Friday, September 19th, 2008
YOUR FIRM’S COMPENSATION SYSTEM
At almost every MAP conference I attend or firm association meeting where firm leaders are gathered, the topic of compensation comes up. The group asks questions of each other like this: How do you do partner comp? How does your firm do staff comp? What are you paying seniors? What are you paying managers? Is it a point system? How do you determine bonuses?
As you could tell from yesterday, I am revisiting Good to Great by Jim Collins. Here’s some thoughts that the CPA profession need to ponder: (I changed some words to fit the CPA profession.)
“We found no systematic pattern linking partner compensation to the process of going from good to great.”
“It’s not how you compensate your partners, it’s which partners you have to compensate in the first place. If you have the right partners on the bus, they will do everything within their power to build a great firm, not because of what they will “get” for it, but because they simply cannot imagine settling for anything less.”
“Yes, compensation systems are important, but for very different reasons in good-to-great firms. The purpose of a compensation system should not be to get the right behaviors from the wrong people, but to get the right people on the bus in the first place, and to keep them there.”
“The salary of the chief executive of a large corporation is not a market award for achievement. It is frequently in the nature of a warm personal gesture by the individual to himself.” – - John Kenneth Galbraith