salary

4 ways to create more capacity

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purple no. 4 billiard ballconsider creating two classes of partners.

by bill reeb and dominic cingoranelli
卡塔尔世界杯常规比赛时间 / succession institute

when partners plan to retire, how do we go about creating additional capacity or freeing up the necessary capacity to handle the client transitions that need to occur?

more on performance management: partner retirement and the war for clients | succession: the questions to care about | 7 succession questions to ignore for now | develop your employees or suffer the consequences | what having your employees’ backs means | 5 harmful management attitudes (and how to fix them) | job 1 for the practice owner: client management

first, all of the “c” clients, which is our shorthand way of describing the smallest clients the firm serves – who while profitable, don’t have much opportunity to hire us for additional services – should not be transitioned to partners, but rather to managers.
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3 tiers of partner compensation

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chart of 3 tiers of partner compensationplus: 6 major factors impacting bonuses. and 4 notes from a master.

by marc rosenberg
partner comp: art & science

most cpa firm partner compensation systems consist of three tiers, each of which compensates the partners in a different way.

more on partner compensation: partner compensation 101| what partners earn and how they earn it | partner compensation: an art, not a science | how partners view compensation: it’s not all about the money | why most partner comp systems are performance-based

what is base compensation (or salary)?

it’s common to define partners’ base compensation as their historical or street value to the firm. what they bring to the firm every day. a managing partner once told me: “it’s what we would have to pay a partner at another firm to come work with us.”

practice debunked: many firms have equal bases for all partners. their thinking is that the base is merely a level of compensation that (1) is above what managers are paid and (2) is enough for the partners to live comfortably on. firms like this are operating a modified pay-equal system, which is widely viewed in the cpa industry as ineffective and unfair. not only do partners not perform equally, there is almost always a wide variation from highest to lowest performer. the case for equal bases is a weak one at best.

practice debunked: i’ve seen some firms impute partner bases as follows: first, compute hourly pay rate by dividing the standard billing rate by the firm’s billing rate multiple. then, multiply the hourly pay rate by 2,000 hours to arrive at imputed base pay. billing rate multiple is a staff person’s billing rate divided by the hourly pay rate. eighty to ninety percent of all firms are in the 3.5 to 4.0 range.

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how to find a partner’s replacement

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man choosing someone's face from a photo arrayshould you add a partner … or capacity? they’re not the same thing.

by bill reeb and dominic cingoranelli
卡塔尔世界杯常规比赛时间 / succession institute

let’s assume you have a retiring partner. you have decided how to pay the partner for his/her value in the firm, you have pinned down the mandatory sale of ownership date (mso) so you can phase that partner out of his or her leadership role in the firm, and you have covered the single most abused part of the succession process, which is client transition. it is now time to discuss how to find replacements for the retiring senior partners.

more on performance management: action plans for transitioning partners | partner retirement and the war for clients | succession: the questions to care about | the pitfalls of equity allocation and reallocation | cpa firm performance assessments: 15 core competencies, 21 questions | how to target what skills to develop now

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the most commonly asked question on this topic is “how can we find people with the same technical skills, management ability, client service capacity and vision for the firm’s future as those who are leaving?” the simple answer is “you won’t, so stop looking for that exact combination.”
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action plans for transitioning partners

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four people meeting for business lunchthe transition process is about making the retiring partner less attractive as the client’s first point of contact.

by bill reeb and dominic cingoranelli
卡塔尔世界杯常规比赛时间 / succession institute

the key to the client transition process is the action plan that the transitioning partner needs to follow for each client.

more on performance management: partner retirement and the war for clients | how retirement issues affect succession planning | 7 succession questions to ignore for now | the pitfalls of equity allocation and reallocation | how to target what skills to develop now | job 1 for the practice owner: client management

for a small tax client, the directive could be as simple as a one-year transition and turning it over to whoever has been assigned to take over that account. for example, the action plan might be something like:

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best practices for client transition

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man watching handshake between two womenimproper transitions can lead to reduced retirement benefits.

by bill reeb and dominic cingoranelli
卡塔尔世界杯常规比赛时间 / succession institute

when a partner is retiring, there is a transition process that we recommend. let’s break it down into a few simple steps:

more on performance management: how client transition is abused | best practices for mandatory retirement | how retirement issues affect succession planning | succession: the questions to care about | 7 succession questions to ignore for now | how partner ratings factor into equity | hazards of not reallocating equity | the pitfalls of equity allocation and reallocation | develop your employees or suffer the consequences | cpa firm performance assessments: 15 core competencies, 21 questions | how to target what skills to develop now | what having your employees’ backs means | 5 harmful management attitudes (and how to fix them) | do cpa firms need management or leadership? |  job 1 for the practice owner: client management

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accounting industry expands at 5% annual rate

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cpatrendlines jobs report tiltpayroll agency hiring surges. wage growth slows at cpa firms.

who’s hiring? who’s not?
join the survey. get the answers.

by 卡塔尔世界杯常规比赛时间

the u.s. tax, accounting and bookkeeping industries are turning out to be one of the brightest spots in the nation’s economy, growing at about 5 percent a year, with payroll agencies now turning in the strongest performance.

wage growth, on the other hand, is showing signs of slowing down.

this month’s 卡塔尔世界杯常规比赛时间 jobs report covers:

  • current hiring trends in each of the bookkeeping, tax, payroll and cpa segments of the industry.
  • average hourly wages for key segments.
  • typical hours worked per week.
  • and trends concerning women in the accounting workforce.

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partner retirement and the war for clients

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retirement plan label on folderbonus checklist: 8 best uses for a retiring partner.

by bill reeb and dominic cingoranelli
卡塔尔世界杯常规比赛时间 / succession institute

once a firm is ready to phase out a partner in retirement, it’s time to move on to the client transition process. but this is the single most abused part of the entire succession process.

more on performance management: best practices for mandatory retirement | how retirement issues affect succession planning | 7 succession questions to ignore for now | how partner ratings factor into equity | the pitfalls of equity allocation and reallocation | cpa firm performance assessments: 15 core competencies, 21 questions | what having your employees’ backs means | 5 harmful management attitudes (and how to fix them)

the reason why this part of the process is the most abused is because both sides – the partner nearing mso (henceforth referred to as retiring partners or retired partners) and the remaining partners – are motivated to do the wrong things. for example, it is in the best interest of retiring partners to not transition their clients because if they don’t, the firm will need to keep them around to continue to work on them after mso. if this isn’t bad enough, because they did not transition their clients properly, the retired partners have a great deal of leverage since they are now entitled to their full retirement pay and still have control over some or most of their client base. this allows the retired partners to gain additional benefits from the partner group by basically reselling their clients to them again. unfortunately, this situation is more the norm than the exception.
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how much do partners earn? and why

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dollar on question markbonus: the 18 factors that drive partner pay.

by marc rosenberg

what do cpa firm partners actually earn?

more on partner compensation: how partners view compensation: it’s not all about the money | why most partner comp systems are performance-based

the statistics below usually vary by the size of the population market, though our experience working on numerous client projects with firms in small markets has shown that it is quite possible for firms in small markets to earn “large market” income.

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partner compensation: an art, not a science

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the 4 engines that drive management.

by marc rosenberg

the allocation of partner income is much more an art than a science. anyone who thinks otherwise is either naïve or has never been a partner whose income was subjected to an income allocation process.

more on partner compensation: how partners view compensation: it’s not all about the money | why most partner comp systems are performance-based

partner compensation is not a science. if allocating partner income were a science, it would be easy to concoct the perfect formula that factors in all relevant performance metrics, both tangible (production) and intangible (leadership, mentoring staff, loyalty, teamwork, etc.), producing results that would be considered fair and acceptable to most or all partners. there would be few arguments among the partners because they would feel the formula says it all and leaves nothing for debate.
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best practices for mandatory retirement

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time to retire clock facethe work retired partners should – and shouldn’t – do if they stay on.

by bill reeb and dominic cingoranelli
卡塔尔世界杯常规比赛时间 / succession institute

once “fair” retirement benefits have been determined, for this moment in time, we can move on to the next step in building our succession plan. the reason i mention that we are simply putting stakes in the ground is because as we set additional stakes in the ground, those new stakes might require us to rethink a decision made when setting a previous stake.

more on performance management: how retirement issues affect succession planning | how partner ratings factor into equity | the pitfalls of equity allocation and reallocation | develop your employees or suffer the consequences

for example, if the firm later establishes premium perks for past owners who want to continue to work for the firm after sale of ownership, then that might require reassessing the retirement benefit calculation agreed to when setting that earlier stake (because in the end, the retirement benefit is about the whole package offered, not just one component).
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how retirement issues affect succession planning

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an old-school bronze justice scale with inequal stacks of moneyif you believe your firm will be dysfunctional without you, now is the time to fix it.

by bill reeb, dominic cingoranelli, and tommye barie
the succession institute

when we take our clients through succession planning, eventually the focus turns to implementing the best practices for running a firm – but first we normally have to start with short-term retirement issues.

more on performance management: succession: the questions to care about | how partner ratings factor into equity | the pitfalls of equity allocation and reallocation | cpa firm performance assessments: 15 core competencies, 21 questions | what having your employees’ backs means

why? because typically you won’t get any buy-in for change until the partners have looked at whether the current retirement system is paying at least roughly a fair market value to the near-term retiring partners.

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succession: the questions to care about

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track and field athletes passing relay baton. studio shot over white.bonus checklists: 5 rules to govern a succession plan. 8 keys to an effective compensation system.

by bill reeb and dominic cingoranelli

we’ve seen a lot of frequently shared, misdirected advice on commonly discussed succession issues. we would rather stop focusing on symptoms and start focusing on resolving the root cause issues that a good succession plan should address.

more on performance management: 7 succession questions to ignore for now | hazards of not reallocating equity | develop your employees or suffer the consequences | how to target what skills to develop now | what having your employees’ backs means

our solution: the robust succession framework

first and foremost, good succession management is a function of good business operating practices. over and over, we find successful firms – including many that have even effectively retired partners in the past – that are overlooking some very important best practices.
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