Промышленный лизинг Промышленный лизинг  Методички 

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firm for professionals is the potential for learning and advancement. Therefore, it is important that firm recruiting efforts and collateral reflect the defined career paths to set clear performance and promotion expectations with potential candidates as early as possible. Convey the message that the firm is well organized, and you will attract the best candidates.

Review and Update of Career Tracks

Like most firm governance structures, career tracks and promotion criteria should be reviewed periodically to ensure that they remain relevant and continue to reflect reality. Typically, firms review these criteria annually and make minor changes to the overall model. Complete overhauls of the career track system are usually driven by major industry changes, large-scale firm growth, mergers or acquisitions, large changes in the firms service offering that occur over time, or changes in strategic direction. These major adjustments are rarely executed and may happen only once every 5 to 10 years. Large changes to the career track and promotion plan affect every professional in the firm and entail a resetting of career expectations by nearly all.

Compensation and Benefits

As outlined earlier in this chapter, compensation is an important element of overall employee satisfaction. Research has shown that as long as compensation is within reasonable (plus or minus 10 percent) range of employees marketplace expectations, other factors are more important determinants of overall career and job satisfaction. However, when compensation strays outside those ranges, it becomes the number one predictor. Inattention to compensation can quickly ruin a firm through mass exodus of key staff.

Compensation setting can be challenging for professional services firms. Salaries and benefits are usually the largest direct cost by far in a professional services firm; therefore, controlling compensation expenses has the largest impact on overall firm profitability. On the other hand, the firms effort to recruit the best and brightest and deliver the highest level of service for clients can be severely hindered by an uncompetitive overall compensation package.

Best practices for firms in the area of compensation include:

Clearly defined compensation programs: Base salary, bonus, and other compensation expectations for each level should be clearly set. While firms may not elect to have an exact salary for each level, ranges of compensation are appropriate as outlined earlier in the chapter.



Total compensation concept: Employee base salary and other cash compensation are only a portion of the total employee expense for professional services firms. Benefits, training, and other forms of compensation can range from 10 percent to 30 percent of the total cost of an employee. Because employees often consider only direct cash compensation when benchmarking themselves against peers in other organizations, the firm should establish the concept of total compensation for employees and highlight for staff the total package of compensation and benefits costs incurred by the firm. One major consulting firm sends employees a total compensation report annually and includes all of the compensation components for professional staff valued appropriately in dollars.

Periodic staff compensation reviews: Annual review of compensation for each staff member. These reviews should usually be tied to the staff annual appraisal. Periodically, the firm may perform market-adjustment compensation reviews that are not linked to the appraisal cycle.

Periodic compensation benchmarking: To avoid undercompensating staff, the firm should benchmark professional and administrative salaries against the market every three to six months. An annual schedule for compensation reviews, usually tied to performance appraisals, is sufficient. For certain high-demand skills, a six-month incremental check is necessary to make sure the market has not changed significantly. Salary adjustments can work both ways (i.e., down as well as up). If the market has come down significantly, downward salary adjustments may be in order. Downward salary adjustments can be incredibly demotivating and should be avoided if possible.

Publication of salary and benefit benchmarking data: Because professional staffwill inevitably conduct their own benchmarking research, the firm can mitigate any negative impacts by proactively researching total compensation appropriate for the firm employees. Benchmarks will vary by level, firm type, geography, and macroeconomic conditions. This benchmarking should be used to set total compensation levels competitively, as well as ensure that staff members are satisfied that objective criteria are used in assessing market levels.

Linkage of compensation and billing: If salaries for a given level within the firm are confined to a certain band, the firm can more easily set bill rates with the expectation that staffing will produce a certain amount of gross margin. For example, the firm may set a policy of billing associates time at three times cost. The bill rate for an associate making $75 per hour, thus, would be $225 per hour. The use of multiples of salary standards to establish bill rates makes project estimating and budgeting an easier process and can be facilitated through the establishment of clearly defined compensation for staff levels.



Adherence to external constraints: Compensation packages should comply with any applicable federal, state, or local laws, as well as any other guidelines or regulations that may apply to the firm, voluntarily or mandated.

Compensation Disclosure

A difficult decision is whether compensation information should be publicized internally by the firm. Knowing the compensation ranges at each level can serve as an incentive to junior staff, creates a culture of openness, and eliminates time-consuming gossip and backbiting over salaries. However, there are some drawbacks to this approach. Competitors can easily benchmark themselves against firm pay rates. Furthermore, if salaries are perceived by the staff to be noncompetitive, attrition rates will be higher. If the salary ranges are too wide or regarded by the staff as inequitable, public salary information will be counterproductive as well.

Internal disclosure of salaries tends to work best in firms that have the preceding compensation best practices implemented: levels and roles clearly defined, easy-to-understand promotion criteria, and market-based bench-marked salary and compensation packages that are relatively competitive. Additionally, firms that disclose compensation information internally may elect to avoid partner compensation disclosure or may intentionally obfuscate the information for the higher levels of the firm.

Timing of Compensation Events

A retention technique related to compensation that can be employed by firms is to structure the timing of significant compensation events so that there is always a personnel event on the near horizon. For instance, the firm can have appraisals delivered in Q1, compensation adjustments in Q2, stock option vesting in Q3, and bonus payouts in Q4. With a real event taking place every two to three months, employees have something to look forward to and tend to do less looking for new opportunities.

Benefit Selection

Establishing a benefit package that fits all employees can be tricky. Staff members at different points in their careers and personal lives care about different things. For example, junior staff are usually focused on cash compensation and training opportunities, whereas mid-career staff with families may want more flexible hours, lower travel expectations, and comprehensive health coverage.

If possible, the firm should accommodate the wants and needs of different constituencies by providing a menu of benefits that employees may purchase



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