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PAY & COMPENSATION

Top 20 Tough Choices for the Partner Comp Committee

man, woman, man having serious discussion around conference table

Production isn’t all that matters.

By Marc Rosenberg
The Rosenberg Practice Management Library

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.

MORE: Voting on Ownership Basis? Three Better Methods | What Partners Do and Don’t Deserve | Tell Potentials What Partnership Takes | Fifteen Big Questions for Your Next Strategy Session | Five Steps to Transition to Partnership | Disturb the Present to Improve the Future
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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.
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Voting on Ownership Basis? Three Better Methods

four people seated around conference table, one with thumb pointed down

Maybe one-partner, one-vote isn’t working.

By Marc Rosenberg
The Rosenberg Practice Management Library

Most firms vote on a one-person, one-vote basis despite varying ownership percentages.

But is that always the best way? Here are three better ways.

MORE: What Partners Do and Don’t Deserve | Tell Potentials What Partnership Takes | Fifteen Big Questions for Your Next Strategy Session | Five Steps to Transition to Partnership | Disturb the Present to Improve the Future
GoProCPA.comExclusively for PRO Members. Log in here or upgrade to PRO today.

Voting done on an ownership percentage basis:

  1. Essentially “disenfranchises” the minority owners. Their vote doesn’t mean much, and it becomes tantamount to not having a vote at all. When they have no vote, they tend to get disenchanted and cease acting like partners. They may eventually leave.
  2. Gives too much power to the majority owners.

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What Partners Do and Don’t Deserve

man wearing suit, pointing one thumb up, one down

Yes, there are limits. 

By Marc Rosenberg
The Rosenberg Practice Management Library

Partners are entitled to a lot. At some firms, they are virtually royalty. But that’s no way to run a firm these days.

A partner IS entitled to:

1. Attend partner meetings and retreats.

MORE: Tell Potentials What Partnership Takes | Fifteen Big Questions for Your Next Strategy Session | Five Steps to Transition to Partnership | Disturb the Present to Improve the Future
GoProCPA.comExclusively for PRO Members. Log in here or upgrade to PRO today.

2. Have access to all confidential firm financial data.

3. Receive a return on capital; repayment of capital when he/she leaves the firm.
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Tell Potentials What Partnership Takes

Senior businessman mentoring two younger workers

BONUS: 27 suggestions.

By Marc Rosenberg
The Rosenberg Practice Management Library

CPA firm partners keep lots of things secret at their firms that should be open. One of them is a written document stating the firm’s criteria for making partner.

MORE: Fifteen Big Questions for Your Next Strategy Session | Five Steps to Transition to Partnership | Disturb the Present to Improve the Future
GoProCPA.comExclusively for PRO Members. Log in here or upgrade to PRO today.

The main explanation we hear for not having such a document is that they are afraid creation of this document will backfire. They are afraid that an underperforming staff will wave this document in front of the managing partner’s face, informing him/her that they have fulfilled all the criteria for making partner and demanding a date for coronation.
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Fifteen Big Questions for Your Next Strategy Session

six people meeting around a table

Focus everyone on the big issues.

By Marc Rosenberg
The Rosenberg Practice Management Library

Most firms spend their time at retreats planning for the future, forming goals and addressing pressing issues and problem areas. The problem areas aren’t day-to-day issues such as purchasing a new copy machine or revising the policy on sick days. The problem areas are more strategic: morale issues, recruiting problems, profitability, etc.

MORE: Five Steps to Transition to Partnership | Disturb the Present to Improve the Future
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Here are some specific examples:
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