Compensation

SURVEY RESULTS: Accountability, Equity, Compensation Are Concerns

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Risk takers are being recognized.

By Allen Koltin
The Rosenberg MAP Survey

Looking back to 2015, first and foremost remains the human capital challenge.

MORE FROM THE SURVEY: MAP Survey Top 10 Findings | CPA Firm Revenues Rise a Hefty 8%
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Firms are gearing up the financial and people resources around recruiting in ways I’ve never seen before. Interestingly it’s not so much at the entry level but rather at the experienced hires all the way up to lateral-level senior managers and partners.
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How to Pay Non-Equity Partners

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Businessmen standing on dollar billDeferred compensation is on the rise.

By Marc Rosenberg
Partner Comp: Art & Science

There are obvious differences between equity and non-equity partners, including how they are compensated.

MORE ON PARTNER COMPENSATION:3 Rules for Promotion to Partner | The 8 Basics for Data-Based Partner Performance Evaluations | How to Set the Managing Partner’s Compensation | Crash Course: Operating a Compensation Committee | Partner Pay: Open vs. Closed Compensation Systems | The 3 Best Partner Compensation Formulas

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However, the differences aren’t as great as many people think.

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How to Drive Partner Performance with a Smart Compensation Plan

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Dollar being built of blocksHow to use compensation as a way of running your firm.

By Domenick J. Esposito
8 Steps to Great

“Show me your compensation plan and I’ll show you your strategy.”
– Dom Esposito

As you strive to become a mid-market sustainable brand, your firm needs to become a performance-driven organization if you want to take advantage of future opportunities and drive growth and profitability. An effective performance management and compensation plan (PMCP) is critical to making your firm’s strategic plan a reality.

MORE ON STRATEGIC PLANNING: Develop the Partners You Already Have | Is HR Ready for Your Partner Pipeline? | Is Your Pyramid Upside Down? | Taking a Balanced Scorecard to Your Partners | Seizing the $10 Trillion Opportunity

The basic premise is that compensation rewards first look to:
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How Committees Kill Firms

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Businesswoman working at deskWhy managing partners need to be accountable.

By Bill Reeb and Dominic Cingoranelli

As we have said so many times before, everyone likes the idea that “I” will hold “me” accountable. But few like the idea of “anyone else” holding “them” accountable.

MORE ON PERFORMANCE MANAGEMENT: The Job of Managing Partner: Empowered or Emasculated? | Partners as Role Models: The Good, Bad & Ugly | Managing the Managing Partner | Pay Varies When Performance Varies | Accountability Is for Everyone | Who Decides What? | CPA Firm Performance Assessments: 15 Core Competencies, 21 Questions

So, once it is decided that accountability is important and someone needs to be responsible for implementation, the discussion quickly shifts to “let’s form a group of people, like an executive committee or a compensation committee to hold us accountable.”
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How to Set the Managing Partner’s Compensation

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Businessman holding multiple dollar signsA management stipend keeps the MP “whole.”

By Marc Rosenberg
Partner Comp: Art & Science

Many firms, especially under $10 million, have a partner on board with the title of managing partner who in reality functions more as an admin partner. This post only addresses how the true MP should be compensated.

MORE ON PARTNER COMPENSATION: How Large and Small Firms Allocate Income | Integrating Partner Comp with Strategic Planning | Partner Pay: The Declining Importance of Book of Business | 3 Non-Performance-Based Comp Systems | 3 Subjective Compensation Systems | Partner Compensation 101

OK, for those of you dying to know what a true MP is, here’s the scoop. A true MP:
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Crash Course: Operating a Compensation Committee

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Business people working in office18 lessons to take to heart. And a few words of warning.

By Marc Rosenberg
Partner Comp: Art & Science

Operating a compensation committee isn’t for the faint of heart. Here are points all members would do well to heed.

MORE ON PARTNER COMPENSATION: 5 Other Systems for Paying Partners | The 3 Best Partner Compensation Formulas | 11 Points in Designing a Partner Comp System | What Partners Earn and How They Earn It | How Partners View Compensation: It’s Not All about the Money | Why Most Partner Comp Systems Are Performance-Based

1. The partners must understand the heart and soul of the Compensation Committee (CC) approach: The system can only work if the people being judged are willing to trust the judges. Period. If the partners aren’t comfortable with this, they should not use the CC.
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Partner Pay: Recapping the Compensation Systems

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The popularity, pros, and cons of each.

Chart of compensation system usage
Compensation systems in use, by size of partnership

By Marc Rosenberg
Partner Comp: Art & Science

What is the actual usage of compensation by firms?

MORE ON PARTNER COMPENSATION:5 Other Systems for Paying Partners | 3 Non-Performance-Based Comp Systems | The 3 Best Partner Compensation Formulas |Why Firms Use Partner Comp Formulas|3 Subjective Compensation Systems|11 Points in Designing a Partner Comp System | 3 Tiers of Compensation | Partner Compensation 101|What Partners Earn and How They Earn It | Partner Compensation: An Art, Not a Science | How Partners View Compensation: It’s Not All about the Money | Why Most Partner Comp Systems Are Performance-Based 

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Observations & Analysis:

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Partner Pay: Why Your Book of Business Isn’t Worth as Much

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Young businessman walking on bungee cord between question mark and dollar signFour reasons behind the decline. Plus the impact on buyouts and retirements.

By Marc Rosenberg
Partner Comp: Art & Science

I’m sure many people see the title of this post as a form of practice management heresy.

MORE ON PARTNER COMPENSATION: 5 Other Systems for Paying Partners | 3 Non-Performance-Based Comp Systems | 3 Subjective Compensation Systems | Partner Compensation 101 | What Partners Earn and How They Earn It | Partner Compensation: An Art, Not a Science | Why Most Partner Comp Systems Are Performance-Based

The message is: The weighting of book of business is trending from being the “end-all” in allocating partner income, or close to it, to a factor that is still important, but less so.
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How to Decide Who Decides Pay

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Woman on building roof spraying out dollars with a garden hoseWhere to draw the line between managing partner and compensation committee.

By Bill Reeb and Dominic Cingoranelli

Everyone likes the idea that “I” will hold “me” accountable. But few like the idea of “anyone else” holding “them” accountable.

MORE ON PERFORMANCE MANAGEMENT: Accountability Requires Clear Expectations | Base Retirement on Today’s Operations | Who Decides What? | How Retired Partners Are Robbing their Own Firms | Best Practices for Mandatory Retirement | How Retirement Issues Affect Succession Planning | Succession: The Questions to Care About | How to Target What Skills to Develop Now | What Having Your Employees’ Backs Means | 5 Harmful Management Attitudes (and How to Fix Them) | Do CPA Firms Need Management or Leadership? |  Job 1 for The Practice Owner: Client Management

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So, once the decision has been made to implement systemic changes to hold partners accountable to specific performance expectations rather than just relying on everyone to put in a self-proclaimed “good day’s work,” the next battleground is determining who will be holding whom accountable. The discussion always shifts to “let’s have a group of people, like a compensation committee, hold us accountable.”
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Partner Pay: Open vs. Closed Compensation Systems

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Businessman ogling money over another's shoulderBoth have advantages.

By Marc Rosenberg
Partner Comp: Art & Science

“If people are concerned about their absolute level of compensation, then they can be satisfied. However, if their focus is on relative standing, then they can never be satisfied.”

– Andrew Grove, former chairman, Intel

An open compensation system is one in which all partners know the earnings of all partners.

MORE ON PARTNER COMPENSATION: 5 Other Systems for Paying Partners | 3 Non-Performance-Based Comp Systems | 3 Subjective Compensation Systems | Partner Compensation 101 | How Partners View Compensation: It’s Not All about the Money | Why Most Partner Comp Systems Are Performance-Based

A closed system is one in which a limited number of partners are privy to this information. In closed systems, the only partners with access to all partners’ income are usually the managing partner, the compensation committee and/or the executive committee.
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