Image of Home Logo

Latest News

Practice Made Perfect - 5.13.15

John Fitzgerald, CPA 05.13.2015 | Practice Made Perfect

Are You Getting The Most Out of Your Compensation System?

by John Fitzgerald, CPA

An effective compensation system should be more than just about money. It should be designed so that its overall impact is rewarding not only to the individual partners but to the firm as a whole.  There are a host of compensation systems - Equal Partnership, Lock-step, 50/50 subjective-objective, among others - each with their unique pros and cons. For an analysis of these systems click here. Whatever system you choose, see if it fulfills some or all of these criteria.  

The Characteristics of an Effective Compensation System

Rewards, encourages, and motivates. This is the prime goal of any compensation system. Your rewards should be designed to retain your best and keep them happy. It should also help motivate those who are on the fence or who need a little prompting.  The system can provide you with the evidence and hard facts you require should it be necessary to remove a non-performer. In all cases, each partner recognizes that he or she is accountable for his or her actions and has the means and support to try and succeed. 

Promotes firm goals.  Gear your compensation system so that it fuels firm goals. If you want to grow certain niche areas, assume that any effort and success in that niche will be amply rewarded.  Any goals you set should be reasonable and attainable.  Setting goals that are clearly out of reach or require extraordinary effort will discourage more than encourage.

Incentivizes long-term behavior.  An effective compensation system becomes part of your firm culture. It will become a part of the natural behavior within your organization and not be regarded as something imposed on the partners. It encourages each partner to concentrate on his own efforts rather than looking at the performance of other partners.

Enhances core values.  Know what you are known for or want to be known for. Whatever firm personality you wish to project and foster, use your compensation system to reward that behavior. 

Attracts lateral hires.  A well-regarded compensation system is an attractive element in any effort to bring in fresh talent, to bolster a service niche, or to start a new one by bringing in experienced professionals. 

Provides a sense of predictability.  Partners should easily understand that clearly defined behaviors produce clearly defined results. If there are hints of favoritism or looseness in the application of rules, the system will be ineffective. 

Avoids large swings in income.  While no partner would object to the occasional influx of a large reward, you should also take measures to see that inevitable dry periods do not take too much of a toll.

Rewards total contributions to the firm. The following are all nonbillable activities: Published articles; media interviews; blogs; speeches; pro bono work; association and committee membership; recruiting; and firm management meetings.  All contribute to the growth, success, and reputation of the firm. Your system should take these activities into account. Failing to do this will discourage these activities and can only be detrimental to overall morale.  

Evolves as your firm evolves.  As your firm grows, the compensation system that worked when you were smaller or less diversified may not be as effective. It is important to remain flexible and make adjustments in tune with the firm you have become.

 


When Tweets Speak Louder than Words

By Marianne Reidy, CPA, and Eric Steiner, CIO

The old saying "Loose lips sink ships" has taken on greater significance at a time when an estimated one billion tweets fling themselves out each week. Social media has emerged as one of the most powerful marketing tools at your disposal - simple, economical, immediate, and impactful. Used judiciously, it can deliver the messages you want in ways unheard of a mere decade ago. But like the proverbial doubled-edged sword, it can cut both ways.
 
The rapid and phenomenal growth of social media has made it difficult for some to grasp how prevalent and widespread it has become. The number of global social network users is expected to top 2.5 billion by 2017.1 Some firms may not have measures in place to lock down or limit the information placed on Facebook, Twitter, LinkedIn, or the next platform in this ever-evolving electronic universe.

Failing to grasp the growing power of social media and not have instituting measures to place some control over its use can place your firm at risk.

The very existence of social media created new challenges in managing records, safeguarding personal information, and protecting the security of firm information and systems. In thinking about your guidelines, your goal is to strike the right balance between two conflicting purposes:

  • Protecting your firm and its reputation, your professionals, your information, and the interests of your clients; and
  • Allowing enough freedom to be an active and contributing participant in this influential medium.    

Setting Your Guidelines

Nothing is truer than to say that the world of social media is evolving at such a breakneck pace that setting a definitive policy is difficult and potentially futile.  Nevertheless, creating guidelines for the use of social media can, at the very least, give you a starting point. The brave new world of social media is inescapable, and your choice is to either stake your place or risk being sidelined and marginalized. You may want to get input on your guidelines from a variety of sources, ranging from firm leaders and top rainmakers to your IT and marketing professionals to younger members of the firm who are likely to be the most immersed and adept at using social media.

Your goal is to develop clear and understandable security guidelines that both support the use of social media while establishing some rational and practical perimeters in tune with your firm's culture.

You require guidelines on what information individuals may share with the public - and who those individuals can be.  Firm leaders?  Partners only?  Selected marketing professionals? 
Consider what settings you are comfortable with for Facebook, LinkedIn, and other platforms that will lock down or limit access to firm information and intellectual property.  Accomplishing this also requires placing some limits on accessing such work product as article drafts, internal memos, and short- and long-range planning documents.

Try to strike a balance with guidelines that might be more lenient on general issues involving highly public legal developments, while holding tighter reigns on subjects impacting your clients.   Keep in mind that if you set up a cumbersome vetting bureaucracy you will encourage delays and, in the long run, nothing will get out in any meaningful time.  Such bureaucracies tend to defeat the purpose of being active in social media - a world that thrives on immediacy. Equally important, if you are to participate in social media, it is something that you must commit to regularly.  You cannnot "go dark" for months at a time then re-emerge and expect to make an impact.

Since your social media presence reflects your overall branding, involve your marketing team. They may help in refining the communication skills of your attorneys, including how to avoid jargon and overly detailed analyses, while writing with a client's perspective in mind.

Your security guidelines should be made particularly clear to attorneys who have blogs where opinions are expressed that may or may not reflect the firm's position or might imply or reveal information that is confidential. You can make better use of your blog presence by repurposing articles and items that were previously published and, presumably, previously vetted and confirmed for use. 

It is important to have procedures in place to monitor social media outlets for comments about the firm, so it is prudent to set up Google Alerts or RSS feeds. If there is a swell of negative activity about the firm, these alerts will give you a heads up, as well as source material, should you choose to take any action.

Computer forensics experts are quick to point out that deleted data is not really gone and may be retrieved by a host of methods.  Protect your company's intellectual property by placing limits on accessing your work product - article drafts, memos, short- and long-range firm plans.

Once you have guidelines in place, you will need to revisit them from time to time as your firm evolves, practice areas come and go, and, of course, technology and the overall social media environment stride forward. The work you put into your guidelines now will go a long way in helping your firm distinguish itself and, with effort, be regarded as a thought leader in touch with the latest issues. 

1 Kwikturn Media estimate 2.19.14.