FAR Roundtable Luncheon Program

Developing Market – Based Pay Practices

March 22, 2006

Jim MossManaging Director

2

Source: Towers Perrin

Total Rewards – Organizational Framework

Pay BenefitsTraining &

DevelopmentWork

Environment

Employee Preferences

Current Marketplace Realities

Mission, Goals, Values and Strategies

3

Developing a Total Rewards Strategy - The Value Proposition

Manage employment elements between the association and employee

Develop a road map that will:

Identify value-added employment-related factors

Prioritize the association’s human resource investment

Rationalize different components of the employment interface

Communicate the links between business strategy

Forge a shared destiny with employees through the

ability to: Attract, retain, and motivate

Protect, enable, and reward

4

Establishing a Total Rewards Framework

Job Itself

Opportunity for Growth

Respect

RecognitionIndirect Pay

Direct Pay

Involvement in Decisions

Source: Aon Consulting

5

Total Rewards – Program Components

Compensation

Fixed pay

Bonus plan

Long term incentives

Compensation

Fixed pay

Bonus plan

Long term incentives

Benefits

Health and Welfare

Retirement

Paid time off

Benefits

Health and Welfare

Retirement

Paid time off

Personal Development

Performance management

Training and development

Career development

Personal Development

Performance management

Training and development

Career development

Work Environment

Culture and climate

Work design and flexibility

Quality of work life

Work Environment

Culture and climate

Work design and flexibility

Quality of work lifeRelational Rewards

Transactional Rewards

Dir

ect

Ind

irect

Source: Hewitt

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Total Rewards – Focus on Work Life Balance

Helping employees manage their physical and mental health

Helping employees take care of dependents

Making work more flexible

Saving employees’ time

Supporting employees through the financial lifecycle

Creating a supportive culture and environment

Source: New England Employee Benefits Council

7

The Workforce Commitment Model

Source: Aon Consulting

8

Compensation Philosophy and Policy

Competitive Market: peer group or survey sources

Competitive stance: position relative to market

Job value determination: internal equity versus market position

Pay mix: fixed versus variable pay

Pay structure: control versus flexibility

Reward focus: group or individual performance

Pay management: degree of participation

9

Market Pricing – Competitive Labor Market Sectors

For-profit

Industry specific

General industry

Not-for-profit

Trade association

Professional societies

Education

Charitables

Government Other non-profit

Healthcare

Higher education

Think tanks

Social/community service

Federal

State

Municipal

10

Determining Appropriate Labor Markets – Selection Criteria

Organizationstructure

Position roles/responsibility

Size of annualoperating budget

Type of not-for-profit

Compensation philosophy

Focus/mission

11

GeographyGeography

Organization Size

Organization Size

Market/ Sector

Market/ Sector

Work Functions

Work Functions

Financial Operations

• Not-for-profit• General Industry

• Similar Budget Size• All Sizes

• National• Regional

Government Relations

• Not-for-profit• Corporate

• Similar Budget Size• $1-3 Billion

• National• Regional

Membership

• Survey Peer Group• Not-for-profit

• Similar Budget Size

• National• Regional

Meeting & Conference

Planning

• Not-for-profit• General Industry

• Similar Budget Size

• National• Regional

Standards/ Certification

• Not-for-profit

• Similar Budget Size

• National• Regional

Market Pricing Protocol - Illustrative Work Functions

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Market Pricing Protocol – Position Level

Position Level Labor Markets Geographic Location

LeadershipSurvey Peer Group

Not-for-ProfitNational

Management Not-for-Profit Regional and Local

Knowledge Workers/Individual Contributors

Not-for-ProfitGeneral Industry

Regional and Local

Semi-TechnicalNot-for-Profit

General IndustryLocal

Administrative Support General Industry Local

13

Market Pricing – Representative Published Survey Sources

Not-for-Profit

Abbott, Langer & Associates, Compensation in Nonprofit Organizations

American Society of Association Executives, Compensation and Benefits Report

Cordom Associates, Salary Survey of Non-Profit Organizations

Greater Washington Society of Association Executives, Compensation and Benefits Survey Report

PRM Consulting, Management Compensation Report of Not-for-Profit Organizations

General Industry

Business & Legal Reports, Survey of Nonexempt Compensation – Pennsylvania

Mercer Human Resource Consulting

Robert Half International, Finance, Accounting and Management Salary Guide

Watson Wyatt

Survey of Nonexempt Compensation – Pennsylvania

Survey of Exempt Compensation – Northeast/Mid-Atlantic

Corporate Marketing and Communications Survey Report

Information Technology Compensation Survey

Industry Report on Sales and Marketing

Industry Report on Top Management Compensation

Geographic Report on Middle Management Personnel

Geographic Report on Office Personnel

Geographic Report on Professional and Scientific Personnel

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Market Pricing – Position Matching/Comparability

Step 6Step 5Step 4

Step 3Step 2Step 1

Organization comparability

Position matching

Market adjustmentPremiumDiscount

Number of survey matches

Effective date of data

Summary pay statistics

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Summary Statistics Definitions

25th percentile represents the figure above which 75% of all reported figures fall

Mean represents the average of all figures reported (typically 5% higher than median)

Median represents the figure above and below which half of all reported figures fall

75th percentile represents the figure above which 25% of all reported figures fall

25th percentile

MeanMedian 75th percentile

Actual low

Actual high

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Closing and Questions

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About PRM Consulting, Inc.

PRM is a professional services firm specializing in helping not-for-profits maximize performance and improve organizational efficiency through human capital. We:

Have more than 100 years of combined staff experience

Significant experience in consulting with trade associations, professional societies and charitables

Benchmark human resource practices across the not-for-profit market

Have a dedicated, full-time staff with roots in major consulting firms

Conduct on-going employee research and compensation levels as well as practices