Benchmarking Compensation & Benefits: How Do You Compare? Christina L. Greathouse, Ph.D. Strategic Performance Group April 30, 2008

Benchmarking Compensation & Benefits: How Do You Compare?

Christina L. Greathouse, Ph.D.Strategic Performance Group

April 30, 2008

Copyright 2008 - SPG 2

Benchmarking Comp & Benefits

• Determining compensation objectives• Choosing sources of data• Choosing comparable organizations• Matching your positions to benchmark

jobs• Using multiple data points• Deciding which statistics to use• Aging the data


Benchmarking Comp & Benefits

• Determining your market position• Making market adjustments• Developing pay ranges • Paying for performance• Calculating operating ratios• Benchmarking your benefits • Communicating total compensation

information


Determining Compensation Objectives

• To achieve internal equity, ensuring that employees are paid fairly in relation to one another.

• To achieve external equity, ensuring that employees are paid fairly and competitively in relation to the external marketplace.

• To develop pay management practices that are fair, objective, transparent and legally defensible.

• To develop a compensation process and system that can be easily maintained and updated.


Internal Equity

Job Evaluation: Determining the relative worth of jobs in order to establish which jobs should be paid more than others within an organization• Job Ranking• Job Classification• Point System• Work Valuation


External Equity: Sources of Data

1. The American Society of Association Executives Compensation and Benefits Study

2. PRM Consulting Management Compensation Report for Not-for-Profit Organizations

3. Cordom Associates Salary Survey of Nonprofit Organizations

4. Human Resources Association – Washington Capital Area (HRA-WCA) Compensation Survey Report

5. U.S. Mercer Benchmark Database6. SalarySource.com7. National Journal Biennial Salary Survey8. National Compensation Study – Association Chief Staff

Executives (American Research Company)


Choosing Comparable Organizations• Industry• Size of budget• Number of employees• Location• Individual versus institutional members• Tax status


Matching Your Jobs to Benchmark Jobs• Scope• Experience required• Education required• Supervisory responsibility• Multi-function jobs


Deciding Which Data to Use• Mean: Average • Median: Midpoint/50th Percentile - figure

above and below which half of the reported compensation figures fall

• 25th Percentile: figure above which 75% of the reported compensation figures fall

• 75th Percentile: figure above which 25% of the reported compensation figures fall


Arriving at a Market PriceTake the median or average of the data based on two or more “cuts”:• Location• Size (budget and/or # of employees)• Industry• Type of organization


Arriving at a Market Price

50th % 75th %

WDC $283,600 $432,800

Trade Assn. $361,800 $619,000

$30M-$60M $306,000 $369,200

100-250 Emp. $307,000 $393,800

MEDIAN: $306,000 $413,300

AVERAGE: $314,350 $453,750


Aging the Data• Increases for executive staff ranged

from 4.6% to 5.3% in 2006-2007

• Increases for managers/supervisors averaged 4% in 2006-2007

• Increases for other staff averaged 3.9% in 2006-2007


Determining Your Market Position

ASAE PRM HRA AVG. YOUR

ORG.

DIFF.

$56.2 $62.1 $71.4 $63.2 $72.2 14%

$85.8 $97.1 $73.9 $85.6 $80.1 -6%

$127.1 $156.7 $141.3 $141.7 $110.1 -22%


Adjustments to Market PriceQUALIFICATIONS

PERFORMANCE

Entry-Level, Little or No

Experience

Lacks Some Position

Quals

Meets

Position

Quals

Above

Average

Quals

Extremely

Well

Qualified

Needs

Improvement-20% -15% -10% -5% __

Partially

Meets

Expectations

-15% -10% -5% __ +5%

Meets

Expectations-10% -5% __ +5% +10%

Exceeds

Expectations-5% __ +5% +10% +15%

Significantly

Exceeds

Expectations

__ +5% +10% +15% +20%


Developing Pay Ranges

Min Mid Max

Grade 1 $32,000 $40,000 $48,000

Grade 2 $36,800 $46,000 $55,200

Grade 3 $42,320 $52,900 $63,480

Grade 4 $48,668 $60,835 $73,002

Grade 5 $55,968 $69,960 $83,952


Merit Increases

MARKET

POSITION

PERFORMANCE

Below

50%

Percentile

50th to

75th

Percentile

Above

50th

Percentile

Unsatisfactory 0% 0% 0%

Needs Improvement 0%- 2.8% 0%-2% 0%

Meets

Expectations3.5% - 4.5% 3.0% - 3.5% 2.5% - 3.0%

Exceeds

Expectations5.0%- 6.0% 4.0%- 5.0% 3.0%- 4.0%

Significantly Exceeds

Expectations6.5%- 8.0% 5.0%- 6.5% 4.0%- 5.0%


Operating Ratios• Total staff compensation (exempt &

non-exempt FTEs): Total revenue

• Staff size (FTEs): Total revenue

• Employee benefits costs: Total revenue

• Employee benefits costs: Total staff compensation


Benchmarking BenefitsSources of Data:1. The American Society of Association

Executives Compensation and Benefits Study

2. PRM Consulting Management Compensation Report for Not-for-Profit Organizations

3. Cordom Associates Biennial Benefit Survey of Nonprofit Organizations


Benchmarking BenefitsBenefit

DescriptionOrgs with

21-50 Emps

Your

Org

Your Org

vs MarketAvg. % healthcare premium paid by employer

80% 100% +

Avg. unmatched employer contribution to 401(k)

7% 0% _

Long-term care 9% Yes +

Health Club

Membership15% No =

Flexible

Work Arrangements50% Yes =


Total Compensation StatementsBenefit Employer Cost Employee Cost

Medical/Dental $4,565 $910

Disability/Life $1,245 ___

401(k) Match $8,194 ___

Salary/Bonus $65,654

TOTAL COMP $79,658


Contact InformationChris Greathouse

Strategic Performance Group

8000 Towers Crescent Drive, Suite 300

Vienna, VA 22182

703-847-3656 – Main phone number

703-736-0340 – Direct phone number

[email protected]

www.strategicperformance.net

Documents

Benchmarking Compensation & Benefits: How Do You Compare? Christina L. Greathouse, Ph.D. Strategic Performance Group April 30, 2008