In the December 17, 2007 issue of Accounting Today, Gary Boomer asked three questions in his article titled Pricing and Partner Compensation. (1)Does your firm have a documented strategic plan; (2) Does our partner compensation system integrate with the strategic plan, and; (3) Am I still pricing by the hour?
Ignoring the first two issues, Gary nails the significance of pricing in the service professions when he clearly states, “The hours x dollars (or cost-plus ) formula does not work in today’s results-based economy.” In my opinion this is true in establishing firm policies for both client satisfaction and even more importantly in associate / staff satisfaction and retention.
Further in the article he refers to author Ron Baker, one of my mentors and unquestionably the leading voice in burying the billable hour. He goes on to outline what he considers important considerations in partner compensation. Notably all are characterized by effectiveness, not efficiency. Damn! You mean the things easiest to measure are not the most important?!
I’ll bet you can name ten!
