By Philip Thomas - Advisory
Benchmarking for partners in the consulting industry is crucial as it ensures that their compensation aligns with their unique leadership roles, individual contributions, and the overall strategic success of the firm, acknowledging the distinct and multifaceted nature of partner responsibilities; however, the inherent complexity often makes partner surveys less common compared to their more standardized consultant counterparts.
Unique requirements for benchmarking partners
Robust and meaningful partner compensation benchmarking surveys require significant amounts of work and inevitably entail a large number of complex variables, encompassing various forms of current and deferred income, while taking account of individual performance metrics, market dynamics, tenure, and specific contributions to the partnership.
Broadly speaking, accuracy in view of all these considerations rests on three key pillars:
- Job Matching
- Total Income
- Firm Selection
While each of these can be considered a separate discipline or area of expertise, similarities lie in a shared requirement for solid logical foundations, deep knowledge of and experience with the market, and defined and appropriate methodologies.
Should any one of the three pillars fail, the resultant compensation report would not be robust or meaningful.
Let’s take a look at the three key pillars in more detail:
Job Matching
Generally speaking, the more value that a partner adds to their firm the more income that they can expect in return.
It is therefore essential to understand the value added to a firm in order to job match appropriately.
Vencon Research’s approach utilises a generic framework to match client levels to other directly comparable levels in the market. Comparability is determined based on detailed consideration of a variety of relevant information (as applicable) including but not limited to:
- Job titles
- Job descriptions
- Defined roles and responsibilities
- Function, industry, service line and practice responsibility
- Geographical responsibility
- Sales revenue generation
- Deliver revenue responsibility
- Managed revenue responsibility
- Span of control
- Utilisation rates
- Strategic involvement
Total Income
Firms often take very different strategic approaches with respect to the types and sizes of remuneration components that they offer their partners. Firm structure dictates to an extent what is or is not possible, however, even between firms of comparable structure we often see bespoke and unique approaches.
It is therefore crucial to gain deep understanding of the ins and outs of each firm’s remuneration package in order to be able to determine the correct income data. Along with the raw income data, Vencon gathers extensive information about firm structure, remuneration packages and the individual components.
In simple terms, Vencon Research’s approach ensures:
- Inclusion of all income that should be included.
- Exclusion of any income that shouldn’t be included.
- That any included income is included in a like-for-like manner.
Firm Selection
Benchmarking surveys compare one data set (client data) to a market data set based on a selected list of relevant competitors. If the market data was based on an unspecified list, it would not be possible for the client to make sound judgements or decide upon the right corrective action.
Given the highly sensitive nature of partner data, Vencon Research’s Partner Compensation reports are anonymous, i.e. the market firms are not named. However, key criteria about each firm is provided so that clients are able to make suitably informed decisions and select appropriate competitors.
In brief, while ensuring each participating firm’s anonymity, Vencon Research indicates the following for each selectable market firm:
· Firm Type (original firm focus, e.g. Operations-based or Pure Strategy)
· Firm size in terms of firm revenue
· Firm size in terms of number of Consultants
· Revenue per Consultant
· International presence (countries located in)
· Scope of different industries served
· Scope of services/functions offered
Vencon Research’s detailed and committed approach to data gathering, data analysis, data clarification and data management ensures that the three key pillars stay standing which in turn results in robust and meaningful Partner Compensation Benchmarking Surveys.
For further information on our Partner, or other benchmarking surveys, visit our website, or get in touch to arrange a consultation.