Analysis Group's CEO on Managing with Soft Metrics

Before she joined Analysis Group, the author worked at a small economic consulting firm that—like most other firms in the industry—closely tracked and measured the profitability of each office and each practice area. That approach, she observed, created a lot of internal competition and divisiveness. In addition, the compensation model was formula-based and data-driven, largely determined by who was selling new business. Analysis Group uses a much different model: It determines partners’ compensation without relying on formulas; it doesn’t obsess over false precision about who sold what business; and pay isn’t strictly a function of billable hours. Instead, extensive, informed discussion of each person’s contributions to the firm leads to a decision about what pay seems fair. For one thing, Samuelson writes, in a professional services firm it’s not always clear who deserves credit for a specific action. She is convinced that the firm’s unconventional model is one of the reasons its culture is so strong.

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