SESSION TWO WORKBOOK MDMN Decisions and Notes for Modules 1 – 5 BSMARTer Business Simulation Management and Relationship Training

Organizational Structure and Compensation MODULE 1

Service Team Structure 1 Example diagram of service team structure.

PM and Ops teams managed by COO Service Team Structure 2 Draw a picture of your service team structure. Partner Jr Advisor/SPM Jr PMOps Advisory team managed by investment committee Dedicated CSA to advisor team Service team per partner/producer. [insert page for full org structure]

Service Team Structure 3 From day 1 we recognize the need to transfer from a siloed organization to a more collaborative team-based environment with a goal of ensuring clear accountability for the partners across the firm. We believe this structure breaks the silo effect and allows us to share more collective resources. Additionally, this structure will help boost a common culture across the firm. The structure is a combination of service team and departmental structure which allows client responsiveness/attention via the advisory team while increasing team accountability and productivity with centralized/departmental pooled resources with PMs and CSAs. In addition, the new structure provides career pathing for junior employees. Each partner/producer would have a Jr advisor/Sr Portfolio Manager which creates an advisor team. The jr advisors are managed by the investment committee led by Don. This breaks down advisor/producer silos and provides the support Pete requests. Additional resources of CSAs and portfolio managers are overall managed by the COO. Each advisor team would have a dedicated CSA. Portfolio managers are a pooled resource and allocated/utilized as needed to create and manage portfolios, and perform research. Service organization was designed with key objectives in mind, including: -Client retention and development -Consistency in client experience/service delivery -Clear accountability for performance -Contribute to firm results -Increase productivity to serve: Current large base of clients Growing base of clients Provide an explanation of your service team structure.

Compensation Benchmarking 4 Determine base compensation for three employees in your briefing book. Complete the task using the next two pages. PositionSalaryBonusTotal Your Lowest-Paid Employee 125,3593,641125,000 Your Highest-Paid Employee 150,4854,515155,000 Mid-range137,9224,078142,000 Benchmark Median 81,8022,19884,000 Benchmark Third Quartile 100,00037,633137,633 See Appendix A for position compensation information Source: 2013 InvestmentNews/Moss Adams Comp Study This is for Portfolio Manager

Compensation Benchmarking 5 Position: Portfolio Manager Findings: Base salary very high and the bonus is low compared with benchmark data. In addition, we found discrepancies between PMs under each partner/advisor. Partners met and agreed to have consistency with salary structure in effort to promote fairness and collaboration across the teams. Roger uncomfortable Actions to take: -Salary based off production with a bonus component. -Contemplate salary /bonus incentive to adjust to closer to marker. -Consider lower base salaries and higher bonus – firm-wide -Over a 2year period, we plan on lowering salaries while increasing the incentive structure to bring our compensation more inline with the market. -Consider the option of pre-pay a portion of the bonus to ease transition. -Goal is to maintain total comp, just adjust structure. -Lowers P&L obligation and allows flexibility based on firm performance -Standardize compensation based on job, and benchmarking and Moss Adams data -Align with performance reviews as we increase the bonus structure. -Better align compensation to firm performance -COO becomes pay normalizer. Partners met to discuss with Rodger PM compensation issue. Came to consensus that the new compensation plan (lower salary/higher bonus) will allow control of pay based on performance. What changes, if any, will you make to compensation?

Staff Selection and Performance Management MODULE 2

Job Advertisement 6 Design a job ad for the position specified in your briefing. (20 minutes) Do not need to do

Performance Evaluation 7 Design a performance evaluation form. Follow the worksheet. (20 minutes) This form will be used for all employees for the firm. These are our core values – each team will use with applicable attributes of each position. This provides a framework to have a disciplined manner to measure our employees vs. our targets. Job FactorExplanation 1. Business developmentIncrease AUM, referrals, marketing 2. Client service Build relationships, teamwork, retention 3. Leadership focus Each to act as an owner, focus on personal development 4. Protect the business Manage risk within the firm, protect the brand/reputation 5. PartnershipsPromote teamwork, build networks 6. Execution/Technical AptitudeCompetency at core job duties Describe how the forum will be used. We recognize as an organization that in long term want to create separate job specific performance evaluations. Above factors are shared factors for all employees. Notes

The Culture of Your Firm MODULE 3

Organizational Culture 8 Today Fragmented Siloed – partners operate in own manner No sense of community/cohesiveness Us vs. them (admin/ops vs. partners) Lack of clear leadership Future Leadership where necessary – no leading by collective group Mary: CEO Peggy: COO More collective work - teamwork Values of firm Growth Accountability Community High integrity Lead by example Service Commitment to each other and to our clients Describe the culture of your firm. What changes would you make? How?

Incentive Compensation MODULE 4

Incentive Compensation 9 Incentive plan for Operations – CSA, admin, PMs/Investment Staff What behaviors do we want to modify/promote? Incentivized by: -Execution -Productivity -Client satisfaction -Retention -….. -Knock down silos to collective/pooled component – consider as a fixed cost (e.g., 20%) Design Advisor Bonus Plan

Partner Compensation MODULE 5

Partner Compensation 10 Who are the partners/owners? What should their base compensation be? Cash comp: salary, bonus – no dividends How much should be salary vs. production based payout? Set the base compensation for your partners.

Partner Incentive Compensation 11 Do base compensation first Do we really need a bonus plan? -NNA? -Retention? Create, discuss and define incentive compensation for partners.

Other Initiatives 12 Describe any other initiatives you will undertake as a firm. These may be outside of the scope of compensation and people but may be important parts of your case. Notes InitiativeExplanation 1.Succession plan for DonDon wants out soon. 2.Lane & Pete as partner Lane and Pete can better serve the firm by assisting/being partners 3.Get Don in AA He has a drinking problem and is killing our reputation 4.Compensation for entire ops teamMirror PM comp for firm 5. Evaluate need for FT project manager and receptionist roles Roles are in question