The Partner Remuneration Handbook

Partner compensation and how partners share profits is central to the cohesive fabric of any professional partnership. While one adage says that "e;there are as many profit-sharing systems as there are partnerships"e;, there has recently been the emergence of a global practice about what "e;merit"e; means and how risk and reward are shared among partners in professional service firms. In The Partner Remuneration Handbook, Michael Roch and Ray D Cruz provide guidance for senior partners, managing partners, partnership boards, remuneration committees and others involved in the partner compensation process (department heads, CFOs, HRDs), on designing effective profit-sharing systems, reaching fair reward decisions efficiently and implementing motivating contribution management processes. Filled with practical insights, this book draws on principles of partnership, motivation and incentives in human capital management, and executive compensation in closely held businesses. Looking beyond the numbers, the authors balance the big picture with a detailed how-to for any professional partnership irrespective of geography, size and maturity. This title encompasses three core elements:Exploring the different partner reward systems found in most professional firms. Showing how partnerships define and discuss partner contribution commitments that further the firm s overall strategic, operational and financial objectives. Providing decision-making guidance about marrying reward to performance and on Remuneration Committee governance. It also addresses a myriad of special topics, such as rewarding partners in management roles, and provides a proven approach for how firm leaders can take partners with them on the journey of evolving their partner compensation system.

Partner compensation and how partners share profits is central to the cohesive fabric of any professional partnership. While one adage says that “there are as many profit-sharing systems as there are partnerships”, there has recently been the emergence of a global practice about what “merit” means and how risk and reward are shared among partners in professional service firms.In The Partner Remuneration Handbook, Michael Roch and Ray D’Cruz provide guidance for senior partners, managing partners, partnership boards, remuneration committees and others involved in the partner compensation process (department heads, CFOs, HRDs), on designing effective profit-sharing systems, reaching fair reward decisions efficiently and implementing motivating contribution management processes.Filled with practical insights, this book draws on principles of partnership, motivation and incentives in human capital management, and executive compensation in closely held businesses. Looking beyond the numbers, the authors balance the big picture with a detailed how-to for any professional partnership irrespective of geography, size and maturity.This title encompasses three core elements:Exploring the different partner reward systems found in most professional firms.Showing how partnerships define and discuss partner contribution commitments that further the firm’s overall strategic, operational and financial objectives.Providing decision-making guidance about marrying reward to performance and on Remuneration Committee governance.It also addresses a myriad of special topics, such as rewarding partners in management roles, and provides a proven approach for how firm leaders can take partners with them on the journey of evolving their partner compensation system.

Preface 5Acknowledgements 7Part I. Introduction1. Trends shaping partner reward 92. The three partner remuneration elements in context 13Part II. Reward structures in professional partnerships3. The seven primary partner reward systems 274. Formula systems: cost sharing, ‘eat what you kill’ and fixed allocation 315. Merit systems: financially driven versus holistic meritocracies 516. Lockstep systems and their variations 817. A partner’s profit- sharing waterfall: drawings, bonuses and distributions 1038. Corporations operating as partnerships, internal markets and talent ecosystems 115Part III. Managing partner contribution9. The future of partner contribution management 12510. Motivating achievement-orientated partners 13311. Using partner contribution frameworks to align partner contribution with firm strategy 14512. Aligning personal objectives with partner contribution expectations 15513. Using measures, metrics and KPIs 16714. Partner accountability through ongoing conversations and informal check-ins 18515. Self-assessments, ratings and other design considerations for formal partner reviews 19116. Conducting effective partner review conversations 20317. Addressing underperformance 21118. Using technology for better partner contribution management 22119. Analytics: using quantitative and qualitative data for evidence-based decisions 23120. The role of HR and business services in partner contribution management 237Part IV. Partner reward governance and decision making21. Key elements of effective reward governance 24522. Remuneration committee basics: when to have one, its remit and its members 24723. Managing to an annual calendar 26324. Reward round preparation, heuristics and decision aids 27125. Reaching reward conclusions while avoiding biases 28126. Transparency in reward communications: nuances of open and closed compensation systems 28927. Appeals: benefits, drawbacks and process considerations 297Part V. Special issues28. Collaboration among partners 30329. Rewarding partners in management roles 31330. Diversity, equity and inclusion 32931. Partner reward in international partnerships 33732. Engaging partners in remuneration policy changes 35333. Well-being and mental health 367Part VI. The way ahead34. Ten principles for partner remuneration systems in ambitious professional services firms 375About the authors 381About Globe Law and Business 383