Competitive Market Compensation Review

1
Competitive Market Compensation Review
Project Overview
July 2009
2
Initial Charge/ Background

• In an effort to identify and define an
  appropriate compensation structure for Ocean
  Leadership (OL), Nonprofit HR Solutions (NPHRS),
  OLs human resources partner, was tasked with
• Collecting and analyzing job content data (i.e.,
  duties, responsibilities and work requirements)
  on covered positions
• Articulating a protocol for benchmarking
  compensation among comparable organizations
• Benchmarking total pay (base salary plus other
  cash) levels and practices using published
  surveys sources
• Comparing how Ocean Leaderships current cash
  compensation compares to developed market pay
  rates for similar positions and

3
Initial Charge/ Background

• Preparing and presenting our study methodologies,
  market findings, as well as observations and
  conclusions.
• OL did not have a formal program in place to
  manage employee pay.
• Although there was no formal structure in place,
  OLs compensation practices have generally
  maintained salaries at competitive levels.

4
Market Review Objectives

• To attract, motivate and retain capable employees
• To ensure equity (internal and external) and
  fairness
• To pay commensurate with duties and
  responsibilities
• To identify career progression opportunities
• To ensure consistency with position titling

5
Job Analysis Foundation of Pay Program
OL Review
Employee Job Description
ConsultantReview
Basis for position evaluation and market pricing.
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Basic Design Elements
MarketPricing

• Published surveys

JobAnalysis
Salary Range
Base SalaryDelivery

• Salary increases

• Job Bands

• Job Descriptions
• Titling

PositionEvaluation

• Whole Job
• Position Leveling

7
Market Pricing External Valuation

• NPHRS believes an organizations actual pay is
  competitive if it falls within 85 to 115 of
  developed market pay rates for management or
  within 90 to 110 for all other employees, since
  market pricing is not an exact science.
• Compared how OLs current cash compensation
  stacks up against developed market pay rates
  for similar positions

8
Pay Survey Sources Used
Cordom Associates, Salary Survey for Non-Profit Organizations, 2008 Human Resources Association, National Capital Area Compensation Survey, 2008 PRM Consulting, Management Compensation Report of Not-for-Profit Organizations, 2008 Salary.com, CompAnalyst, 2009 Total Compensation Solutions, Not-for-Profit Compensation Survey, 2008 Watson Wyatt, Middle Management Report, 2007 Watson Wyatt, Professional Administrative Services Report, 2007 Watson Wyatt, Professional Specialized Services Report, 2007 Mercer, Benchmark Database Metropolitan Benchmark Survey, 2008 Mercer, Information Technology Compensation Survey, 2008
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Findings

• OLs current actual pay is competitive on
  average, in relation to the market median for
  similar positions in comparable organizations.
  Market median represents the figure above and
  below which half of all reported figures fall.
• This is consistent with OLs articulated desire
  to compensate its staff at or close to the market
  median wherever possible.
• Although there was no formal structure in place,
  OLs compensation practices have maintained
  salaries at competitive levels.
• OLs base salaries have been adjusted through
  COLAs of 3.5 - 4.0 over the past few years. The
  average market movement in base salaries in both
  the profit and not-for-profits sectors has been,
  on average, at 3.5 - 4.0 per annum over the
  past 5 years.

10
Actions Taken

• We articulated OLs employee pay philosophy and
  objectives in a manner that conveys OLs desire
  to have a compensation program that reflects
  equity, fairness and recognition of the internal
  and external value of all positions
• We constructed a base salary structure, including
  grades and ranges to reflect OLs pay philosophy
  
• We assigned positions to salary grades using the
  developed market base salaries, and reflecting
  internal equity and organizational value
• We established formal career levels and developed
  consistent job titling ensuring consistency and
  clarity going-forward
• We estimated the cost to implement the approved
  salary structure and
• We agreed on a communications plan for program
  roll-out.

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2009 Approved Salary Structure
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Summary of OLs Competitive Position
Competitive Range Degree of Competitiveness All Employees All Employees
Competitive Range Degree of Competitiveness Median Median
Competitive Range Degree of Competitiveness Ees Total
Competitive Range gt 115 5 9.6
Competitive Range 85 - 115 46 88.5
Competitive Range lt 85 1 1.9
Competitive Range Total 52 100.0

• Salary adjustments have been made in response to
  review
• Salary Increase Factors Considered
• Current Salary vs Competitive Market Salary
• Internal equity
• Individual performance
• Annual Salary Increase Budget

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Next Steps

• OL will administer and maintain the program on an
  on-going basis to help ensure fair and equitable
  employee pay in the future.
• NPHRS believes the adoption of the recommended
  changes will improve the external competitiveness
  of OLs employee pay program as well as help to
  attract, engage and retain qualified talent in
  the future.
• OL will regularly (i.e. bi-annually) review the
  approved salary structure to ensure that it
  remains consistent with competitive pay rates of
  comparably situated organizations

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Quick Note on Salary Structure Rationale

• The purpose of each component of the approved
  salary structure is as follows
• The minimum is the rate paid an employee who
  possesses minimal qualifications and is expected
  to be able to perform the basic duties and
  responsibilities of a job after normal training.
• The midpoint is the going rate for an employee
  whose performance satisfactorily fulfills the
  requirements of the position and who typically is
  fully proficient in his/her primary areas of
  responsibility
• The maximum is the highest rate available for an
  employee whose performance consistently exceeds
  its position requirements or for whom longevity
  with the organization causes him/her to reach the
  top of the range for his/her position.