by David Maister 1994
This article first appeared in the September 1994 Supplement to International Law Firm Management. A revised version appeared in First Among Equals (2002) by McKenna and Maister.
Among professional firms there exists a wide array of systems for measuring and rewarding partners who operate in different locations or different practice groups.
At one extreme, some firms operate their separate locations or practice groups as distinct profit centers with minimal sharing of profits.
At the other extreme are firms who try to avoid creating intergroup competition by treating office or group results as irrelevant. Some avoid even calculating office and group results for this reason.
The vast majority of firms operate between these two extremes. The results of the group to which the partner belongs are usually treated as an influence (or a contributing factor) in assessing performance and awarding compensation, but they are rarely determinative.
It is a difficult juggling act to examine group results without giving off the dysfunctional signal that only local group results are important, thereby destroying intergroup cooperation.
However, I believe that it can be done and that it is important to examine group results, whether groups are defined by location, discipline or industry. (It is wise to examine the results of all three types of groups.)
Without such analysis intergroup cooperation is hard to encourage, and a firm must understand its economics at levels below that of the whole firm.
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