BONUS: Seven systems to allocate income … and who uses them.
By Marc Rosenberg
How to Bring in New Partners
It would take a book much longer than this post to properly explain the finer points of partner compensation, especially how each of the major compensation systems works. Oh, did I forget? We wrote such a book, “CPA Firm Partner Compensation: The Art and Science.”
MORE: Fifteen Steps to New Partner Buy-in | What Buying In Actually Means | How Partner and Staff Actions Impact Profits | Nuts and Bolts of Mentoring Staff | Nine Ways to Measure Staff Performance on the Path to Partner | Sixteen Duties of a Partner | Five People to Keep Out of Partnership
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Best Practices and Key Concepts
As is the case with all of my lists, no one firm incorporates all of these practices in its partner compensation policy. But I have observed all of the practices below in one or more of the best firms I’ve worked with over 20 years.
- Performance-based. There should be a strong link between pay and performance. When it comes to CPA firm performance and profitability: As the partners go, so goes the firm. The partners have a much greater impact on the firm’s success than professional staff and other personnel. If they perform at a high level, the firm will do the same. If partner performance lags, then the firm will suffer. Therefore, the firm needs to motivate the partners to produce at high levels and reward them accordingly. Compensation isn’t the best way to motivate anyone’s performance, but it is effective.
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