Benchmarking compensation: results from the 15th edition of ASAE's Association Executive Compensation and Benefits Study provide valuable industry benchmarks.

ACROSS THE PAST TWO YEARS, association excutive compensation has experienced a moderate increase. So says the data gathered for the latest edition of ASAE's Association Executive Compensation and Benefits Study (AECBS). Analysis of the two most recent editions of the AECBS shows that from 2002 to 2004 median total compensation has increased for most executives. In fact, 26 of the 33 job titles surveyed in both years experienced an increase in median total compensation during that period.

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However, because not all of the same organizations participated in both the 2002 and 2004 studies, it is important to treat this information as a broad gauge of compensation trends. For a more precise view, consider the total compensation among repeating participants (see Figure 1). For 21 of the 22 positions that contained an adequate number of responses from which to obtain statistically valid data, on average, median total compensation rose about 3 percent annually from 2002 to 2004.

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The most popular type of salary increases were merit increases (reported by 69 percent of the responding associations, up from 57 percent in 2002) and general across-the-board increases (reported by 24 percent of associations both years). Organizations that granted the latter type of salary increase offered a median 4 percent salary adjustment in 2004, a number that also remained unchanged.

What does this information mean for your association? It's time to review senior-staff salaries to make sure that they are in line with industry standards and to ensure that your association has the compensation and benefits leverage that will help you retain and attract top talent as the economy continues to rebound. The AECBS provides the information you need to benchmark your association's compensation and benefits offerings against those of similar associations, as measured by staff and budget size, location, and other criteria. Here's a snapshot of the data you'll find.

Calculating compensation

While countless factors can influence senior-level compensation, the clearest appears to be organizational size, both budget and staff. Data indicate that the total annual budget and total staff size of an association are the most important factors in compensation of senior-level employees (see Figures 2 and 3). Generally, and probably not surprisingly, the larger the total annual budget or the larger the staff of the organization, the greater the compensation paid to employees.

As shown in the 2004 data in Figure 3, the typical membership development director at an organization with a staff size of more than 100 earned more than twice as much as a typical membership development director in an organization with a staff size of 10 or fewer.

The geographic location of an organization--and more specifically, the cost of living in that location--is another important element to consider when examining compensation. Generally, the following has been found to be true: The higher an area's cost of living, the higher an employee's compensation. In past AECBS reports, Chicago, New York City, and Washington, D.C., have been among the geographic regions paying the highest compensation to senior-level employees. This was true again this year (see Figure 4).

Evaluating employee benefits

Though competitive compensation is certainly an important part of attracting and retaining quality employees, a strong benefits package can be equally important. However, myriad factors--from legislative changes to skyrocketing health care costs--make creating a competitive package challenging. Here's a look at what other organizations are offering.

Medical insurance. Ninety-six percent of the organizations that participated in the 2004 AECBS provide medical coverage to their staff. The vast majority of those (83 percent) offer some type of managed care plan (i.e., HMO, PPO, POS). About one third offer traditional indemnity insurance (basic hospitalization/major medical). And as for health savings accounts, which recent federal law changes have made more attractive and less restrictive, less than 20 percent currently offer an HSA plan. It will be interesting to see whether associations transition to this type of plan in years to come.

Because medical insurance premiums have increased at rates higher than inflation for more than a decade, it is not surprising that 61 percent of the responding organizations reported taking steps within the past year to control the costs of providing medical insurance to employees. The most popular strategy continues to be increased deductibles (see Figure 5). Historical data from the AECBS show that the average deductible for employee coverage has risen from $274 in 1999 to $443 in 2004.

Retirement plans. Eighty-eight percent of responding associations also offer a retirement plan to eligible employees, down slightly from the 90 percent of respondents offering them in 2002. Of those providing plans, nearly all offer some type of defined contribution plan, such as a 401(k) or 403(b) plan. One third of associations offer a defined benefit plan or pension. The median cost of offering retirement programs (including administrative costs and annual contributions) was 6 percent of total salaries and wages.

Other benefits. Life insurance, short- and long-term disability insurance, prescription coverage, and dental benefits are but a few of the additional benefits that associations offer. However, very few (less than 15 percent) offer direct medical expense reimbursement, supplemental long-term coverage, hospital indemnity insurance, and elder care.

FIGURE 1: Compensation Changes

Percentage change in total individual compensation for most common
senior management positions from 2002 to 2004

CEO                      10.6%
Deputy CEO               13.7%
Administration           10.9%
Chief Financial Officer   6.4%
Education/Certification   6.5%
Information Technology   12.5%
Meetings/Conventions      4.8%

Note: Table made from bar graph.

FIGURE 2: Government/Lobbying Director Salaries by Association Budget
Size*

BUDGET SIZE         2002      2004

$750,001-$1M       $44,300   $59,002
$1,000,001-$2.5M   $66,369   $78,688
$2,500,001-$5M     $77,200   $91,800
$5,000,001-$10M    $98,918  $106,300
$10,000,001-$15M  $126,000  $132,814
More than $15M    $114,209  $125,562

Note: $750K and less budget size not reported due to too few
organizations within that budget category.
*All figures are 2004 and 2002 median total annual compensation.

FIGURE 3: Membership Development Director Salaries by Association Staff
Size*

STAFF SIZE       2002   STAFF SIZE       2004

10 or fewer    $45,000  10 or fewer    $47,500
11-20          $56,500  11-20          $50,838
21-50          $70,489  21-50          $69,823
51-100         $80,000  51-100         $80,837
More than 100  $87,738  More than 100  $97,360

*All figures are 2004 and 2002 median total annual compensation.

Note: Table made from bar graph.

FIGURE 4: CEO Salaries in Select Cities*

CITY                2002      2004

Atlanta            $83,000  $109,000
Austin, Texas     $130,800  $139,000
Chicago           $174,600  $190,052
Denver            $107,667  $121,936
New York City     $175,000  $220,250
Washington, D.C.  $192,000  $209,250

*All figures are 2004 and 2002 median total annual compensation.

FIGURE 5: Steps Taken to Control Health Care Costs

Increase Deductible                      53%
Increase Employee Contribution           33%
Offer Managed Care Plan                  28%
Increase Out-of-Pocket Maximum           27%
Offer Medical or Health Savings Account   7%

SOURCE: 2004 Association Executive Compensation and Benefits Study, 15th
Edition

Note: Table made from bar graph.

RELATED ARTICLE: ABOUT THE STUDY

ASAE's Association Executive Compensation and Benefits Study, 15th Edition, examines compensation levels of more than 30 executive-level positions in nearly 700 U.S. associations. Compensation data are aggregated by membership type, total annual budget, total staff size, geographic region, metropolitan area, industry or interest areas, and tax status. The 2004 study also contains recent trends in perks, retirement plans, medical insurance, disability insurance, contracts, and other benefits. For those who are on the higher end of the pay scale, the 2004 Blue Chip Association Executive Compensation and Benefits Study may be a better tool.

To order, contact ASAE's Member Service Center by phone: [phone] or 888-950-ASAE (outside the Washington, D.C., metropolitan area); or e-mail: [e-mail]. Request product AMR212017 for the AECBS and product AMR212054 for the Blue Chip study. Each study costs $143.95 for ASAE members and $224.95 for nonmembers. For mid-level professionals and support staff positions, ASAE offers the Association Staff Compensation and Benefits Study, available at the same price by requesting product AMR213100.

CUSTOM ANALYSES

If you want more customized analyses that evaluate your individual circumstances or you find that your organization does not exactly fit the AECBS's descriptions, the ASAE Industry and Market Research Department can perform a custom analysis. This will ensure that the data you're interested in not only takes into account peers and organizations with comparable parameters and demographics, but that you are properly comparing the more complex data.

For the individual. If you want to arm yourself with more fine-tuned compensation data to give you more clout when negotiating your salary and benefits, consider the following customer analyses: base salary; other cash, bonuses, or supplementary pay; types of perks; types of benefits; and terms of contracts.

For the organization. If you're a chief financial officer, human resources director, or a board member and need hard data to evaluate how your organization is performing, better manage your personnel, or plan your budgets, here are just a few of the types of customer analyses that can assist your decision-making precision: exempt and nonexempt personnel expenses; standard employee benefits and perks; changes in salaries across several years; total income or organization generated per employee; average salary costs per employee; proportion of personnel expenses devoted to benefits; and salary costs as a percentage of organization expense.

To order your customized analysis, contact the ASAE Industry and Market Research Department today. To order by phone, call 202-626-2847, or send an e-mail to [e-mail]. Customer analyses are offered at a discount to ASAE members and at a further discount to organizations that participate in the compensation surveys.

Shawn E. Six is a partner at Industry Insights, Inc., Columbus, Ohio, the company responsible for the data and report compilation for the Association Executive Compensation and Benefits Study, 15th Edition. E-mail: [e-mail].