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Performance Is Everything

Book Description

Compensation is the largest expense that a firm incurs. And yet, few firms really manage it well. The trick is realizing it is more complex than just splitting the pie.

The crucial issues of compensation and performance are inextricably linked. In this important resource, experts August Aquila and Coral Rice offer a unique perspective on how you can align your compensation and performance management plans in order to boost performance, maximize profits, and keep both your staff and clients happy.

This companion to Aquila and Rice’s successful AICPA publication, Compensation as a Strategic Asset, will pick up where that guide left off, offering readers the “Why, What, and How” for compensation plans filtered through the lens of performance management.

The authors convey, in the simplest and clearest terms, how firms can improve overall firm performance by engaging in the following activities:

  • Develop a compelling vision
  • Develop a strategy for what you want to accomplish
  • Have the right systems in place to help achieve the strategy
  • Align individual goals with firm and departmental goals
  • Create an effective performance review system
  • Monitor performance monthly and quarterly for trends
  • Provide higher performers with more rewards than average performers

Ultimately, this guide is based on what other firms are doing, and let's you know why it’s working or why it’s not. By guiding you through a process and providing you with the tools to design a partner and staff compensation plan, Performance Is Everything will help you develop the plan that works for your firm.

Table of Contents

  1. Cover Page
  2. Title Page
  3. Copyright Page
  4. Dedication
  5. Contents
  6. Preface
  7. Acknowledgments
  8. About the Authors
  9. Part 1: Why You Need to Reward People Differently
    1. Chapter 1: Workforce Trends in the Twenty-First Century
      1. Rapid Pace of Technological Change
      2. Shifting Demographic Patterns
      3. Job Sharing
      4. Permanent Part-Time Positions at the Owner and Employee Levels
      5. Globalization of the Workforce
      6. Employers Demanding Higher Skills
      7. Lack of Clearly Defined and Stable Jobs
      8. Flattening of Organizations
      9. Women in Leadership Roles
      10. “Around-the-Clock” Economy (24/7)
      11. Trust
      12. Final Thoughts
    2. Chapter 2: Superior Performance Comes From Alignment
      1. Performance Variables
        1. The 7S Model
        2. Other Models
      2. The Nine Performance Variables
        1. Organization Level
        2. Process Level
        3. Performer Level
      3. Final Thoughts
    3. Chapter 3: Building a Compelling Vision
      1. A Vision Is More Than a Simple Statement
      2. How to Ensure Owners Connect to the Vision
      3. When to Involve Owners in Creating the Vision
      4. What Should a Compelling Vision Contain?
      5. The How To Is as Important as the Vision
        1. Journey, Milestones, and Measuring Progress
        2. What’s in it for Me?
      6. Final Thoughts
    4. Chapter 4: Link People Performance to Strategy
      1. What Is Strategy?
      2. Where to Start?
      3. Case Study
      4. Strategy Execution as a Core Competency
      5. Final Thoughts
    5. Chapter 5: Your Role as the Leader
      1. Even Managing Owners Need Assistance
      2. What Successful Managing Owners Do—The Leadership Model
        1. Setting Direction
        2. Gaining Commitment
        3. Execution
        4. Personal Example
      3. Final Thoughts
    6. Chapter 6: Why You Need to Reward Different People Differently
      1. Financial Reasons
        1. Performance-Compensation Gap
        2. Need to Reward the Performers
        3. Align Monetary and Nonmonetary Rewards With Position Level
      2. Operational Reasons
        1. Evolving Business Models
        2. Rapidly Changing Competitive Landscape
      3. Generational Reasons
        1. Work-Life Balance
        2. Generational Differences
      4. Today’s Compensation Plan
        1. Written Win-Win Agreements
        2. Customized Criteria and Goals
        3. Focus on Current Production and Future Capacity
        4. Reward Performance, Not Entitlement
        5. Include At-Risk Compensation
        6. Ensure Fairness
        7. Create a New Culture
        8. Exercise Courage
      5. Final Thoughts
  10. Part 2: What You Need to Reward
    1. Chapter 7: Make It Happen Through Performance Management
      1. Survey Results
      2. Owners and Performance Management Systems
      3. Job Descriptions
      4. Final Thoughts
    2. Chapter 8: Selecting the Right Performance Measures
      1. Vision, Strategy, and Objectives
      2. The Role of Performance Measures in Driving Behavior
      3. Why Choose Performance Measures That Are Linked to Firm Objectives
      4. How to Choose Performance Measures That Are Linked to Firm Objectives
      5. Potential Dangers When Using Performance Measures
      6. Using Scorecards to Categorize and Clarify Performance Measures
        1. Firm Scorecard
        2. Department Scorecard
        3. Individual Scorecard
      7. Categories of Objectives
        1. Financial Measures
        2. Client Service Measures
        3. Internal Systems and Business Process Measures
        4. Employee Growth and Learning Measures
        5. Business Development Measures
      8. Final Thoughts
    3. Chapter 9: Overcome the Challenges in Creating a Compensation Plan
      1. Best Practices in Designing a Compensation System
        1. Entitlement Performance Continuum
        2. Evaluate Current Plan
        3. Getting Started
      2. Six Major Obstacles and How to Avoid Them
      3. Final Thoughts
    4. Chapter 10: Choosing the Right Elements: Build a Compensation Plan
      1. Base Pay
        1. Compensation for the New Owner
        2. How Do You Determine the Market Value (“Street Value”) of Your Owners?
        3. Developing Pay Ranges
        4. Developing Owner Pay Ranges
      2. Bonus
        1. Bonus Compensation Criteria
        2. Types of Bonus Compensation
      3. Combining Tangible and Intangible Compensation
      4. Administering the Plan
        1. Performance Management
      5. Final Thoughts
  11. Part 3: How to Reward Performance
    1. Chapter 11: How to Manage Performance Effectively
      1. What Is Performance Management?
        1. Ensure Performance Expectations Are Clear From the Beginning
        2. Create a Culture Where Giving and Receiving Feedback Is the Norm
        3. The Role of the Johari Window in Performance Management
        4. Giving Feedback
      2. Performance Evaluations
      3. Final Thoughts
    2. Chapter 12: Owners Need to Be Evaluated Too
      1. Factors Determining the Owner’s Value
      2. Owner Evaluation
      3. Only Performance Is Reality
      4. Align Goals and Rewards to Strategic Initiatives
      5. Building a Culture of Accountability—“Accountability is Good, But Not for Me”
      6. Setting Goals
      7. What Support Will Owners Need?
      8. Start With the Firm’s Strategic Plan
      9. Individual Owner Performance Plan
        1. Areas of Performance Evaluation
        2. Goal Setting
        3. Steps in the Evaluation Process
        4. Changes to the Owner Performance Plan
      10. Final Thoughts
    3. Chapter 13: Even Managing Owners Need Feedback
      1. The View From the Top
      2. Other Criteria
      3. Final Thoughts
    4. Chapter 14: How to Compile and Assimilate a Bonus Performance Plan
      1. The Right Performance Bonus Plan
      2. Sample Performance Bonus Document
      3. Owner Performance Bonus Plans
      4. Case Study—Compensation System in a Midsized Firm
      5. Case Study—Large Firm
        1. Managing Owner and Executive Committee
        2. Line Owners
        3. Managers
      6. Discretionary Pool
      7. Final Thoughts
  12. Part 4: Where Do You Go From Here?
    1. Chapter 15: What Will You Do Tomorrow?
  13. Appendix: 2011–2012 Performance Management and Compensation Survey