Profit sharing among partners is an issue that has serious impacts on the motivation of partners, the collaboration amongst them and, by extension, the success of the firm. It is not easy to obtain consensus on a system to be employed and, to complicate this, views change over time as older partners exit and new partners enter the firm and practices adapt to new market realities.
The dilemma exists: while it seems logical to reward performance, and professional service firms have increasingly been doing so at the partner level, how can firms at the same time maintain the unity and culture of the partnership where money may not be the only objective and where collective efforts are essential to achieving success?
See Splitting the Pie: Some Thoughts on Profit Sharing among Partners for more insight into these issues.
In the same way that Edge advises on all aspects of partner compensation systems (see Partner Compensation and Performance solution), we are also able to assist in ascertaining and implementing profit-sharing arrangements that:
- are consistent with a firm’s culture and strategy
- optimize performance
- reward contributions
- attenuate dilution
- consider transition into and out of partnership