One Firm’s Experimentation on a Compensation System
| Source: Journal of Accountancy
Meyners + Company, in Albuquerque, New Mexico, is an 80-person firm including six partners. In 2002 it launched what proved to be a very successful initiative to incorporate “new core competencies and core values into the firm culture.” The core competencies are:
Core values include:
The compensation program rewarded people for embracing core values, becoming expert in core competencies, and contributing to the firm’s strategic goals. There were three levels of pay—a base salary, a general bonus, and a firm-profitability bonus. Because the bonus components were generous, base salaries were low. But when the firm failed to meet its profit objectives, some staff members felt unfairly penalized. An employee survey revealed that staff didn’t understand the calculations, and thought the program was too complicated and confusing. They were enthusiastic about use of core competencies and core values in evaluating their performance, but they were not enthusiastic about using them in bonus calculations. The firm eliminated the bonus program and increased base salaries, but core competencies and core values are used in determining base pay and raises. While this removes a direct incentive for high performance, the firm believes most people are internally motivated to do their best. After making this major change in compensation, the firm addressed the issue of staff retention and decided to launch what it calls MCO University. Training at MCO University is related to core competencies and core values. Courses include technical training, time management, and productivity. The firm says there is a correlation between the amount of training and staff longevity. Staff appreciate the investment the firm is making in them. Training programs also have a positive effect on recruiting. From Journal of Accountancy, February 2006. For the complete article, click on the following link: http://www.aicpa.org/pubs/jofa/feb2006/mcdonald.htm. |