As part of our ongoing support and education for accountancy firms we recently came across a few queries regarding team bonuses and which were the most Popular.
There are 4 items that spring to mind as being well received by the majority of team members as follows:
1 New Biz
The most popular approach for rewarding team members (including partners) for winning business is as follows:
A – 25% of the first years fee payable when the engagement letter is signed
B – 12.5% of a new service bought from an existing client payable on cash received
C – It is the team member’s responsibility to make a claim
D – Please don’t over “accountantise” the system as that can have a negative effect on trying to generate new business.
Rewarding people for chargeable hours (rather than recoverability) is much more positive;
A – If we can benchmark the number of chargeable hours by fee earner for last year and reward them for more productivity, it appears that a bonus of 35% of recoverable chargeable hours over and above last year is very effective.
B – The firm, of course, receives 60% of every hour that is charged and recovered in that year.
C – Only run this reward scheme for one year.
3 The Bounty Scheme
If we can reward our team members for introducing potential members of the team that subsequently do become members of the team, it makes sense to reward them to the tune of about one half of what one would typically pay a recruitment agent.
This seems to be an equitable and very generous reward scheme and encourages team members to look out for other team members that fit the culture of the firm.
4 Friday Afternoons Off
Not much explanation is required here other than the office shuts down on Friday afternoon. This has proven to be a very good morale booster.
It should be pointed out, of course, that the chargeable hours target of the week remains the same as it was, with not having Friday afternoons off (ie team members are asked to make up chargeable hours during the week so that productivity remains as it was before).
Following the theme of helping our Members we have been asked to review partner remuneration with the following analysis being received rather well by most:
The first profit share would be allocated by salary and this is to be determined with each partner at the beginning of the year and may vary depending on partners’ roles.
After salaries have been distributed, we can then reward partners in 2 ways:
A – Objective bonuses based on performance that can be measured such as:
i New business
ii Chargeable hours
iii Lock up
iv Fee portfolio, etc.
B – Subjective Bonus – this is a bonus allocated on items that are very subjective and hard to measure.
Normally partners are asked to vote on their colleagues to distribute the subjective bonus. For example, if there are 5 partners in the firm then each partner has 4 votes, 3 votes, 2 votes and 1 vote to be allocated to his or her other 4 partners. The Managing Partner adds up the total and distributes the subjective bonus in bands accordingly (it’s not very helpful sometimes to give exact scores to the partners).
C – After salaries, objective bonus and subjective bonuses have been allocated the remaining profit would be divided up by partners equity stake holding in the business.