Learning Sheet- Brainard, Bennis and Farrell
Essay by Naveenraaj • July 7, 2018 • Case Study • 1,119 Words (5 Pages) • 3,116 Views
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Learning Sheet- Brainard, Bennis and Farrell
Naveenraaj K P, 17214
The case highlights one of the key problems in professional service firms such as consulting, accounting, law firms etc. where the issue of compensation is complex and can have serious implications on the performance of the company. The employees are their key resources and compensation is an important component of keeping the employees motivated and loyal.
Key problems faced by Brainard, Bennis and Farrell (BBF)
1. One of the key issue faced by BBF is that issue of tackling seniority Vs performance in compensating partner. The firm had historically given higher importance to seniority however, there is a growing discontent among young partners that they are not being compensated adequately enough for their efforts and some of the old partners are being compensated unreasonably.
2. The other key issue faced by them is that they weren’t sure about the weightage which should be given to the difference performance parameters so that evaluation can be done on a more objective basis rather than the current system which had high degree of subjectivity.
3. Communication of these performance parameters and their weightages is also a major issue since the executive committee would prefer a consensus of all partners over this issue to avoid any discontent.
4. There was also an issue for lateral hires. Due to immense competition for talent in the market, the firm had to make attractive financial packages in order to hire someone talented from the market. However, this created problems in the future since it didn’t align with the existing system of compensation and there was discontent that these new lateral hires are compensated heavily.
5. The younger partners in the firm are very competitive and expect to be rewarded handsomely for their efforts despite being low in seniority without which the probability of them shifting to competitive firms is much higher.
6. There was also an issue about origination fees. With the firm growing in complexity, it was very difficult to keep track of the origination and the change over of partners representing a particular client. This in turn created a problem of over compensating origination fee for certain partners even though the client is now represented by another partner.
7. The firm also had to decide about what should be future of less productive senior partners who are being compensated heavily despite bringing lower revenues. They were exploring options such as reduced compensation, asking them to leave etc.
Solutions proposed:
The following weightage criteria is now proposed for the various performance parameters against which partners will be evaluated. In order to the quantitative parameters which were already measured in the firm, certain additional qualitative parameters such as quality of work, co-cooperativeness with other partners and committee work can also be measured on a scale to bring in more objectivity.
Parameter | Weightage proposed & Rationale |
Billable Hours | A weightage of 12% is recommended and it is justified since it represents the actual work done by partners which earns revenue for the firm. |
Non-billable hrs | To ensure that partners who are involved in new business development are also compensated adequately for their efforts, a weightage of 10% is recommended |
Dollars managed | Higher the value of dollars managed by a partner, higher is the share of revenue for the firm and hence needs a weightage of 10%. |
Write-off performance | In order to decrease or discourage the practice of write-offs by certain partners, a weightage of 6% is recommended. |
Unbilled dollars | This represents the share of revenue which has not been recognized by the firm since the partner has not charged it so 5% weightage can be given |
Collections performance | A higher weightage of 7% is given so that the partners are proactive in collecting the dues from clients thus resulting in good cash flows for the firm. |
Origination credits | In order to encourage partners to actively bring in new clients especially given the tough market conditions, 10% weightage should be given for this parameter. |
Billing rate | In order to discourage partners from under charging their service to gain more billable hours, a weightage of 10% should be given to this parameter. |
Age | In order to emphasize the importance of the senior partner and their contributions, a weightage of 12% is recommended. |
Quality of legal work | In order to maintain the high quality of work which the firm strongly believes in, a weightage of 8% can be given in order to ensure high quality deliverables |
Cooperativeness with other partners | In order to encourage better coordination and cross selling among partners for increased revenues, a weightage of 5% is recommended. |
Committee work & firm management | In order to encourage partners to take part in certain committees and involve in managerial tasks other than focussing on billable hours, a weightage of 5% is recommended for this parameter |
For parameters such as Billable Hours, Non-billable hrs, Dollars managed, Write-off performance, Unbilled dollars, Collections performance, Origination credits and Billing rate, the following evaluation criteria can be used.
Range | Rating |
0-25 % | 0.5 |
26-50 % | 1 |
51-75% | 1.5 |
76-100% | 2 |
101-125% | 2.5 |
126-150% | 3 |
151-175% | 3.5 |
176-200% | 4 |
Quality of legal work:
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