market group.
The only person who can address the issues surrounding the maintenance of a vigorous and profitable enterprise is a time-poor, limited skills matrix, capital-deficient -YOU!
So, scale down the costs surrounding all the above that have filled some gaps, but not sufficient to ensure a productive future.
Create your own advisory board charter with some legal help (See sample at this link Advisory Board Charter-AnyCompany Pty Ltd), determine the current and future needs of your pharmacy company and recruit accordingly.
If you need help to get started, please contact Neil Johnston at email@example.com