Compensation Plan Should Recognize Partner Value

Source: Accounting Today

Compensation systems in the past were typically based on results, incorporating such factors as charge hours, book of business, and realization. That’s not enough today says Gary Boomer, Boomer Consulting, Manhattan, Kansas. What also should be considered are people development, level of client service, and devotion to the firm’s adopted standards, policies, and procedures.

The hierarchy of values of partners follows from low to high:

1.        Those with technical skills but no management or new business contributions.

2.        Those with client service responsibilities who manage non-partner personnel, but make minimal new business contributions.

3.        Those who produce new business and manage other partners.

The value of managing becomes more important when the firm is growing rapidly, but that does not mean managing is not important in slower growing firms. Partners should think as if they were in much larger firms. They should think about increasing the quality of the people, revenue per person, level of training, capitalization, and degree of specialization. They should think of managing as a profession. This thinking translates into further personal development as better managers, higher devotion to standards and policies, more personal training, more new business development, less client work (more delegating), and upgrading the client base.

The firm’s future should be based on a strategic plan and each partner should be held accountable for his or her part in executing the plan.

From Accounting Today, June 6, 2005. Click on the following link for the complete article:
http://www.webcpa.com/article.cfm?articleid=13222&;pg=acctoday.