Crafting a compensation system is never easy. But it gets more complicated when we’re talking about professional services firms. Aside from the salary and benefits basics common to all systems, there are special issues in professional services firms that need to be addressed - what partnership structure will be used? How do we reward business development and “non-billable” activities? What kinds of bonus and incentive structures will support the overall goals of the firm? Does it make a difference if we’re a “young” firm or an “established” firm?
The answers to these questions will vary from firm to firm. But there are some guidelines to help you answer these questions and some things to keep in mind when crafting compensation for professional services firms.
In this episode, we discuss compensation in professional services firms with Ann Bares. We talk about how to compensate people on partnership track, how to reward business development and business origination, and how to structure incentives and bonuses. We also discuss how to value jobs and set salaries in light of little valid market data. We wrap up with a discussion about generational differences and how younger workers are demanding more transparency because of their sensitivity to inequity and unfairness.