{"id":8504,"date":"2021-09-06T11:27:58","date_gmt":"2021-09-06T15:27:58","guid":{"rendered":"https:\/\/www.sage.com\/en-us\/blog\/?p=8504"},"modified":"2026-02-12T04:37:35","modified_gmt":"2026-02-12T09:37:35","slug":"is-your-firms-partner-compensation-structure-holding-you-back","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-us\/blog\/is-your-firms-partner-compensation-structure-holding-you-back\/","title":{"rendered":"Is your firm\u2019s partner compensation structure holding you back?"},"content":{"rendered":"
\n\t
\n\t\t
\n\t\t\t
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\tPeople & Leadership<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t
\n\t\t\t\t\t

\n\t\t\t\t\t\tIs your firm\u2019s partner compensation structure holding you back?\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t

\n\t\t\t\t\t\t\t\t\t\t\t<\/p>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n\t

\n\t\t
\n\t\t\t
\n\t
\n\t\t
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t\n\t\t
\n\t\t\t\n\t\t\t\t\"\"\t\t\t\tSandra Wiley<\/span>\n\t\t\t<\/a>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n<\/div>\n\n\n\n

Compensation, particularly partner compensation, is a topic that leads to considerable debate in most firms, and the discussion has only become more complex with the addition of non-equity and non-CPA owners.<\/p>\n\n\n\n

In most firms, the compensation model started when the firm was small, the profession was less commoditized and labor was abundant with less reliance on technology. In that environment, compensation is traditionally based on stock ownership and book of business (financial results).<\/p>\n\n\n\n

The problem is, these compensation models ignore things like upskilling, staff learning and development<\/a>, client filtering, culture and other leadership behaviors.<\/p>\n\n\n\n

Changing the partner compensation model<\/h2>\n\n\n\n

Change is never easy, and most partners aren\u2019t interested in changing unless forced to by a crisis or threat of loss. Today, that crisis is here due to the too-narrow focus on financial results: talent shortages, technical debt, lack of a succession plan, and highly skilled managers who have no interest in becoming a partner.<\/p>\n\n\n\n

Why would they when making partner essentially means being left with a lot of work and no money that will flow back to them?<\/p>\n\n\n\n

Unfortunately, outdated compensation plans impede innovation and transformation. They protect firms from the adverse effects of poor client filtering processes, lack of investment in technology, and failing to develop new services or upskill team members.<\/p>\n\n\n\n

Partners in these firms believe that simply delivering good client work is a recipe for financial success, which creates a significant obstacle to fostering a collaborative, continuous improvement, and growth-oriented firm culture.<\/p>\n\n\n\n

It\u2019s time to fix that.<\/p>\n\n\n\n

\n\t
\n\t\t
\n\t\t\t
\n\t\t\t\t\t\t\t\t

Becoming a future-ready practice<\/h2>\n\n\t\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\t

By 2030, the world of accounting is going to look radically different.\u00a0 Download our guide practical advice and tips on how to prepare for the next decade.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\tDownload your copy<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\"\"\t\t\t<\/div>\n<\/div>\n\n\n\n

7 characteristics of a successful partner compensation structure<\/h2>\n\n\n\n

In looking at successful firms, there are seven distinguishing characteristics of the partner compensation structure. They are:<\/p>\n\n\n\n

1.     The foundation<\/h3>\n\n\n\n

Every firm needs a vision, a strategic plan, and alignment. Without these, you will have a weak foundation.<\/p>\n\n\n\n

To change your partner compensation model, you need to get buy-in from your partner group. This is never an easy task as partners tend to resist change, but alignment and consensus are big factors in determining success.<\/p>\n\n\n\n

2.     Time to think and plan<\/h3>\n\n\n\n

Firm partners need to spend time working on<\/em> the firm rather than in<\/em> the firm. Most partners tend to over-focus on financial measures because it\u2019s easier to measure financial results than develop staff, improve internal processes, and operations and improve client satisfaction by developing new services and becoming a trusted advisor.<\/p>\n\n\n\n

In addition, at least 25% of profits should be reinvested back into the firm \u2013 into technology, processes, people, training and development, etc. The truth is, financial results will come if partners work on these other areas.<\/p>\n\n\n\n

3.     Objectivity<\/h3>\n\n\n\n

Creating a vision and strategic plan and reaching alignment is easier with an outside perspective. You may need help from a third-party coach or facilitator.<\/p>\n\n\n\n

\n\t
\n\t\t
\n\t\t\t
\n\t\t\t\t\t\t\t\t

Grow your practice with Sage accountant software<\/h2>\n\n\t\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\t

<\/p>\n

CPAs and accountants can trust Sage\u2019s tools and resources to grow their accounting firms and better serve clients.<\/p>\n

<\/p>\n

<\/p>\n

\"\"<\/figure>\n

<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\tLearn more<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\"\"\t\t\t<\/div>\n<\/div>\n\n\n\n

4.     Clear and communicated<\/h3>\n\n\n\n

What gets measured gets done. Partners and employees are motivated to achieve written goals. The best compensation structures look at several KPIs<\/a> \u2013 not just charge hours. You may quickly become aware that you don\u2019t have a reliable method for measuring performance outside of financial results.<\/p>\n\n\n\n

We recommend the Balanced Scorecard<\/a> approach, which typically sets goals in four categories:<\/p>\n\n\n\n