New Criteria for Partner Compensation
Source: Partner’s Report
The following indicates how partners ranked compensation criteria. Respondents were asked to rank criteria as “very important,” “somewhat important,” “somewhat unimportant,” and “very unimportant.” Following are results of the “very important” rankings:
| How Partners are Paid | % | How Partners Would Like to be Paid | % |
| Book of business | 26 | Firm management | 83 |
| Fees collected | 25 | New business developed | 73 |
| Personal billable hours | 18 | Fees collected | 66 |
| New business developed | 17 | Book of business | 63 |
| Seniority | 17 | Realization | 61 |
This table is based on a new book by August Aquila and Coral Rice, Compensation as a Strategic Asset, which includes a research survey on the subject. The book can be ordered from www.cpa2biz.com, product 090493. Cost is $57 for AICPA members and $71.25 for nonmembers.
Book of Business. Firms are stressing profits over volume. Profit can be determined easily by subtracting costs and allocated overhead from revenue received.
Firm Management. Recognizing firm management as a compensation criterion means assessing how partners contribute to firm goals rather than to their own.
Seniority. New compensation systems frequently disregard seniority.
Partner contributions to the firm can be assessed using the following questions:
- Has the partner contributed to the firm’s growth and reputation?
- Has the partner brought in new clients?
- Has the partner helped train and mentor younger staff?
From Partner’s Report—the Monthly Update for CPA Firm Owners, November 2007, p. 1. Increasing Margins: How CPA Firm Owners are Paid Now—and How They Would Like to Be. For subscription information contact Institute of Management & Administration, Inc., 3 Park Avenue, 30th Floor, New York, NY 10016-5902. One-year subscription $399. 212-244-0360, [email protected]. For the complete article, click here.