A Nonconforming View of Partner Compensation

Source: VeraSage Institute, Blog of Ron Baker

In response to a question on how to design a partner compensation system in a firm that does not use timesheets, Ron Baker made a number of suggestions including the following:

• Try using revenue instead of hours.
• But, allocating earnings based on revenue is peculiar to the partnership structure, which features consensus rather than leadership. Under the corporate model revenue is not allocated among employees. That gives people less motivation to delegate.
• Future compensation models will feature base pay, bonus pools based on earnings, and bonuses based on extraordinary contributions. Contributions may include such things as helping to enhance the knowledge of the firm.
• But, if you want to base compensation on revenue, try this: let the entire group of client service people meet and decide on how to allocate profits. They will be fair and they will insist that everyone be accountable for the firm’s performance.

For the complete blog entry, click here.

From VeraSage Institute, www.verasage.com/index.php/community/, Blog of Ron Baker, July 6, 2008, "Ask VeraSage: Designing Team and Partner Compensation Without Timesheets."

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