{"id":119768,"date":"2023-12-14t11:55:02","date_gmt":"2023-12-14t16:55:02","guid":{"rendered":"\/\/www.g005e.com\/?p=119768"},"modified":"2024-08-29t23:54:17","modified_gmt":"2024-08-30t03:54:17","slug":"twenty-items-for-a-partner-compensation-committee-to-decide","status":"publish","type":"post","link":"\/\/www.g005e.com\/2023\/12\/14\/twenty-items-for-a-partner-compensation-committee-to-decide\/","title":{"rendered":"top 20 tough choices for the partner comp committee"},"content":{"rendered":"
<\/strong><\/p>\n production isn\u2019t all that matters.<\/strong><\/p>\n by marc rosenberg<\/i> increasingly, cpa firms are adopting the compensation committee system for allocating partner income. firms are finding that systems such as formulas, pay based on ownership percentage or pay-equal no longer work.<\/p>\n more: <\/b>voting on ownership basis? three better methods<\/a> | what partners do and don\u2019t deserve<\/a> | tell potentials what partnership takes<\/a> | fifteen big questions for your next strategy session<\/a> | five steps to transition to partnership<\/a> | disturb the present to improve the future<\/a> if there is one overarching cause for this significant trend, it\u2019s that firms are understanding that their partners need to be something more than production machines. in addition to bringing in business, managing a client base and working billable hours (all of which continue<\/strong> to be important values in a compensation committee), partners need to excel in intangible areas such as helping staff grow and develop, developing specialized expertise and teamwork. the compensation committee is one of the best systems available to cpa firms to allocate income based on this diverse array of performance criteria. there are actually 20 major decisions that need to be made by a compensation committee (cc).<\/p>\n 1. if the committee is appointed, decide when this will be done. if elected, decide when elections will be held and set future dates.<\/p>\n 2. decide how many members will be on the cc, including the managing partner.<\/p>\n 3. decide term of office of cc members. terms should be staggered so that a minimum number of members leave the committee each year.<\/p>\n 4. should the cc and the management\/executive committee be the same or separate?<\/p>\n 5. what will be the performance criteria that the cc will use to evaluate the partners?<\/p>\n 6. decide if the cc will function as management or if it will be strictly limited to allocating the income. if the former, the main \u201cmanagement\u201d part of their job could include some or all of the following:<\/p>\n 7. decide what the structure of partner compensation should be. should it include some or all of the following tiers and what percentage of total partner income should go into each tier?<\/p>\n 8. if both a base and a bonus:<\/p>\n 9. if the base is independent of the bonus, what will impact the base?<\/p>\n 10. if the bonus is independent of the base, how will it be determined?<\/p>\n 11. decide how the progress on goals throughout the year will be monitored and who will do it.<\/p>\n 12. will you use the paper and pencil method as a non-binding guideline? will you do it for both base and bonus? who will tabulate it?<\/p>\n 13. what information will the cc want to review and who will collect this data? what will the cc use to evaluate each partner?<\/p>\n a. production statistics<\/p>\n b. any evaluations of the partners\u2019:<\/p>\n c. achievement of formal, written goals<\/p>\n d. performing your role in the firm<\/p>\n e. input from management, especially the managing partner and department heads<\/p>\n f. non-binding paper and pencil exercise<\/p>\n g. assessment of the extent that each partner lived and breathed the firm\u2019s core values<\/p>\n h. anything else the cc considers relevant<\/p>\n 14. what will be the reporting year for the above data?<\/p>\n a. if your firm is a calendar year-end, when will the committee deliberate? remember, as a practical matter, you probably won\u2019t be able to collect the data until the third week or so of january. the cc needs time to study and review the data, so, their first meeting may not be until the end of january or beginning of february.<\/p>\n communication with each partner would have to be in february. is this feasible given the busy season?<\/p>\n an alternative is to prepare the data on a basis other than a calendar year. an example would be nov. 1 through oct. 31 or dec. 1 through nov. 30.<\/p>\n b. if you are not<\/strong> a calendar year-end, are you comfortable having goals and compensation being done on a basis other than calendar year-end?<\/p>\n 15. how will the cc members actually make their decisions:<\/p>\n 16. determining the compensation of the cc members:<\/p>\n 17. communications:<\/p>\n 18. will the system be open or closed? (in an open system, all partners know all partners\u2019 income. in a closed system, only cc members know what each partner earned.)<\/p>\n 19. appeal procedures?<\/p>\n 20. approvals required of cc decisions?<\/p>\n production isn\u2019t all that matters.<\/strong>
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\nwhen firms begin operating their new compensation committees, there is a lot of initial confusion and bewilderment about how to get started. for example:<\/p>\n\n
checklist: 20 decisions for a compensation committee
\n<\/strong><\/h3>\n\n
\ngoals.<\/li>\n
\nyear.<\/li>\n<\/ul>\n\n
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\n<\/a>
\nby marc rosenberg<\/i>
\nthe rosenberg practice management library<\/i><\/a><\/p>\n","protected":false},"author":1339,"featured_media":120576,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"","_relevanssi_noindex_reason":"","footnotes":""},"categories":[2374,3120,3002,2266],"tags":[2429,572,38,1416],"class_list":["post-119768","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-pay-compensation","category-pro-member-exclusive","category-special","category-partner","tag-earnings","tag-pay","tag-salary","tag-wages"],"acf":[],"yoast_head":"\n