FAR Roundtable Luncheon Program Developing Market – Based Pay Practices March 22, 2006 Jim Moss Managing Director

1 Source: Towers Perrin Total Rewards – Organizational Framework PayBenefits Training & Development Work Environment Employee Preferences Current Marketplace Realities Mission, Goals, Values and Strategies

2 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

3 Establishing a Total Rewards Framework Job Itself Opportunity for Growth Respect Recognition Indirect Pay Direct Pay Involvement in Decisions Source: Aon Consulting

4 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 life Relational Rewards Transactional Rewards Direct Indirect Source: Hewitt

5 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

6 The Workforce Commitment Model Source: Aon Consulting

7 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

8 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

9 Determining Appropriate Labor Markets – Selection Criteria Organization structure Position roles/ responsibility Size of annual operating budget Type of not-for-profit Compensation philosophy Focus/mission

10 Geography Organizati on Size Market/ Sector 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

11 Market Pricing Protocol – Position Level Position LevelLabor MarketsGeographic Location Leadership Survey Peer Group Not-for-Profit National ManagementNot-for-ProfitRegional and Local Knowledge Workers/ Individual Contributors Not-for-Profit General Industry Regional and Local Semi-Technical Not-for-Profit General Industry Local Administrative SupportGeneral IndustryLocal

12 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

13 Market Pricing – Position Matching/Comparability Step 6Step 5Step 4 Step 3Step 2Step 1 Organization comparability Position matching Market adjustment Premium Discount Number of survey matches Effective date of data Summary pay statistics

14 Summary Statistics Definitions 25 th 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 75 th percentile represents the figure above which 25% of all reported figures fall 25 th percentile MeanMedian75 th percentile Actual low Actual high

15 Closing and Questions

16 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