FOREWORD xi
PREFACE xiii
ACKNOWLEDGMENTS xvii
CHAPTER 1 Why We Need a New Compensation Paradigm 1
Paradigm Shifts in the Accounting Profession 1
Paradigm Shifts in Owner Compensation 7
Final Thoughts 11
CHAPTER 2 How to Grow the Compensation Pie: The Leadership Factor
15
What It Takes to Be a Leader 16
What Leaders Do 16
How to Be a Leader 20
Final Thoughts 20
CHAPTER 3 Growing the Compensation Pie: The Big Picture Factor
23
The 7S Model 23
Applying the 7S Elements to Accounting Firms 25
The Organizational Effectiveness Cycle 26
Final Thoughts 28
CHAPTER 4 How to Grow the Compensation Pie: The
Mission/Vision/Values Factor 31
Determining Mission and Vision 31
Developing Values 34
Final Thoughts 35
CHAPTER 5 How to Grow the Compensation Pie: The Balanced Scorecard
Factor 37
The Balanced Scorecard 37
Building the Scorecard 41
Strategy Maps 46
Final Thoughts 48
CHAPTER 6 Compensation Terminology and Criteria 51
Compensation Terminology 51
Total Compensation 57
Compensation Criteria 58
Final Thoughts 66
CHAPTER 7 Current Compensation Methods 71
Formula Method 73
Equal Pay Method 75
Lockstep Method 76
Hybrid Approach Method 77
Managing Owner Decides Method 77
All Owners Decide Method 78
Ownership Percentage Method 79
Pay for Performance Method 80
Eat What You Kill Method 80
Compensation Committee Method 81
Executive Committee Method 83
Pen and Paper Method 83
Final Thoughts 83
CHAPTER 8 Designing a New Compensation System: It’s About People
95
The War for Talent Is Not Over 95
Get the Right People on the Bus 98
Final Thoughts 101
CHAPTER 9 Designing a New Compensation System: Attract, Reward, and
Retain Top Performers 103
Key Learnings 103
What Makes a Good Plan 105
Designing a Compensation Plan 107
Rolling Out the Plan 109
Incentive Plan Success Factors 109
Include Noncash Rewards 110
Final Thoughts 111
CHAPTER 10 Setting Goals and Managing Performance 113
“Line of Sight” or Cascading Performance Goals 113
Set Cascading Performance Goals 115
Prepare to Write Cascading Performance Goals 116
Write Cascading Performance Goals 117
Define Measures of Success for Cascading Performance Goals 118
Categories of Cascading Goal Measures 119
Set Tasks and Action Steps 123
Determine Personal Readiness Level 124
Prepare Final Cascading Performance Goals 125
Manage Performance 125
Final Thoughts 127
CHAPTER 11 Is a Pay for Performance System Right for You? 133
Pay for Performance Challenges 133
Performance-Based Compensation Is Not a Silver Bullet 135
Getting Started—Diagnose Before You Design 136
Goals and Attributes of an Effective Compensation System 136
Building a Pay for Performance Plan 137
Structuring a Pay for Performance Compensation System 140
Providing Feedback in a Pay for Performance
Compensation System 143
Translating Performance Into Compensation 144
Effects of a Pay for Performance Compensation System 144
Final Thoughts 144
CHAPTER 12 Pay for Performance: Align Compensation to Firm
Initiatives 151
Only Performance Is Reality 152
Align Compensation to Strategic Goals 152
Real-Life Example One—A Firm in Transition 153
Real-Life Example Two—One Managing Owner’s Wake-Up Call 154
Real-Life Example Three—Needed: Firm Growth; Challenge: How to Get
There 156
Real-Life Example Four—Tiered Reward System 157
Real-Life Example Five—Compensation System in a Mid-Sized Firm
157
Real-Life Example Six—Using the Balanced Scorecard 158
Final Thoughts 159
CHAPTER 13 Compensating the Managing Owner 167
What Is a Managing Owner Worth? 167
What Is an Administrative Owner? 173
What Is a Real Managing Owner Worth? 173
What Are Managing Owners Paid? 173
Final Thoughts 173
CHAPTER 14 What Will You Do Tomorrow? 175
Four Keys to Success 175
Considerations 176
Benefits 177
Final Thoughts 177
APPENDIX 2006 Owner Compensation Survey 179
BIBLIOGRAPHY 187
August J Aquila, an internationally known consultant, speaker, and
author, has held leading positions in the accounting profession for
more than 25 years. He currently heads AQUILA Global Advisors, LLC,
a full-service consulting firm to accounting and other professional
services firms.
Coral L. Rice is one of the accounting profession’s top consultants
and executive coaches in the areas of organizational development,
compensation, and learning. She serves as a global senior
consultant in FranklinCovery’s 4 Disciplines of Execution practice
and has served both Fortune 100 and smaller clients in a variety of
consulting roles.
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