Partner remuneration is a complex process for any law firm and one that firm leaders are often looking to improve.
Here are five tips for fine-tuning your compensation review process to make partner remuneration less of a headache.
1. Lay down the foundations
It doesn’t matter what method you use to determine partner remuneration. What does matter is making the method clear to everyone.
- Be clear about the criteria you will use as part of the assessment, whether that is firm-wide contributions, personal development or financials.
- Apply the criteria consistently. Partners will determine for themselves what criteria really matters based on the type of behaviour that is, and isn’t, rewarded.
- Be transparent with individual partners about the basis for their own award. Extend that transparency partner-wide, for example with anonymised case studies that illustrate how desirable behaviours were assessed and rewarded, and problematic ones were not.
2. Use an objective-based approach
Having partners set objectives at the outset of the year, and then assessing performance based on their achievement of those objectives at year end, creates transparency and accountability between individuals and leadership. By agreeing objectives early, you and your partners can be confident they are spending time on the right activities. Communicate your firm’s priorities by establishing common categories or themes for the objectives your partners should set, e.g. expanding existing client relationships or converting prospects.
3. Ease the process with continuous assessment
The remuneration process can take months to complete. If the process isn’t clear, measurable or fair it can distract many partners from their work. What’s more, if you can’t back up your final decision with evidence then the process can leave partners feeling upset or cheated; or ready to move to another firm.
To ease the annual process, firms should monitor and discuss partner and firm-wide progress at intervals throughout the year. Where partners are veering off track, timely intervention to help someone correct their course is in everybody’s interest. It is certainly far better than discovering objectives have not been met only at the point of review. An open dialogue throughout the year about performance can streamline the annual process and help avoid surprises in the year-end assessment.
4. Use a 360-degree survey
‘By laying themselves open to praise and criticism from all directions and inviting others to do the same, [companies] guide their organisations to new capacities for continuous improvement.’
These surveys offer a window into the behaviour of your partners, ensuring that your remuneration process isn’t determined on statistics and partner-supplied information alone. Input from peers and team members is sometimes the best means of getting behind the results to understand how they were achieved. For example, if a partner has won a significant amount of new business but three associates are burnt out from being overworked as a result, then the overall performance of that partner may not be as strong as the figures alone indicate. A 360 survey, or at minimum some form of structured feedback gathering, will flag up these issues.
5. Use software to run your process more efficiently
The partner remuneration process requires a lot of time, preparation and effort from the most senior people in the business, which makes it an expensive process to run. Any efficiency gains go directly to your bottom line. Without the right methodology and information access, determining who gets what is hard work – especially if you have hundreds of partners to assess. Manually compiling the multitude of reports, notes, feedback, and review forms necessary to assess partner performance is inefficient. Instead, find a systematic way to capture much of this information, ideally in real-time over the course of the year. Firms can do this by:
- Managing objectives, achievements and feedback on performance in a dedicated software tool. This empowers partners to report progress and share information throughout the year.
- Encouraging your partners to regularly monitor and update their progress against objectives.
- Ensuring that the right people have access to objectives and progress when they need it. Make information accessible to those in leadership roles so they can provide support, guidance or encouragement when needed.
Your partner remuneration assessment is an important and emotive process that affects your entire firm. With that in mind, make sure you determine what actions and behaviours are important. Communicate, through words and actions, what behaviour will be rewarded so that your partners understand from the start how they can climb the remuneration ladder.
At ObjectiveManager, we have developed goal-setting software to help professional services firms and their people define strategy and improve performance through continuous feedback to power growth.
By simplifying the way firms conduct the entirety of their strategic planning from Sector/Client progammes to Partner Remuneration, we help them improve collaboration and optimise conditions for growth. Our innovative software turns individual gains into big business impact by making individual and firm-wide objectives visible, constant and actionable.