Future-proof your partnership: navigating partner compensation in the age of AI and private capital
As 2025 closes, professional services firms are navigating a rapid transformation driven by AI and by increasing private capital investment. As you reflect and plan for 2026 and beyond, I explore 3 critical trends reshaping partner compensation:
1. Partner compensation and AI
2. Private capital and partner compensation
3. Merit systems for sustainable growth
Understanding these 3 trends is critical for attracting, retaining and motivating top partner talent.
Partner compensation and AI
How should partner contribution and profit-sharing be redefined in the age of AI?
As delivery gets faster, cheaper and more automated, value is pivoting from hours and effort to what AI can’t (yet) replace: judgment, trust and personal relationship-building.
As a result, partner contribution to business development will carry much more weight than in the past.
This shift doesn’t just redefine who advances. It upends how partners are rewarded, how senior technical experts are valued and how managing partners choose to invest for long-term, sustainable growth.
Future partner compensation systems will reflect how partners create long-term value. Systems that cling on to rewarding partners for short-term production will quickly fade.
Private capital and partner compensation
Professional services firms remain firmly on private capital’s radar.
By the end of 2025, more than half of the top 30 U.S. accounting firms will have taken on private equity. The trend in other PSF subsectors may not be as dramatic, but private capital's interest in this high margin sector is unabated. The current dramatic shift from zero just five years ago is reshaping not only how firms operate, but how they define value.
Outside capital offers PSFs the financial means to digitize the business and capture the benefits of AI. Firms can pursue growth through expansion into new segments or regions with greater speed. The financial backing of an investor can also transform a firm from being a target to becoming a consolidator.
Private capital introduces new accountabilities. This, in turn, affects partner incentives, contribution and reward. The challenge for partnerships will be to balance the adoption of much faster decision-making with preserving shared partnership values underpinning the firm’s success.
Download our upcoming white paper to understand how private capital changes the partner compensation equation. Register to reserve your copy.
Merit systems for sustainable growth
To grow without private capital, firms require a supportive partner compensation system.
Outside professional services, many organizations are thriving precisely because they’re choosing to be self-financed. They all share 3 attributes: Strong leadership. Unwavering focus on top-line growth, efficiency and innovation. And a long-term orientation that transcends quarters or financial cycles.
Within the professional services sector, an obsession with current-year profits continues to dominate. Yet this is changing, and many firms have changed how they motivate and reward their partners.
Today’s and tomorrow’s partners want to be recognized for their performance and their contributions to the business – financially and otherwise. They detest opacity and having to play the “waiting game” – or any game for that matter.
With very few exceptions, today’s market leaders across the PSF sectors are strong meritocracies. They have long made the shift from a comfortable, tenure-based compensation model to one that is based on merit – or from a collection of sole traders to a model where one’s own success requires the success of others (see our recent whitepaper linking compensation to partner collaboration).
Best wishes for a healthy and successful 2026!
