boomer partner compensation 6/28/05 4:16 pm page 1 …...partner compensation the act of researching...

A BOOMER STRATEGIC ADVANTAGE TM

GUIDE TOPARTNER

COMPENSATION

BOOMER Partner Compensation 6/28/05 4:16 PM

GUIDE TOPARTNER COMPENSATION

“To change your firm... You must change the thinking of the partners. Tochange partner behavior, you must change their compensation.”

L. Gary Boomer


SUMMARY

Compensation of owners in a professional service firm has always been contentious. Over the years, severaltrends have developed based upon the size of the firm. A new trend is developing that is an attempt totake the best from previous systems and blend it with new developments in firm management. This

method is generally referred to as the balanced scorecard approach. It is driven by the need to attain balance,accountability and promote teamwork. It requires vision, thinking, strategy and time in order to properlyimplement. When most firm owners hear about the approach, they become excited (positive and negative) aboutthe potential. How is it going to affect my compensation is the first and expected reaction. Sadly, few think aboutwhether or not this is going to be good for the firm. This is normal and should not deter a firm from striving toimprove its compensation system. Change is always difficult, so expect it to take some time and require severalmeetings to address questions and sell the vision. It is important to understand the evolution of compensationsystems in order to move to the next level. Peer firm experiences can also be very valuable and save time.

There are basically three ways to get partners to change.• Pain• Education• Rewards

Partners typically do not want to change unless they hurt enough, learn enough or are compensated enough tochange. In fact, most won’t want to change until they are forced by a crisis or threat of a loss. That crisis today isimmediate on two fronts: first, is the lack of quality people and secondly the fact that many older partners do nothave viable succession plans in place. Most firms’ compensation systems were started when they were muchsmaller, the industry was less commoditized and there was an abundance of labor with less reliance ontechnology for leverage. Successful firms think differently than ordinary firms. To change, your firm mustchange its thinking. As a leader, if you are willing to change your thinking, you can change your feelings. If youchange your feelings, you can change your actions. If you change your actions, you can change yourperformance. If you change your performance, you can change your life. Unsuccessful people tend to focus theirthinking on survival while average people tend to focus on maintenance of what they currently have. Successfulpeople focus on progress. You may want to start the process through education and stop paying partners fordoing the wrong things.

Compensation must support the firm’s goals and reinforce its core values. The acid test is alignment. Does thefirm’s compensation system encourage the performance the firm wants to reward? The right system today won’tnecessarily be the right system in the future or forever. Strategic priorities change as does competition fromwithin and outside of the profession.

Trust is the key. Owners must trust the decision making process and the decision makers to be fair. Transparencytends to build trust, yet some firms are moving away from transparent systems. The system should focus on thelong-term goals of the firm. Firms and employees need financial discipline. There must be an explicit evaluationprocess, yet in many firms, owners have not had a serious evaluation for years. It is easy to measure revenue,charge hours and other hard numbers regarding short-term performance. It is hard to capture more subtleaspects of partner performance such as the mentoring of young people, thinking and idea development and thelong-term value of current work where future risk of litigation exists.

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SUMMARYA BOOMER STRATEGIC ADVANTAGE TM


People’s priorities change as their personal lives evolve. Therefore, one size does not fit all. The intensity of theprofession can become exhausting. At times, money may matter more than recognition; at other times, just theopposite. Regular performance reviews for all partners should be standard operating procedure. In most firmsthey are not. A salary review is different than a performance review. Feedback is hard work and requires thinkingand time. In fact, most firms spend far too small amount of time planning and thinking. The tendency is to justact by focusing on chargeable hours. However, most firms are only at 50% chargeable; what are they doing withthe other 50% of their time? Performance reviews require commitment from the top.

The remaining sections of this document will guide you in your exploration ofPartner Compensation by looking at the following: Methods to Partner Compensation—pg. 3

• Equal• Formula• Spreadsheet• Managing Partner Decision• The Compensation Committee• Points/Values• Balanced Scorecard

The Balanced Scorecard—In depth—pg. 9

A Plan to Move Forward—pg. 12

Tools—Appendix—pg. 13A. Article—Holding Your Managing Partner AccountableB. Managing Partner Job DescriptionC. The One Page Plan for Partner CompensationD. 90-Day Game PlanE. Progress Report1

F. Sample Firm Balanced ScorecardG. Sample Partner Balanced ScorecardH. Sample Staff Balanced Scorecard

1 TM & © 2004. Based on The Positive Focus™ concept from The Strategic Coach Program™. All rights reserved. Used with permission. www.strategiccoach.com.

SUMMARY


METHODS TO PARTNER COMPENSATION

The act of researching methods is vital, but the act of “acting” on themethod is the most important step in the process.

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COMPENSATION METHODSMETHODSFirst, let’s quickly review the various compensation methods and a brief comment about each. There are manyvariations so don’t be alarmed if your firm’s system is a combination of two or more of these methods.

Equal

Formula

Spreadsheet

Compensation Committee

Managing Partner Decision (MP)

Points/Values

Balanced Scorecard

Works in large firms

CEO form of doing business

Used in very large firms

New to the professional services firm

ATTITUDESEmployees think differently than the self-employed, business owner or investor. Are your partners businessowners, investors or self-employed? Most think they are business owners, but act like they are self-employed.Employees are primarily focused on salary and benefits while the self-employed tend to “do it themselves.”Business owners hire people with unique abilities and talents; they also delegate and manage the employees ratherthan focus on their own chargeable hours and book of business. Finally, investors are primarily concerned aboutthe return on investment. Some of these characteristics appear in everyone, so it is important you conduct anhonest assessment of how your firm’s owners think and act. Remember, all progress starts with the truth.

MOTIVESIn speaking with partners from many firms, there are many common motives. While I understand the thinkingbehind them I don’t always agree with the values some firms are placing on them and the results the systems areproducing. A good question to ask is, “Who is looking out for the firm?” Some of the terms start to sound“bureaucratic” and subscribe to the “entitlement” philosophy. The following is a brief list of the most oftenstated motives:

• Fairness• “Bottom line” driven• Return on investment• Recognize seniority/experience• One-firm concept

• Goal oriented• Objective versus subjective data

(keep score with hard data)• Leverage of resources• Integration with the strategic plan• Results based versus effort based

The more complex the better in most firms

Easy, but promotes mediocrity

Based upon the paper & pencil method, just automated


Most of these systems are associated with potential problems and firms tend to stay with a system too longbecause of the fear of the unknown and change. Let’s quickly look at the potential problems associated with eachtype of system.

EQUALThis system tends to work in newly created firms; those that have three or fewer partners. The system tends topromote mediocrity as the firm grows. You also should remember that inequality comes from equal treatment ofunequal people. This system can be very limiting to the growth of a firm.

FORMULAThe biggest risk behind the formula system is the fact it often promotes the concept of sole proprietors sharingoverhead rather than the one-firm concept. Partners may hoard work and not leverage properly. This system alsotends to overcompensate for technical skills and places little value on firm management, leadership, improvedprocesses, vision and learning.

SPREADSHEETThe spreadsheet system is very similar to the formula system with the exception that the spreadsheet allows formore complexity. Accountants tend to like complex formulas that are difficult for the outsider to understand.Perhaps this evolves from trying to get every owner’s positive attributes included in the formula. Firms need astrategic plan or shared vision in order to make this or any of the systems work properly. Without a strategic plan,how do you answer the question: “What is best for the firm?"

METHODS

Equal

Formula

Spreadsheet

CompensationCommittee

MP Decision

Points/Values

No

Rare

No

Common

Rare

2-3 Partners 4-7 Partners 8-10 Partners 10+ Partners

No

Can Work Well

No

Very Common

Effective atUpper End

Becomes Viable

BecomesDifficult

No

Less Common

Can Work

Common

More Difficult

Still in Use

Seldom

Too Difficult

System

Common Rare Never Never

SYSTEM—USAGE—TENDENCIESThe following table shows where the various systems are typically used.

Above data taken from The Rosenberg MAP survey, an annual survey of CPA firm MAP statistics and management practices. Marc Rosenberg, www.rosenbergassoc.com.


MANAGING PARTNER DECISIONIn firms where there is a strong leader and visionary, the managing partner often can successfully administer theowner compensation system. However, very few firms are able to maintain this system. Typically, the managingpartner does not have a book of business or chargeable hours when this system is utilized. It is difficult, if notimpossible, to find a managing partner who is both a strong leader and a strong manager. Superman orsuperwoman does not exist even though many CPA’s would like to think they are both great leaders andmanagers. A great manager is interested in helping the firm and others succeed rather than just themselves. Theyare like a good coach: they encourage, support and critique their team. They must have the trust of the team. InAppendix B you will find a job description for a Managing Partner that will assist you in the development of this position.

THE COMPENSATION COMMITTEEThis method is either an attempt at providing balance or the managing partner may not want the soleresponsibility for administration of the system. This system requires excellent communications and often comesinto existence due to the perception there isn’t any better system. The compensation committee should be smalland the managing partner should be a permanent member of the committee. The other members should beelected. Not all owners should expect to participate on the committee.

POINTS/UNITSThis is the system that most large firms use and is generally combined with the compensation committee. Whilethe system may work, it has a tendency to overvalue technical skills and managed book of business. It can be thefoundation for the balanced scorecard method which we will discuss in more detail later.

One of the most disruptive results of all of the systems appears to be regarding the differences in compensationlevels among owners rather than the total amount of the compensation pool. Therefore, many firms have gone orare moving toward closed systems where partners do not know other partners compensation. Typically, ownerscan calculate approximate amounts in small firms with a limited number of owners.

THE BALANCED SCORECARDWhile the newest system in the professional service profession, it is not a new system and has been employed incorporate America for over 10 years.

The concept was developed at Harvard Business School in the early 1990s by R.S. Kaplan and D.P. Norton. It isan organizational performance measurement system that has received widespread acceptance and is now beingintroduced into professional service firms. Some refer to it as a pay for performance system.

The purposes of the Balanced Scorecard are:• Communicates strategy throughout the firm• Informs owners/employees of how they fit• Teaches owners/employees to focus on what is important, not just activity• Creates control over life balance• Links firm and owners/employees’ success• Provides feedback on a timely basis• Rewards results rather than effort• Provides opportunity for success at all levels within the firm

COMPENSATION METHODS


The scorecard is typically categorized into four categories: learning & growth, internal operations and processes,client development and satisfaction and financial. The tendency of all companies (firms) who implement theBalanced Scorecard approach is to over focus on the financial measures. Accountants know how to measurefinancial results but have trouble with the other three categories. Experts say the financial results will come ifproper focus is given on employee learning and growth, improved processes, and client development andsatisfaction. Financial success is a result.

By now you probably have several questions about the Balanced Scorecard. What is it? Why are professionalservice firms interested? How do they use it? How do they implement it? We will attempt to answer yourquestions as we proceed.

The steps to the process are:1. Clearly define business objectives and strategy.2. Communicate, measure, motivate and reward.

The obstacles are numerous and accountants are notorious for being able to identify the obstacles; but generallythey don’t take the time to develop the necessary strategies to overcome the barriers.

Some of the more important obstacles are:• Vision—inability to see and communicate what the future will look like.• People—inability to attract and retain quality people.• Management—inability to focus on the business rather than simply working

in the business.• Resources—with limited resources, firms must focus on a limited number of strategic

objectives and initiates. Often firms try to do too much and accomplish very little.

VISIONIn most firms the employees fail to understand the business vision either because the firm doesn’t have a sharedvision or the vision isn’t consistently communicated. It must also be clearly communicated both internally andexternally (by all owners). Sadly, in many firms the owners do not agree upon the vision, therefore, employeesand clients hear conflicting visions and strategies. Employees are the key asset in a knowledge based business.Communication and understanding of the vision are the keys to successful execution. Strategic goals must betranslated into tasks, performance standards and desired outcomes. Do not assume anything. It is much better forinitiatives to be well-defined and consistently communicated.

PEOPLEIn today’s commoditized marketplace, quality people are becoming more difficult to attract and retain.Compensation must be linked to performance and performance must be measured correctly. Employees tend tofocus on what is measured, particularly if it is tied to compensation. The key measurement in the professionalservice industry has been chargeable hours. Some will still argue this is a key indicator. However, a balance isneeded among financial, training/learning, process improvement and client satisfaction related initiatives. It isvery important the firm’s compensation plan reinforces the firm’s strategic objectives. The scorecard should becascaded down to the individual level. Reward employees for creating value. Caution: start with the owner groupbefore you apply the balanced scorecard to the staff. Wait at least one year before taking the system to the stafflevel. Get the problems at the owner level resolved first. (Remember the three keys to change: pain, educationand reward.)

METHODS

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NOTES

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MANAGEMENT AND LEADERSHIPWhere is management focused? What is being measured? These are key questions in aligning management andthe strategic plan. The management team needs to focus beyond just financial results. While financial results areimportant, so are investments in training/learning, processes, technology and client satisfaction. With firms onlyaveraging around 50% chargeable, there appears to be adequate time for the important initiatives. Management’sresponsibility is to balance among conflicting priorities. Someone must provide the necessary leadership and discipline.

Great leadership is the solution to most issues facing firms. Yet we find the majority of managing partners or chiefexecutive officers do not have a job description. Without a job description it is impossible to hold the managingpartner accountable and accountability must start at the top of the firm. A sample CEO/Managing Partner jobdescription is included in the supplemental materials in Appendix B.

RESOURCESResources must be budgeted and allocated in accordance with firm strategy. Without a firm strategic plan, firmsoften get caught in spreading too few resources across too many objectives and initiates. Long-term goals mustbe balanced with short-term performance. Many firms get caught in the trap of maximizing current profits whileavoiding the necessary long-term investments in technology, re-engineered processes and training/learning.Unfunded retirement benefits based upon owner salaries can be a detriment to making the necessary investments.The firm should always come above any one partner’s compensation or retirement plan. Be careful not to allowsenior partners to over commit the firm to unfunded retirement benefits that are dependent upon futureearnings. Everyone wants a great deal, but the firm must be able to excel and afford the benefits. Therefore,someone from the outside who is independent and knowledgeable of the profession may be needed to provideperspective and coaching. Another alternative is a paid outside advisory board.

LEADERSHIP IS KEY


BALANCED SCORECARD (IN-DEPTH)

Partner compensation is indeed a balancing act. Finding the methodthat will hold partners accountable, motivate to meet firm goals andultimately allow for a high rate of return is within your reach.

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VISION &STRATEGY

INTERNALBUSINESS

PROCESSESCUSTOMER

LEARNING &GROWTH

FINANCIAL

THE BALANCED SCORECARD2

A graphic of the Balanced Scorecard follows. Note that vision and strategy are at the core with the four primaryperspectives linked.

Each perspective can be valued differently depending upon the firm’s valuation system. As a word of caution,make sure you give internal business processes, learning and growth and customer satisfaction adequate value. Inthis example, we are assuming they are part of your firm’s strategic plan. If not, then you will simply substituteyour firm’s areas of strategic objectives.

OBJECTIVES AND MEASURESEstablish what you are going to measure and then how you will measure. Most professional service firms arecomfortable measuring lagging indicators (or dealing with history). Leading indicators are more important inmanaging a well run firm. Indicators such as client contacts, number of proposals outstanding and absenteeismare leading indicators. Cause and effect are most important when dealing with leading indicators. If…., then….,(else). Remember that goals are measurable while slogans are not measurable.

WHAT NEXTIf you think the Balanced Scorecard approach has value for your firm, you should get additional training and dosome research. Once this is complete, you will need to make the decision to take action and obtain the buy-in ofyour partner group. This is never an easy task as partners tend to resist change. Their biggest question, eventhough they may not want to admit it, will be what effect it will have on their own salary and retirement benefits.It will require a trial run to calculate what salaries would have been the past year if the system had been in place.Getting everyone striving for the same firm goals and completing their individual 90-Day Game Plans will ensuresuccess. Leadership, alignment and consensus are big factors in determining success. It may require coachingfrom someone outside the firm. It is generally very difficult for the managing partner (or any partner) to changea firm’s compensation system. The saying that if you are part of a system, it is impossible to change the systemholds true. It requires objectivity, education and confidence in order to ensure success.

THE BALANCED SCORECARD


TIPS ON GETTING STARTED1. Start with your strategic plan—without a plan you will have a weak foundation.2. Start with the total commitment of the MP or CEO—leadership is a requirement.3. Commitment is different than support—this is for all partners, not everyone but “me.”4. Use a facilitator/coach—it will reduce time and increase partner confidence.5. Start with the partner group—do not include the staff the first year.6. Use the Progress Reports3 and 90-Day Game Plans to reduce time

(simple tools that will reduce management time).7. Schedule quarterly meetings in advance—meetings scheduled in advance have more importance.8. Ensure performance funds—financial rewards change behaviors.

(Also, stop paying partners for doing the wrong things.)9. Focus on limited objectives—maximize your return by focusing resources on priorities.10. Use graphics for positive visuals around the office—communicate consistently and often.

SAMPLE SCORECARDSThe scorecards in Appendix F–H are provided as examples of how firm objectives become owner and staffobjectives. It is recommended that no more than three initiatives be measured under each perspective. You willsee in the example that we are only measuring three objectives. The objectives are given different weights(importance) even though each perspective is given equal value. In this example, a maximum of 25 total points isassigned to each perspective. The score in each objective comes from quarterly evaluations. Firm success is tied toowner and staff success. The final score is reduced to a total value of 10 or less. This is only an example and yourfirm may chose not to weigh values. Most experts agree that each objective should not be equal in value;however, the perspectives should be valued equally. The tendency of many owners will be to want to reduce thevalues on everything but the financial objectives. Each firm should determine their perspectives, objectives andvalues based upon their strategic plan. While this is only an example, you may find the objectives fit your firmwith minor modification.

CONCLUSIONThe Balanced Scorecard approach is new in the professional service industry. Few professional service firms haveused the approach for over two years. The system requires management time and communication at all levelswithin the firm. It will improve the alignment of firm and personal objectives. If your current ownercompensation system is not producing the results that promote the one-firm concept, you should consider theBalanced Scorecard approach. It will hold owners accountable while focusing on priority objectives. It will alsoincrease confidence as the firm grows and improves.

2 The concept of the Balanced Scorecard approach was acquired by reading The Balanced Scorecard: Translating Strategy Into Action by Robert Kaplain and David Norton.


SCORECARD

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A PLAN TO MOVE FORWARDThroughout this guide you have been challenged to evaluate, think and change your current mind-set in order todevelop a partner compensation plan that is effective for your firm. The steps in your process are simple—butthey are not to be “glossed over” or taken lightly.

Step 1: Appendix A—Holding your Managing Partner AccountableEvaluate where you are today and base decisions on the overall firm strategic plan.

Step 2: Appendix C—Partner Compensation Sample PlanDevelop a plan for your firm’s partner compensation objectives.

Step 3: Appendix D and E—90-Day Game Plan and Progress Report4

Assign tasks to each team member and allow them the opportunity to fill out a personal game plan and quarterlyprogress reports to ensure accountability and progress.

Step 4: Evaluate Each YearEvaluate your progress each year and make adjustments if necessary.


A PLANTOMOVEFORWARD


TOOLS

Possessing the tools that are necessary to effectively complete your tasksis imperative to any process. The next section will give you a jumpstart in your partner compensation endeavors.

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APPENDIX A

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APPENDIX A

ARTICLE—HOLDING YOUR MANAGING PARTNER ACCOUNTABLEManaging an professional service firm is not an easy task due to the nature of the ownership and the fact that toooften everyone thinks they are in charge; but in reality, no one really has the power and control to lead andmanage effectively. The majority of professional service firms have a managing partner in title and responsibility,but often without the authority and power to lead effectively and efficiently. Accountability and discipline are thekeys to improving performance and growing the firm. I believe that most people’s intentions are good; however,often they get caught in the day-to-day tactical issues and fail to focus on the big picture or strategic goals.

Let’s look at the key areas in evaluating your managing partner. The areas shouldalso be part of the managing partner’s job description. The primary areas are:

• Leadership• Profitability• Strategic planning• Team building• Learning/Training• Asset protection

Each of these areas is important and worthy of further discussion. The size of yourfirm, number of partners/owners and the existing management team will influencethe areas of importance. The following rating scale applies:

• EE—Exceeds expectations• ME—Meets expectations• NI—Needs improvement

LEADERSHIP/Criteria1. Does the managing partner function as the firm’s visionary? Does he/she have the

proper balance between long-term vision and current results?

2. Does he/she spend an adequate amount of time thinking about what the firmshould look like in three years? Can he/she make a decision promptly and effectively?

3. Does he/she communicate the vision to all stakeholders? (Partners, staff and clients)Does he/she communicate regularly and consistently? Can the managing partnerprovide confidence and sustain employee morale?

4. Does the managing partner participate in associations and attend practicemanagement conferences in order to keep the firm informed of best practices andindustry trends?

5. Is the managing partner visible in the community and does he/she represent thefirm well? Is he/she a good role model for members of the firm?

EE ME NI


STRATEGIC PLANNING/Criteria6. Does the firm have a written strategic plan with priority goals, measurements,

action steps, assigned parties and due dates? Does the firm’s budget properlyaddress the priority goals?

7. Does the firm have a written marketing plan and budget that integrates with thefirm’s strategic plan?

8. Does the firm have a written technology plan and budget that integrates withthe firm’s strategic plan?

9. Does the firm have a written human resources (staffing) plan that integrateswith the firm’s strategic plan? (You must get the right people on the bus, thewrong ones off and everyone in the right seat.)

10. Does the managing partner involve the right people in the planning process?Can he/she build consensus?

EE ME NI

TEAM BUILDING/Criteria11. Has the managing partner empowered a firm management team including

administration, marketing, technology and human resources? Does he hold them accountable?

12. Does he/she resolve partner conflicts and counsel partners as needed?

13. Does the managing partner utilize testing such as the Kolbe Index® to buildefficient and effective teams?

14. Does the managing partner limit the number of personnel reporting directly tohim? (Generally five or less.)

15. Does the managing partner enforce the One-Firm concept, firm standards,policies and procedures?

EE ME NI

LEARNING & TRAINING CULTURE/Criteria16. Does the managing partner support a learning/training culture?

17. Does he/she require firm personnel to develop a TPOV (teachable point of view)in order to transfer knowledge? (Training and learning is a two-way street.)

18. Does the managing partner ensure that partners and staff attend learning sessions?

19. Does the managing partner teach and ensure the firm’s culture is consistent among offices?

20. Does the managing partner continue to learn and grow personally?

EE ME NI


APPENDIX A CONTINUED

FIRM PROFITABILITY/Criteria21. Does the managing partner manage to the strategic plan and budget?

22. Does he/she require all personnel to develop quarterly game plans? Does he/shehold partners accountable for their quarterly game plans?

23. Does the firm have a retirement plan that will ensure the continuation of the firm?

24. Does the managing partner ensure enforcement of firm policies regarding billings,collections and partner performance?

25. Does the managing partner terminate non-performers and those who do not train and develop other personnel?

EE ME NI

ASSET PROTECTION/Criteria26. Does the managing partner keep the shareholder and employment agreements

current?

27. Has the managing partner addressed succession planning? Is there a firm plan in place?

28. Does he/she regularly review insurance coverage and monitor risk management?

29. Does the managing partner negotiate and review material legal agreements?

30. Does the managing partner have a current employment agreement with the firm?

EE ME NI

While these 30 questions are not all inclusive, they should serve as a starting point or sample for you to developyour own firm’s evaluation form. A significant issue in many firms is the expectation of the managing partner tomanage the firm as well as manage a book of business. Many managing partners do not want to give up theirbook of business due to the fact it is a security blanket as well as the fact they like dealing with clients. In largerfirms, the firm is best served if the managing partner transfers his/her book of business to other partners andfocuses on firm business. An employment agreement for a fixed term of years (generally a three to five year term)is appropriate. If the partners decide to vote the managing partner out, he/she has a “golden parachute.”Likewise the managing partner should expect to inform the other partners at least one year in advance ofretirement or if he/she intends to relinquish the role of managing partner.

As important as defining what you expect your managing partner to do is documenting what you believe he/sheshould not be doing. A simple question like “What are the three things the managing partner should stopdoing?” is as relevant as any of the above 30 questions.

Hopefully this will get your firm thinking and acting on formalizing the process of professionally managing yourfirm. This is advice you would give your clients. Apply it in your own firm and experience improved performanceand teamwork.


APPENDIX B

GENERALThe managing partner is the CEO of the firm. The partner in this position is responsible for leadership, direction,guidance and control of the firm’s business activities to assure the short and long-term profitability and growth ofthe firm. Accordingly, the managing partner is responsible for recognizing emerging industry and environmentalchanges and developing strategies to capitalize on opportunities to assure the long-term success of the firm.Naturally, the managing partner has the responsibility for overseeing and assuring the successful completion ofthe firm’s business planning activities. In addition, duties include directing and facilitating the partnerperformance reviews.

ACCOUNTABILITYThe managing partner reports to the stockholders regarding the successful performance of all duties andresponsibilities. The managing partner is elected by a majority vote of the stockholders to a ___ year term. Themanaging partner shall give notice as to his/her intentions to seek an addition term at least 12 months prior tothe end of the current term.

MAJOR DUTIES AND RESPONSIBILITIES1. Provide firm leadership.2. Assure the availability of a positive, dynamic client-oriented office environment that is

genuinely committed to proactively serving clients and operating as a team.3. Direct and coordinate the firm’s strategic and annual business planning process including

human resources, technology, marketing/sales and succession planning.4. Assure the availability of an effective management team to implement the annual business

plan and govern firm operations, i.e. client service, financial/administrative management, personnel, professional development and marketing-business development.

5. Assure there is an effective and productive partner + manager group. The managingpartner/CEO is responsible for helping these individuals improve their performance through regular performance appraisal emanating from personal game plans, coaching and mentoring.

6. Assure that the firm adheres to a high level of proactive client service that will foster continued prosperity.

7. Assure that the firm has an effective training/learning and leadership development program as it pertains to continually upgrading its “people assets,” i.e. recruitment, motivation and retention of people.

8. Represents the firm both internally and externally as the CEO.9. Resolves any partner conflict (with the aide of other partners or consultants if need be) to

assure the continuity of high-level client service and a productive office environment.10. Primary liaison for the firm’s advisors (i.e. lawyers, bankers, insurance agents, etc.).

TITLE Managing Partner-CEOCLASSIFICATION Full TimeREPORTS TO Stockholders

JOB DESCRIPTION


1. Integrate the partner compensation plan withthe firm’s strategic plan and hold partnersaccountable.

• Approval of the firm’s strategic plan• Partner game plans and progress reports• Reviews

2. Develop a compensation system that is viewedas fair, understandable and recognizes individualcontributions.

• Complete and communicate partnercompensation plan

• Partner acceptance• Firm profitability• Revenue per FTE

3. Provide the firm with adequate capital • % of net revenue invested annually• Amount invested per FTE• Increase in revenue per FTE

4. Promote adherence to firm standards, policiesand procedures. (Citizenship)

• Evaluation of personal training requirementsfor each employee as a benchmark.

• Report on number of courses completed• Surveys of personnel• Focus group feedback

5. Integrate personal and firm goals • Compliance with firm policies andprocedures

• Success of firm sabbatical program

Strategic Objective MeasurementDEVELOP APLAN FOR YOURFIRM’S PARTNERCOMPENSATIONOBJECTIVES.

APPENDIX C Sample Plan PARTNER COMPENSATION PLANJONES & Company LLP


September 30, 20xxAnnuallyQuarterlyMonthly

Quarterly

CEO—Partners—Key PersonnelCEO—Partners—Key PersonnelPartnersCEO—Partner-In-Charge

CEO—Partner-In-Charge

2.1 Develop a written system.2.2 Communicate with all partners in a group and individually.

• Build a model based upon prior year actual and projected results2.3 Review and update all stock redemption plans.

• Voluntary• At retirement age• Disability• At death

2.4 Review all insurance policies and evaluate requirements.2.5 Implement and fund a 401k plan.

December 31, 20xxDecember 31, 20xx

March 31, 20xx

June 30, 20xxJune 30, 20xx

CEO—Legal CounselCEO—Firm Administrator

Task Force

Firm AdministratorFirm Administrator

3.1 Develop, approve and implement a comprehensive technology plan and three-year budget that integrates with the firm’s strategic plan.

3.2 Hire a Learning Director to coordinate Continuing Professional Educationand technology training.

• Professional educator with leadership skills• Excellent communication skills

3.3 Join the Boomer Circles for coaching, best peer practices and the Extranet.3.4 Implement a document management system.3.5 Implement an integrated financial reporting system.

September 30, 20xx

October 15, 20xx

ASAPJune 30, 20xxDecember 31, 20xx

CEO—Firm Leaders

CEO—HR Director

Partner—IT LeaderTask ForceTask Force

4.1 Hire a Learning Director.• Professional educator• Reports directly to CEO

4.2 Complete a training needs assessment.4.3 Develop a training curriculum.4.4 Schedule and conduct training sessions.4.5 Acquire and implement a Learning Management System.4.6 Implement a centralized help desk and Intranet.

October 15, 20xx

June 30, 20xxDecember 31, 20xxOctober 15, 20xxSeptember 30, 20xxDecember 31, 20xx

CEO—HR Director

Learning DirectorTask ForceLearning Director/Key PersonnelLearning DirectorIT Director

5.1 Review, document and update firm policies and procedures.• Internal tax return preparation• Outsourcing policy and procedures• Financial statement preparation• Time entry and billing

5.2 Develop a firm sabbatical program.• Owners—One month every other year• Principals & managers with over five years—one month every three years

5.3 Implement a balance scorecard plan.• Client satisfaction• Compliance with firm polices and procedures• Financial• Training and learning

5.4 Review and update partner compensation plan.

September 30, 20xx

June 30, 20xx

December 31, 20xx

December 31, 20xx

Task Forces

Task Force

Task Force

CEO—Executive Committee

Strategy/Initiative Due date Assigned to1.1 Conduct an annual firm summit.1.2 Update firm’s strategic plan.1.3 Adopt 90-Day Game Plans for each partner.1.4 Conduct monthly partner or department meetings to discuss obstacles and

resource requirements. Report results to firm management.1.5 Conduct quarterly reviews utilizing The Progress Report5.

PARTNER COMPENSATION PLANJONES & Company LLP



APPENDIX DMY 90-DAY GAME PLAN

Name

For Period Ending

Project Specific Steps Due Date Assigned To1.

2.

3.

4.

5.

6.

7.

_ Communicate with Team _ Publish progress in Newsletter


APPENDIX ETHE PROGRESS REPORT6

Name

For Period Ending

Accomplishment Reasons Important Further Progress Required Specific Steps

1.

2.

3.

4.

5.

_ Communicate with Peers _ Publish progress in Internal Newsletter 6 TM & © 2004. Based on The Positive Focus™ concept from The Strategic Coach Program™. All rights reserved. Used with permission. www.strategiccoach.com.


Score1–10

page 22

APPENDIX FPerspective Weight ValuePoints

(Equal)

FinancialIncrease revenue per FTE to $ 150 k 10.00% 8.33

Increase revenue by 15 % 5.00% 8.33

Increase NIBPS to 35 % (Net income before partners' salaries) 10.00% 8.33

25.00Subtotal:

ClientSatisfaction

Complete satisfaction surveys on 33% of clients 10.00% 8.33

Complete New Opportunities worksheets on top 100 clients 10.00% 8.33

Implement a client filtering system 5.00% 8.33

25.00Subtotal:

10.00 1.00

7.00 0.35

7.00 0.70

2.05

6.00 0.60

7.00 0.70

9.00 0.45

1.75

Define unique processes in tax preparation 5.00% 8.33

Implement content management system 10.00% 8.33

Implement integrated production & management systems 10.00% 8.33

25.00Subtotal:

7.00 0.35

8.00 0.80

4.00 0.40

1.55

InternalProcesses

Create a Learning/Training Culture 5.00% 8.33

Hire a Learning Director 10.00% 8.33

Provide a training facility 10.00% 8.33

25.00Subtotal:

6.00 0.30

6.00 0.60

6.00 0.60

1.50

Learning &Training

100.00% 100.00Firm Total: 6.85

SAMPLE FIRM BALANCED SCORECARD

Objectives


Score1–10

page 23

APPENDIX GPerspective Weight ValuePoints

(Equal)

FinancialIncrease managed book to $ 1,000,000 10.00% 8.33

Implement change orders in excess of $ 50,000 5.00% 8.33

Manage head count to $ 150 k per FTE 10.00% 8.33

25.00Subtotal:

ClientSatisfaction

Complete satisfaction surveys on 20 clients 10.00% 8.33

Complete New Opportunities worksheet on 20 clients 10.00% 8.33

Score all clients using the filtering system 5.00% 8.33

25.00Subtotal:

10.00 1.00

2.00 0.10

10.00 1.00

2.05

9.00 0.90

10.00 1.00

10.00 0.50

2.40

Serve on technology committee 5.00% 8.33

Implement content management system 10.00% 8.33

Select and implement integrated management system 10.00% 8.33

25.00Subtotal:

8.00 0.40

10.00 1.00

10.00 1.00

2.40

InternalProcesses

Attend 40 hours of internal training 5.00% 8.33

Attend Boomer Circles with IT Director 10.00% 8.33

Develop advanced Financial Reporting class withLearning Coordinator

10.00% 8.33

25.00Subtotal:

5.00 0.25

10.00 1.00

7.00 0.70

1.95

Learning &Training

100.00% 100.00Partner Total: 8.85

SAMPLE PARTNER BALANCED SCORECARD

Objectives


Score1–10

page 24

APPENDIX HPerspective Weight ValuePoints

(Equal)

FinancialIncrease production to $ 175 k 10.00% 8.33

Identify change orders in excess of $ 10 k 10.00% 8.33

Target 5 new clients–$10,000 or greater 5.00% 8.33

25.00Subtotal:

ClientSatisfaction

Complete satisfaction surveys on 5 clients 10.00% 8.33

Complete New Opportunities worksheets on top 5 clients 10.00% 8.33

Score all clients using the filtering system 5.00% 8.33

25.00Subtotal:

7.00 0.70

7.00 0.70

2.00 0.10

1.50

8.00 0.80

7.00 0.70

6.00 0.30

1.80

Serve on tax processing tax force 5.00% 8.33

Convert files to content management system 10.00% 8.33

Complete documentation of tax processes 10.00% 8.33

25.00Subtotal:

8.00 0.40

9.00 0.90

9.00 0.60

1.55

InternalProcesses

Attend 40 hours of internal training 5.00% 8.33

Participate in Firm Leadership Program 10.00% 8.33

Obtain CITP designation 10.00% 8.33

25.00Subtotal:

6.00 0.30

6.00 0.60

6.00 0.60

1.50

Learning &Training

100.00% 100.00Staff Total: 7.00

SAMPLE STAFF BALANCED SCORECARD

Objectives


NOTES

page 25

NOTES


This publication is meant to strengthenyour common sense, not to substitute for it.It is also not a substitute for the advice ofyour advisors, personal and professional.

If you would like further information aboutThe Boomer Technology Circles™

or other Boomer Consulting, Inc. services andproducts, please telephone 785·537·2358 or

888·266·6375—or by E-mail at:[email protected]

610 Humboldt StreetManhattan, KS 66502–6035

TM and © 2005 Boomer Consulting, Inc. All rightsreserved.No part of this publication may be repro-duced in any form, or by any means whatsoever,

without the written permission from the publisher,except in the case of brief quotations embodied in

critical articles and reviews.

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