Partner Compensation: MP vs. Rainmaker
Source: CPA Trendlines
The following is a complete reprint, reproduced with permission, of an article by Marc Rosenberg.
In allocating partner income, a firm needs to look at all performance attributes of each partner.
From a 35,000-foot altitude, firms should be reviewing these items for each partner:
- The partner's role in the firm, the relative values of the various roles (MP, rainmaker, client handler, QC expert, niche specialist, administrator, etc.) and how well the role was performed.
- The extent that the partner achieved his/her goals.
There are three different roles a partner can play:
Most partners are client handlers. Excellence in leadership, bringing in business, retaining and profitably growing a client base, helping staff grow, teamwork, and interpersonal skills are expected.
The MP's role focuses on profitability, execution of the strategic plan, holding partners accountable, "effective" firm governance, overseeing revenue growth, making the firm a great place to work, crisp decision-making, and effective succession planning.
The rainmaker is often the highest paid partner because partners perceive that bringing in business trumps all other performance attributes. But I've seen many rainmakers perform poorly in other important areas such as growing the staff, billing and collection, teamwork, and accountability. These need to be taken into account.
It's not enough to ask which of these three roles should be the highest paid. Firms need to look at:
- How well these roles were performed, and
- The “whole package” of performance factors, not just one or two.
For the original article, read “Who Should Earn More: The Managing Partner or the Rainmaker?”
From CPA Trendlines, March 11, 2013, http://cpatrendlines.com.