Partnership Incentive Design

Background

A founder-led Canadian consulting firm with a growing national footprint engaged Southlea to redesign its equity partner compensation model. The firm was preparing to expand its partnership group and needed a scalable, future-ready approach to compensation that would support succession planning (i.e. phasing out founder-partners, and engaging the “next generation”). 

Southlea’s engagement included: 

• Meeting with current partners and senior leaders expected to join the partnership group. 

• Reviewing the firm’s existing salary, incentive, and distribution plans. 

• Recommending a suitable and data-driven compensation framework that differentiated between senior leader and partner levels, supported by an impact assessment. 

Challenges

As the firm transitioned from a founder-led structure to a broader partnership model, it faced the challenge of creating a compensation system that was: 

• Fair and transparent to all stakeholders. 

• Aligned with its total rewards philosophy and performance. 

• Sustainable strategy balancing the risk appetite/capital capacity of incoming leaders and value-crystallization of retiring founder-partners. 

Results

With Southlea’s support, the firm successfully updated its salary, incentive, and equity plans. The new structure enabled a smooth transition from non-partner to partner roles and positioned the firm for long-term growth. 

Key Takeaway:

Founder-led firms benefit from early alignment on compensation philosophy and clear, transparent communication with future partners.