The partner accountability model is aimed at driving partner performance. It starts with trust and unity around a shared firm strategy, clear assignment of ownership and definition of partner roles, and the establishment of partner goals that are specific, measurable, realistic and relevant. Performance is enhanced by monitoring progress along the way and providing effective feedback. Ultimately, successful performance is measured and rewarded by partner compensation.
The topic of compensation is inherently complex and subjective and is probably the least favorite subject among partner groups, but the one that gets a lot of air time because no one is really ever satisfied with what they make, and all of us believe we would be happier making more.
The Right System Yields Results
Even so, a properly designed and well-thought-out partner compensation system can drive desired behaviors and inspire your partner group to high performance. Likewise, a poorly designed partner compensation system will motivate unwanted behaviors and discourage the all-important one-firm culture needed to scale your firm and maximize profitability and consistency.
A good partner compensation system is:
* Understood by all (in writing).
* Simple (or as simple as possible).
* Fair: Those who contribute the most get the most and those who contribute the least earn least.
* Designed to drive the right behaviors (performance based)
* Motivating and inspiring.
A well-designed partner compensation system allows partners to easily understand their potential compensation in advance and how they can affect their compensation both positively and negatively.
A simple and understandable partner compensation system must also be based on clearly stated expectations of what performance is expected and required. Such performance must clearly connect to and support the achievement of overall firm strategy as well as the specific goals assigned to each partner. It's because of these ties to strategy, expectations and goals that more work is required ahead of sitting down with spreadsheets, formulas, or allocation methods. This is the work that has often been overlooked, leading to the compensation system dissatisfaction we see in so many partner groups.
The most effective and simple partner compensation systems have the following three elements:
* Base compensation or draw. This is the amount paid on a regular basis (e.g., monthly) to reflect the value of the partner's expected or minimum contribution...