Partners need to be something more than production machines. [Checklist included.]
by Marc Rosenberg, CPA
Author of How to Operate a Compensation Committee
Increasingly, CPA firms are adopting the compensation committee system for allocating partner income. Firms are finding that systems such as formulas, pay based on ownership percentage or pay-equal no longer work. When we compare the usage of the compensation committee today to 5 years ago, the increase in usage ranges from 16% to 26%.
If there is one overarching cause for this significant trend, it’s that firms are understanding that their partners need to be something more than production machines. In addition to bringing in business, managing a client base and working billable hours (all of which continue to be important values in a compensation committee), partners need to excel in intangible areas such as helping staff grow and develop, developing specialized expertise and teamwork. The compensation committee is one of the best systems available to CPA firms to allocate income based on this diverse array of performance criteria.
More Marc Rosenberg practice management trends and guidance: Three Ways to Break Partner Gridlock in an Accounting Firm | What Partners Are Entitled To, and What They’re NOT Entitled To | How to Make Partner? | Why Accounting Firm Partners Are “Popping Prozac like M&M’s” | The 15-Item Checklist for Your Next Partner Retreat | Five Key Responsibilities for a New Partner | Planning a Partner Retreat for Real Results | 6 Steps to Get Your Business to the Next Level | The 10 Biggest Mistakes in Reading MAP Statistics | Re-Engineering Partner Accountability | Marc Rosenberg: Why CPAs Aren’t Making More Money [VIDEO] | Marc Rosenberg: Slow Learners Need Not Apply | 10 To-Do’s for a Partner Buyout
When firms begin operating their new compensation committees, there is a lot of initial confusion and bewilderment about how to get started. For example:
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