FAR Roundtable Luncheon Program Developing Market – Based Pay Practices

1. FAR Roundtable Luncheon ProgramDeveloping Market – Based Pay Practices March 22, 2006 Jim Moss Managing Director

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

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

5. Total Rewards – Program Components Transactional Rewards Compensation Fixed pay Bonus plan Long term incentives Benefits Health and Welfare Retirement Paid time off Direct Indirect Personal Development Performance management Training and development Career development Work Environment Culture and climate Work design and flexibility Quality of work life Relational Rewards Source: Hewitt

6. 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 Government For-profit Not-for-profit Other non-profit • Federal • State • Municipal • Industry specific • General industry • Trade association • Professional societies • Education • Charitables • Healthcare • Higher education • Think tanks • Social/community service

10. Determining Appropriate Labor Markets – Selection Criteria Size of annualoperating budget Organizationstructure Focus/mission Position roles/responsibility Type of not-for-profit Compensation philosophy

11. Market Pricing Protocol - Illustrative Work Functions Financial Operations Government Relations Membership Standards/ Certification Meeting & Conference Planning Work Functions • Not-for-profit • General Industry • Not-for-profit • Corporate • Survey Peer Group • Not-for-profit • Not-for-profit • Not-for-profit • General Industry Market/ Sector • Similar Budget Size • All Sizes • Similar Budget Size • $1-3 Billion • Similar Budget Size • Similar Budget Size • Similar Budget Size Organization Size • National • Regional • National • Regional • National • Regional • National • Regional • National • Regional Geography

12. Market Pricing Protocol – Position Level

13. Market Pricing – Representative Published Survey Sources • 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

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

15. 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 Actual low 25thpercentile Median Mean 75thpercentile Actual high

16. Closing and Questions ? ? ?

17. 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