Compensation in the Large CPA Firm
Source: Partner Insights
The following includes excerpts, reproduced with permission, from an article by August Aquila.
For large firms thinking about modifying their compensation systems, here are 10 best practices to consider. [The first five are reproduced below.]
- Firm culture. Make sure that you recognize the importance of a one-firm culture. Basically, this means that the firm is more important than any one partner. Partners can leave their outsized egos at the door.
- Strategic planning. If you don't have a strategic plan then it is hard to reward partners for moving the firm ahead. You need to make sure that the firm's compensation system is tied to the achievement of its strategic plan.
- Accountability. Partners often have the feeling that they can do whatever they want simply because they are partners. Partners need to achieve and do what they say they are going to do to maintain trust and credibility among the other partners. The compensation plan should strongly enforce the concept of personal responsibility.
- Compensation. Today, compensation is much more than just base salary/draw. Best practices tell us that at a minimum there should be four buckets: Base compensation, bonus, discretionary element, and return on capital or equity.
- Performance buckets. These tell your people what areas will be measured. Obviously, traditional production [measures] are critical to keep a business alive for the present, but developing new business and being involved in activities that enhance the value of the firm are also critical.
The remaining five best practices are goal setting, performance evaluation, leadership, communication, and behavioral evaluation.
For the complete article, read “10 Best Practices for Large-Firm Compensation Systems.”
From Partner Insights, Aquila Global Advisors, LLC, January 2016, www.aquilaadvisors.com.