The Partner Remuneration Handbook
A Guide to Compensation in Law and Other 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.
Table of Contents
|Part I. Introduction||9|
|1. Trends shaping partner reward||9|
|2. The three partner remuneration elements in context||13|
|Part II. Reward structures in professional partnerships||27|
|3. The seven primary partner reward systems||27|
|4. Formula systems: cost sharing, ‘eat what you kill’ and fixed allocation||31|
|5. Merit systems:financially driven versus holistic meritocracies||51|
|6. Lockstep systems and their variations||81|
|7. A partner’s profit-sharing waterfall: drawings,bonuses and distributions||103|
|8. Corporations operating as partnerships, internal markets and talent ecosystems||115|
|Part III. Managing partner contribution||125|
|9. The future of partner contribution management||125|
|10. Motivating achievement-orientated partners||133|
|11. Using partner contribution frameworks to align partner contribution with firm strategy||145|
|12. Aligning personal objectives with partner contribution expectations||155|
|13. Using measures, metrics and KPIs||167|
|14. Partner accountability through ongoing conversations and informal check-ins||185|
|15. Self-assessments, ratings and other design considerations for formal partner reviews||191|
|16. Conducting effective partner review conversations||203|
|17. Addressing underperformance||211|
|18. Using technology for better partner contribution management||221|
|19. Analytics: using quantitative and qualitative data for evidence-based decisions||231|
|20. The role of HR and business services in partner contribution management||237|
|Part IV. Partner reward governance and decision making||245|
|21. Key elements of effective reward governance||245|
|22. Remuneration committee basics: when to have one, its remit and its members||247|
|23. Managing to an annual calendar||263|
|24. Reward round preparation, heuristics and decision aids||271|
|25. Reaching reward conclusions while avoiding biases||281|
|26. Transparency in reward communications: nuances of open and closed compensation systems||289|
|27. Appeals: benefits, drawbacks and process considerations||297|
|Part V. Special issues||303|
|28. Collaboration among partners||303|
|29. Rewarding partners in management roles||313|
|30. Diversity, equity and inclusion||329|
|31. Partner reward in international partnerships||337|
|32. Engaging partners in remuneration policy changes||353|
|33. Well-being and mental health||367|
|Part VI. The way ahead||375|
|34. Ten principles for partner remuneration systems in ambitious professional services firms||375|
|About the authors||381|
|About Globe Law and Business||383|
Managing director, MHPR Advisors; head of partnership consulting, Performance Leader
Michael Roch is managing director of MHPR Advisors and head of partnership consulting at Performance Leader. For more than 20 years, Michael has been an adviser to managing and senior partners, boards and remuneration committees of professional services firms worldwide. His clients include law firms, accounting firms, consulting firms, public relations and media firms, wealth managers, real estate advisers and other advisory firms in more than 40 countries across Africa, Asia, Australia, North America, Europe and the United Kingdom. More than a dozen are market leaders in their respective countries.
Beyond his consulting work, Michael is a technology entrepreneur. He served as Europe co- CEO of the Internal Consulting Group, an Australia-based global consulting ecosystem with more than 4,000 members worldwide, and was managing partner of KermaPartners, a consulting firm he co-founded that focused on the professional services sector. His early career involved stints at two Big Four accounting firms in the United States and Eastern Europe and a Global 20 law firm in London and Frankfurt.
Michael has published extensively in the areas of partnerships, alliances and ecosystems. He holds an MBA and a JD, both from the University of Denver, United States, and he is scheduled to complete his DBA in coopetition management from Grenoble École de Management, France, in 2024.
CEO and co-founder, Performance Leader
Ray D’Cruz is the CEO and co-founder of the software and consulting firm Performance Leader. At Performance Leader, Ray works with leading professional firms internationally on a range of interrelated partner and employee contribution issues. His work includes developing contribution frameworks, advising on performance objectives and measures, and implementing performance and feedback software in professional firms. In a consulting career spanning over 20 years, he has consulted for firms in more than 40 countries, across a range of professional services sectors. Ray is a regular presenter and speaker at workshops and conferences. He hosts the Performance Leaders podcast series and has authored numerous publications related to partner contribution and compensation. Before Performance Leader, Ray was a partner at the Centre for Professional Services Management, a management consultancy firm for the professions, and a senior HR practitioner in top-tier Australian law firms. He is a qualified lawyer and practised law at Freehills (now Herbert Smith Freehills).