1. Compensation: BVARI’s Philosophy and Practice Boston VA Research Institute, Inc. 1 Presented by: Becki Amaral BVARI Annual Business Meeting August 12, 2011

2. Boston VA Research Institute, Inc. 2 Issues: Increased IRS Oversight Incentives for change “Reasonable compensation” Private inurement concerns Founded on BVARI’s philosophy Develop a process

3. Boston VA Research Institute, Inc. 3 Requires 3 to 5 comparable organizations that are similar in size – both number of employees and revenue, in the same geographic area, and that have the same focus activity. IRS Requirements

4. 4 Boston VA Research Institute, Inc. Since we were unable to find three comparable organizations, IRS informed us that we could use salary survey information for non-profits in our area. Compliance

5. Boston VA Research Institute, Inc. 5 Economic Research Institute, “Salary Assessor” tool licensed to BVARI. Third Sector New England, “Valuing Our Nonprofit Workforce 2010”. Total Compensation Solutions, LLC, “2009-2010 Not-For-Profit Compensation Survey”. Robert Half Corp., “2011 Salary Guide”. Surveys Used

6. Boston VA Research Institute, Inc. 6  Retention of valuable employees  Compliance concerns for organization and Board of Directors  Need for written philosophy and process to guide compensation decisions Additional Incentives for Change

7. Boston VA Research Institute, Inc. 7 “Reasonable compensation”  Training and experience  Duties and responsibilities  Time and effort devoted to organization  What comparable organizations pay  The use of a process to determine compensation

8. Boston VA Research Institute, Inc. 8 “A section 501(c)(3) organization must not be organized or operated for the benefit of private interests, such as the creator or the creator‘s family, shareholders of the organization, other designated individuals, or persons controlled directly or indirectly by such private interests. No part of the net earnings of a section 501(c)(3) organization may inure to the benefit of any private shareholder or individual. A private shareholder or individual is a person having a personal and private interest in the activities of the organization.” Private Inurement Concerns

9. Boston VA Research Institute, Inc. 9 Compensation is the value we place on the knowledge, skills and abilities an associate brings to the job. It is the intent of BVARI to employ the best individuals with the necessary skills for the function in which they operate and to pay them according to the value they bring to the organization. Proposed Philosophy of Compensation

10. Boston VA Research Institute, Inc. 10 Based on job description and minimum job qualifications Knowledge, skills and abilities Behavioral questions CANDIDATE INTERVIEWS

11. Boston VA Research Institute, Inc. 11 3 Components of BVARI’s Compensation Analysis Model: 1) Education or training 2) Experience that outlines the candidate’s broad generalist knowledge of the job role 3) Expertise in one or more areas considered essential components of the function EVALUATING THE CANDIDATES

12. 12 Level 1 – Entry level Level 2 – Qualified Level 3 – Accomplished Level 4 – Advanced Level 5 – Expert EVALUATING THE CANDIDATES

13. Boston VA Research Institute, Inc. 13 Interview Candidates Evaluate Candidates Select New Hire Decide on Compensation Annual Review compensation COMPENSATION PROCEDURE

14. Boston VA Research Institute, Inc. 14 Salary Top Cause of Employee Dissatisfaction: Salary is by far the leading cause of employee dissatisfaction among U.S. workers, cited by 47% of respondents in a recent survey. EMPLOYEE SATISFACTION:

15. 15 Boston VA Research Institute, Inc. Other leading causes include: workload (24%), lack of opportunities for advancement (21%) employee's manager or supervisor (21%). It is important note that a strong correlation exists between employee satisfaction, customer satisfaction and, ultimately, a company’s revenue and profitability. EMPLOYEE SATISFACTION

16. 16 Boston VA Research Institute, Inc. Review all current BVARI employees to ensure that our compensation philosophy is applied; Develop a checklist of components and scoring that will be consistent with applying a level (1-5) to all new employees; Orient all supervisors and PIs to BVARI’s new pay philosophy Next Steps

17. 17 Boston VA Research Institute, Inc. Becki Amaral labamaral@verizon.net Questions