Rosenberg Associates Blog
Marc Rosenberg, CPAAllocating partner income used to be a science. Now it is a fine art. Not too long ago, the majority of firms allocated income with some combination of a formula (eat what you kill), ownership percentage, and seniority. Few compensation systems recognized subjective factors such as developing staff; firm management; teamwork; achieving formal, written goals;…
Kristen Rampe, CPAThe CPA profession has witnessed profound transformations in firm management. This blog aims to shed light on the sea of changes in partner income allocation methods, showcasing how these changes have influenced the overall dynamics of CPA firms. We will reflect on the changes over the past 20 years and, more importantly, delve into the…
Compensation committees are the best of several common partner compensation systems for achieving a balance between recognizing traditional production accomplishments and rewarding intangibles. The compensation committee (CC) approach aligns the firm’s strategic plan and vision with how partners are evaluated and how they are compensated. It motivates partners to produce what the firm needs them…
If you ask 10 different people to define one of today’s buzzwords – transparency – you will get 10 different answers. This post addresses “transparency” as it relates to a CPA firm compensation committee. Transparency defined Expectations of transparency applicable to compensation committees are: (1) making it easy for others to see how the process…
Firms use several methods to allocate income among the partners. At firms with 8 or more partners the compensation committee system is by far the most common. With this approach a small number of partners are elected to allocate income using their best judgment, formed after a thorough review and analysis of performance data. This…
Some partner compensation systems provide for both a base and bonus that are mutually exclusive. At other firms partners receive a salary or draw during the year and a year-end distribution that adjusts the salary or draw to one final income number, based on each partner’s performance for the year. What’s better, a one-tier or…
Firms over-emphasize the importance of ownership percentage. We have repeatedly stated this opinion in our blogs and monographs. Taken to extremes, ownership percentage can be used to drive all of the “big 4” partner issues: partner income allocation, partner buy-in, partner buyout and voting. At many firms, ownership percentage may not be the sole driver…
This question has been posed to me by several partners over the years. As you might guess, the partners raising the question all had a hand in identifying firms that were either merged in or came close. Note: This question applies only to line, client service partners, not to partners whose specific job it is…
The correlation between size of firm and use of a compensation committee to allocate partner income is no surprise to CPA industry observers – the trend seems to gather steam every year, according to The Rosenberg Survey. Now 61% of firms with 8 partners or more report the CC as their method of choice, and…
Multi-partner firms use 4 systems to allocate partner income: (1) Compensation Committee, (2) Formula (aka “eat what you kill”), (3) Paper and Pencil and (4) MP decides. This missive focuses on the Compensation Committee, which is a group of elected partners entrusted to fairly and impartially allocate partner income based on performance. For comp committees…
Get our expertise delivered to your inbox.