Designing a Compensation Model for Growth

The Challenge

A fast-growing professional services firm was struggling with its partner compensation model. Originally designed when the firm had fewer employees and a flat structure, the plan had become inconsistent, unpredictable, and increasingly misaligned with firm-level performance. Without visibility into accrued obligations or long-term costs, the leadership team found it difficult to forecast payouts, manage cash reserves, or determine whether the model actually incentivized the right behavior.

The firm’s growth had outpaced the tools and planning required to support sustainable rewards, creating a risk of overpayment, underperformance, and misalignment between partner success and firm profitability.

Our Approach

We conducted a comprehensive review of the firm’s compensation framework, beginning with an analysis of historical payouts, partner revenue credit allocations, and performance metrics. Working closely with senior leadership, we identified the pain points: inconsistent application of rules, lack of centralized data, and no forward visibility into liabilities or funding.

We then designed a structured model that clearly defined individual and firm-level performance triggers and vesting timelines. The new model was accompanied by a custom-built forecasting tool that allowed the company’s management team to monitor projected payouts, adjust assumptions in real time, and ensure that sufficient capital was reserved for partner distributions.

We also worked hand-in-hand with legal, HR, and finance to implement new tracking procedures, helping teams operationalize the plan with consistency and transparency.

The Impact

The new compensation structure aligned individual rewards with firm growth, eliminated confusion around payouts, and improved retention by offering a clear, long-term value proposition for key talent. The company’s management team gained confidence in cash flow forecasting and compliance, and partners could clearly see how their efforts translated into reward.