Employee Compensation Planning Presented By: Jonathan McQuade The Ensemble Practice LLC ACR#88575

Compensation Planning Process Define compensation philosophy Benchmark compensation Analyze benchmark results Confirm roles and responsibilities Set or review individual compensation Review total firm compensation costs

What compensation planning is not Important Points What compensation planning is not black and white a comprehensive employee management tool a sole driver of employee performance So…what is it?? creates consistency and communicates expectations determines whether incentives are driving performance measures firm’s position and competitiveness with labor market review of firm’s compensation costs and other related variables

What is Compensation Philosophy? A statement similar to the strategy or “value proposition” of a firm. Should tie in with strategy Describes how compensation works in a firm and what principles govern compensation decisions Should be clear enough to where it can be applied in practical situations without ambiguity Print out Fusion compensation philosophy

Components of Compensation Compensation positioning in relation to industry Factors driving base pay compensation Tenure and loyalty Degrees and designations Responsibilities Experience Performance Incentive compensation Benefits Long term compensation

How to Use the Tool: A short demonstration

Incentive as % of Total Comp Admin Staff 5-10% Support Staff 10-20% Advisor Staff 20-30% Business Developers 30%+ Management Staff 20-30% (Does not include ownership returns)

Examples of Targets for Incentive Pay Support Staff Professionals 3 or less NIGO’s High level of client service Attend training and demonstrate knowledge Responsive to lead advisors Support firm projects 98% Client retention 5 new qualified clients 8 referrals from existing clients Good client survey results

Questions to Consider How do I want my employees to behave and does their compensation help drive that behavior? Are we appropriately using incentive and bonus pay? What does it achieve and is it measurable? Is the compensation plan affordable for the firm? What is the firms philosophical stance of the role compensation plays and is it communicated to employees?

Well thought out compensation plan needs: In Review Well thought out compensation plan needs: Compensation philosophy Awareness of position in relation to current labor market pay To be affordable to firm Should result in: Consistency Alignment of expectations between staff and firm Appropriate use of extrinsic motivator to reward behavior and performance