Updated: Aug 27, 2021
This article summary appears in full on the Performance Leader website.
How to fairly reward equity partners who manage a client load plus internal leadership roles was the key topic of discussion at our partner compensation roundtable held with Performance Leader late 2020.
Fifteen Managing Partners and Remuneration Committee members of large law, accounting and property advisory firms in Africa, Asia, Europe and the United Kingdom attended. Barolsky Advisors’ Joel Barolsky and Performance Leader’s Partnership Advisor, Michael Roch, facilitated the roundtable.
The discussion quickly revolved around three interrelated problems, with many interdependencies, that require sensitivity from the partnership:
Unclear reward policies for partners in management roles
Divergent views in the partnership about the impact of partners with formal management roles
The value to the partnership of partners in management relative to a partner's client-facing role
FINDING A WAY FORWARD: 5 QUESTIONS TO ASK
We discussed five important questions to ask in relation to a management role:
What are the general roles & responsibilities for this role?
If done reasonably well, how much energy do we want partners to spend in this role?
If done reasonably well, how do we reward partners for carrying out this role?
What are the specific strategic, operational and financial imperatives for this partner in this role?
How did this partner do?
THREE PRACTICAL ISSUES
At the end of our roundtable, we sought a discussion around three questions that Remuneration Committee chairs frequently ask. There was consensus only about one thing: the answer always is, “it depends.”
Should the Managing Partner always be at the top of the points ladder?
How should RemCom reward a partner who is already among the highest paid for client delivery, yet also is achieving great results as a partner-leader?
Isn't a group leader only achieving great results on client delivery because s/he is the group leader?
CLEAR ADVICE BY ROUNDTABLE PARTICIPANTS
Our roundtable participants left with three clear pieces of advice:
Make expectations of partners in management roles clearer and then agree a few defined strategic, operational and financial outcomes that help RemCom make informed reward decisions
Establish a clear reward policy for partners in management roles including incentives and sanctions if necessary
Ask the Board to involve non-executive directors in the evaluation of senior leaders to counterbalance the strong voice these individuals tend to have in the partnership
Our thanks to our roundtable participants for a stimulating conversation. Please get in touch if you’d like to discuss any part of this article, and read on to see how Performance Leader can help your firm with partner contribution and compensation issues.
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Download the 2020 Equity Partner Contribution & Compensation report, co-authored by MHPR and Performance Leader.
Read Performance Leader's KPIs & Metrics in Partner Contribution & Compensation roundtable report.
Discover how Performance Leader supports your firm's management of Partner Contribution.