14 Sep Managing Partner Compensation Expectations in a Record Financial Year
How do successful leaders and firms manage their compensation expectations in a record financial year? A recent article by The American Lawyer investigates, positing that some of the most effective means for managing the compensation expectations of partners include structural elements in their compensation system, leadership techniques, and talented, communicative leaders. Blane Prescott, a consultant for legal consulting firm, MesaFive LLC, notes “some firms suffer morale and trust issues because their compensation process fails to manage expectations. Compensation isn’t just about setting a number and then defending one’s decisions. There are many firms for whom setting partner compensation is a surprisingly easy and smooth process, regardless of whether profits are up or down, because they focus on managing expectations and helping partners to succeed.”
Most firms understand the benefits of talking with partners about performance and compensation, but one important question is, is it better to do that before or after setting compensation? It may sound illogical but talking to partners before setting their compensation produces dramatically better engagement, improved performance in the following year, and more effectively manages expectations. But they only work if firms do those interviews well, and unfortunately, perhaps only a quarter of all law firms meet that standard. Good interviews are two-way conversations, focused on helping the partner to be more successful. They explore each partner’s strengths and weaknesses and include a focused discussion of priorities for the coming year, (as quoted in The American Lawyer).
It is often said it is rare to find great leaders who lack great communication skills. Not all communication skills are the same—some leaders are gifted at talking to groups, while others are fabulous at counseling individuals. The key question for managing expectations is, do firms have leaders (at the firm, practice and office level) routinely communicate substantive information and meaningful analyses (not just highly filtered, quantitative data) to partners all throughout the year? Are they honest about telling partners when the firm is doing well, and when the firm isn’t? Are they skilled at accurately describing what the challenges are and how to address them? Are they open about the financial data they share, or does it constantly feel like they are just spinning selected facts?, (as quoted in The American Lawyer).
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