Webinar summary: Three Ways to Faster Partner Reward Rounds

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Oct 2024

Year after year, and in each reward round, most partner remuneration committees spend far more time than needed to (re-)allocate their partners’ profit-share.  Our recent webinar, “Three Ways to Faster Partner Reward Rounds,” outlined some of the reasons for slow partner reward rounds and suggested ways to reach better decisions in less time. 

Why partner reward rounds are slow

Most partner reward rounds suffer from at least one of three problems: 

• Committee members aren’t put in the best position to be well-prepared; poor preparation tends to extend beyond partner data
• The committee’s decision-making is haphazard and doesn’t follow a shared decision-making process
• Committee members get thrown in the deep end of deciding on partner profit shares without sufficient partner compensation expertise

Most partner compensation committees suffer from at least one of these problems; many suffer from all three. 

In our webinar, we offered some ways to overcome these shortcomings.

1. Well-prepared reward rounds

A well-prepared partner reward round achieves five things: 

• A well-structured kick-off meeting sets the scene for the upcoming reward round and puts business events (such as a down year, a merger, a major malpractice claim) into context for committee members
• RemCom members are updated on changes to partner compensation policy and committee processes
• There is a timeline that doesn’t rely on additional meetings needing to be scheduled last minute
• Partner data are made available well in advance
• Partner data are well-summarized, perhaps with an initial segmentation to give context for committee members

In our webinar, we provided our favourite 10-point partner reward round kick-off agenda and other pointers for a well-prepared partner reward round. The more well-prepared a partner reward round is, the fewer iterations the committee will require to reach its outcomes – translating into less time spent.

2. Implementing a structured decision-making process

A well-defined and cohesive decision-making framework is essential for maintaining momentum and consistency throughout partner reward rounds. The exact shape of this decision-making process depends on each firm’s approach to partner reward:  the committee’s decision-making framework for a modified lockstep will be different from the framework used for a financial meritocracy https://www.mhpradvisors.com/blog/professional-partnerships-profit-sharing-fundamentals

A decision-making process will essentially be a step-by-step guide for:

• Gathering and prioritizing inputs (partner data and service line data)
• Sequencing the analysis of financial, non-financial and qualitative partner data incorporating internal and external benchmarks 

Following a step-by-step methodology enhances transparency, reduces the risk of cognitive biases creeping in and reduces committee discussion time.

3. Clear commitment to continuous committee member development

Most partner compensation committee members have only experienced their own firm’s partner compensation system (as subjects of that system); some may have seen the system of their previous firm in a similar capacity.  Most partners will have views about, yet not have deep expertise in, partner compensation, incentives, reward, and how incentives drive behaviour – yet their expertise is not likely to be very deep or nuanced.

This does not only lead to longer decision-making in most partner compensation committees.  New RemCom members tend to be overwhelmed, experienced RemCom members are frustrated because they feel they are missing something, and the partnership loses out because committee members don’t have the same kind of deep, trusted conversations that they have as expert professionals in their field.

An ongoing capabilities development program for partner compensation committee members will want to include elements such as:

• Mindset – how to stand above partnership politics
• Partner reward practices – linkages between business results, partner contribution, assessment, incentives
• Decision-making – processes, tools, heuristics, cognitive biases
• The role of reward in partner (under-)performance management
• Committee effectiveness – meaningful discussions, practices, decision-making, infrastructure, conduct
• Evolving partner compensation policy

Our Partner Remuneration Committee Fundamentals online course offers an extensive exploration of the most important issues that any partner compensation committee member might encounter, providing essential tools, frameworks and  best practices to ensure more efficient and effective decision-making.  The course equips participants with a deep understanding of current partner reward systems, practical approaches to distilling complex partner data, and  step-by-step methods for making unbiased, high-quality decisions.

Take the next step

Empower your committee to drive faster, more effective reward decisions. Register for the Partner Remuneration Committee Fundamentals course today.

Or, if you would value an exploratory call with Michael at no obligation to you, please reach out to the team at [email protected]