By Daniel Hunter
Shortcomings in the remunerations strategies at property and engineering professional services firms are leading to short termism, fee hoarding and actions that are inconsistent with corporate values, according to a new survey by accountancy and business advisory firm, BDO LLP.
In total, two thirds (64%) of those surveyed as part of BDO’s ‘Pay and performance in Property and Engineering Firms’ study disclosed that pay and performance systems were promoting potentially damaging behaviour among partners and directors in their businesses.
Short-termism was identified as the most prevalent issue resulting from poorly-implemented remuneration strategies (cited by 44% of respondents), followed by fee hoarding (36%), actions inconsistent with the firm’s values (36%), empire building (31%), partners/directors threatening to leave/actually leaving (22%) and information hoarding (17%). On average, each respondent highlighted three separate issues resulting from pay and performance matters, with 19% selecting four or more.
The report also found that these issues had a tangible effect on productivity, with 44% of respondents stating that at least 5% of partner/director time was lost, on average, as a result of the behaviour identified above.
“The difficult operating environment facing the property sector poses numerous challenges, not least in the area of remuneration," Benjamin Viney, Senior Consultant in the Human Capital Advisory Services team at BDO LLP, said.
“Introducing an effective pay and performance strategy is far from easy but, as the survey results suggest, the costs of getting it wrong can quickly become substantial.
“Moreover, firms that properly address weaknesses in profit sharing arrangements and performance management systems can actually increase partner profits considerably, as well as improve morale and job satisfaction more generally.
“The survey suggests that the property sector still has considerable scope to improve in this area. Businesses would be well advised to take a look again at their employee reward schemes to see where they can build greater long term alignment between personal and business performance.”
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