Partner Compensation Should Reflect Partner Value to the Firm

Source: Accounting Today

Article by L. Gary Boomer, president of Boomer Consulting in Manhattan, Kansas.

In a modern compensation system, partner value for compensation purposes is measured according to the following hierarchy:

The most valuable partners:

• Manage other partners.
• Develop talent.
• Bring in new business.
• Nurture clients.

The middle tier partners are involved in:

• Client service.
•  Managing staff.
• Some new business development.

At the low end of the compensation hierarchy, partners have technical skills but few or none of the skills above.

Book of business, charge hours, and realization are part of the formula, but not, as they used to be, the most important part.

Partners are urged to visualize the firm as being many times larger than today. What would change? Partners in such a firm would need to be better managers, more compliant with policies, more involved with developing talent, better business developers, able to push work down, and accountable for their performance. These are the attributes that should be rewarded if the firm is to grow. It is interesting that none of this would change if the firm were growing only at a normal rate.

For the complete article, click here and select the article The Evolution of Partner Value.

From Accounting Today, November 5, 2007, SourceMedia Inc., One State Street Plaza, 27th Floor, New York, NY 10004, 800-221-1809.