In small service firms such as marketing agencies, IT service providers, and consulting firms, founders are in a relentless pursuit of top talent. The cornerstone of this quest often lies in crafting an irresistible employee value proposition (EVP). While compensation has traditionally been viewed as the primary lever to attract and retain talent, emerging trends suggest that it might not be the golden ticket after all.
In the dynamic world of professional services, from marketing agencies and consulting firms to providers of fractional executives, navigating the intricacies of co-founder compensation is a critical aspect of maintaining harmony and fairness within the leadership team. With approximately 80% of professional service firms operating as partnerships, the question of how to adjust partner compensation equitably is a recurring challenge.
Founders of boutique professional service firms, such as consulting firms, marketing agencies, and software development firms, often face a common dilemma: how to structure their own compensation. This critical decision can lead to problematic outcomes: not paying oneself, underpaying, or overpaying. The solution lies in understanding and applying a dual-role compensation method that accurately reflects the value a founder brings to their firm.
As the founder of a boutique professional service firm, you’ve embarked on a unique journey filled with challenges and opportunities. In my book, “The Boutique: How to Start, Scale, and Sell a Professional Service Firm,” I introduced a framework that outlines the three key stages in the lifecycle of a small service firm: Grow, Scale, and Exit. Today, we’ll explore how your compensation as the Founder changes as your firm evolves through these stages.
As the founder of a boutique professional service firm, you understand the importance of growth. But not all revenue is equal.
