Source: CPA Practice Management Forum

The evolution of the firm and a very competitive marketplace have created a need for different levels of “partner” at Friedman LLP in New York City, a firm of 300 people. These different levels allow the firm to:

• Reward the visionaries and leaders.
• Identify future high performers.
• Continue to benefit from the experience of seasoned professionals.
• Utilize the special talents of highly qualified practitioners.

Here is a description of each level:

Equity partner: Has a base level of compensation, shares in an allocated bonus pool and shares more highly in firm profits.

Limited equity partner: The same concept as an equity partner, but a lower percentage share of firm profits.

Income partner: Nonequity partner, with guaranteed base plus performance-based bonus. Does not share in firm profits.

Retired partner: A partner exceeding retirement age may continue to be employed, receiving a pro rated share of base compensation plus retirement benefits and accrued capital. May have the title “Partner Emeritus” or “Consultant.”

Contract partner: Terms of employment, including performance expectations, are set out in an agreement that remains in effect for a set period of time.

Principal: Someone who has partner potential, or is at partner level but is not a CPA. Principals participate in partner meetings but are excluded from discussions of financial matters.

Director: Valued professional recognized for excellent performance heading a functional area, such as marketing, technology, recruiting, human resources, or finance.

Many firms have “special partners.” They aren’t retired but seem to be. There are programs in place to mentor these partners and bring them to an operational level, or to transition them to retirement.

For the complete article, click here.

From CPA Practice Management Forum, CCH Incorporated, 800-449-8114, December 2008, p. 11, “Not All Partners Are (or Should Be) Created Equal.”

Measuring CPA Leadership Effectiveness