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Benchmarking Compensation & Benefits: How Do You Compare?
Christina L. Greathouse, Ph.D.Strategic Performance Group
April 30, 2008
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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
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Copyright 2008 - SPG 3
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
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Copyright 2008 - SPG 4
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.
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Copyright 2008 - SPG 5
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
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Copyright 2008 - SPG 6
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)
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Copyright 2008 - SPG 7
Choosing Comparable Organizations• Industry• Size of budget• Number of employees• Location• Individual versus institutional members• Tax status
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Copyright 2008 - SPG 8
Matching Your Jobs to Benchmark Jobs• Scope• Experience required• Education required• Supervisory responsibility• Multi-function jobs
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Copyright 2008 - SPG 9
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
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Copyright 2008 - SPG 10
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
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Copyright 2008 - SPG 11
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
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Copyright 2008 - SPG 12
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
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Copyright 2008 - SPG 13
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%
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Copyright 2008 - SPG 14
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%
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Copyright 2008 - SPG 15
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
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Copyright 2008 - SPG 16
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%
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Copyright 2008 - SPG 17
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
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Copyright 2008 - SPG 18
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
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Copyright 2008 - SPG 19
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 =
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Copyright 2008 - SPG 20
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
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Copyright 2008 - SPG 21
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
www.strategicperformance.net