- The firm establishes overall goals for the year.
- The Managing Partner establishes goals with each partner, integrated with the firm goals and monitors performance with each partner during the year.
- The MP and each partner meet at year end to review achievement of goals and summarize performance.
- The MP makes a recommendation of the year end bonus allocation to the Compensation Committee based on each partner’s performance and the judgment of the MP.
- The Compensation Committee reviews and adjusts, if necessary, the MP recommendation.
- Salaries (draws) are set for the coming year by the MP and Compensation Committee.
- The Compensation Committee or governing board is responsible for a similar process with the MP.
The ultimate goal is to find a fair allocation of firm profits among the partner group. One size clearly does not fit all firms or partners and, as your firm evolves, your partner compensation process needs to evolve along with it.
Gary Adamson is the President of Adamson Advisory, specializing in practice management consulting for CPA firms. He is an Indiana University graduate and has extensive hands on experience as the recent managing partner of a top 200 CPA firm. He can be reached at (765)488.0691 or email@example.com. For more about Adamson Advisory, visit www.adamsonadvisory.com or follow the company at www.adamsonadvisory.com/blog and www.twitter.com/adamsonadvisory.