What you earn.

ASAE's latest Association Executive Compensation Study shows what association professionals are earning and what associations are paying.

If you're a numbers person--not to mention if you're as curious as the next person when it comes to finding out what your colleagues are making--you'll want to read this article about the findings of ASAE's most recent executive compensation survey. A few numbers right off the top will help set the stage:

* $125,657, $122,158, and $107,790;

* $76,598;

* 17%, 21%, and 28%;

* $98,306, $59,462, 60%;

* $23,300 and $39,157.

Captured your attention? I hope so, because these are just the teasers for some interesting comparisons across associations, jobs, and years:

* If you're an association chief executive officer living in the Washington, D.C., metropolitan area, you're earning on average more than your counterparts in runners-up New York City and Chicago: $125,657 as compared to $122,158 and $107,790, respectively.

* Aside from the chief paid executive and the Washington office head, the next highest compensation goes to the association's chief economist, checking in at an average $76,598. ASAE's compensation survey doesn't ferret out cause and effect, but one could reasonably postulate that this level of compensation reflects the value industries place on the role of associations in auditing the economy and their competitive positions therein.

* The positions showing the largest percentage change (17%, 21%, and 28%) between the 1990 and 1992 surveys are, respectively, director of consumer affairs, chapter relations director, and Washington office head. Interesting that chapter relations director has seen this jump, which would seem to parallel national associations' increasing focus on state and regional activities.

* $98,306 is the average compensation for a man in the chief paid executive position; $59,462 is what his female counterpart is making. In other words, on average, women in the chief paid position make 60% of the salary men on average make in that position. This represents a 3% improvement in the gap between men's and women's earnings since ASAE's 1990 study, where the ratio of women's salaries to men's in the chief staff position was 57%; in the 1988 study the ratio was 55%.

* In ASAE's 1981 study, the director of information's $23,300 was the lowest average salary of all 27 positions surveyed; the 1992 low goes to membership director, at $39,157. Given the value attached to membership marketing and retention during the last few years of an unpleasant economy, the membership director's average salary comes as a bit of a surprise. By the way, in the 1992 study, director of information averages $44,490, and information systems director (a position not identified in the 1981 study) averages $45,497.

Now for some context. Since ASAE's 1990 Association Executive Compensation Study, the American economy has endured a full cycle of recession with its accompanying rise in unemployment and slow recovery. Nationally, the overall rate of unemployment has risen from 5.5% in 1990 to 7.4% through October 1992, according to the Bureau of Labor Statistics (BLS), Washington, D.C.

Sluggish economy, modest but steady salary gains

In the association community, the work force retracted in some industries, such as real estate, and expanded in others, such as health care. According to BLS, the size of the work force in the employment category of "Membership Organizations," which includes trade, professional, and religious groups of all types and sizes, rose from 1990 to 1991 by 2.4% (from 1,953,500 to 2,000,600) and another 1.7% through August 1992 (to 2,036,100). The preliminary statistics through September 1992, however, showed a decrease of 2.1% (to 1,992,400).

Even with this fairly flat growth, compensation for association executives rose at a modest level since ASAE's study in 1990. If there can be a positive byproduct of recession, it is the slowing of the rate of inflation as measured by the U.S. Department of Labor's Consumer Price Index. The slower inflation rate, however, generally parallels a slower rise in salaries, which has been true in this recession as well. According to a 1992 survey by the American Compensation Association, national salary budget levels for both not-for-profit and for-profit organizations fell from 5.4% in 1990 to 5.0% in 1991 and 4.6% in 1992. At the same time, the Consumer Price Index fell from 6.1% in 1990 (high partly because of oil prices during the Gulf War) to 3.1% in 1991 and held fairly steady at 3.2% through October 1992.

Compensation highlights

ASAE's latest compensation study (published in 1993 with data from 1992) represents data from 27 executive-level positions representing more than 6,900 executives in more than 1,500 associations. Profiled are 875 trade associations and 684 individual membership organizations. Because each edition of the compensation study comprised a different group of participants, comparisons are approximations.

Highs and lows. Table 1 indicates salaries have risen steadily since 1981. The median two-year increase (the mid-point of all the increases) for all 27 positions in 1992 was 7%, compared to a two-year increase of 9% in the 1990 study. The simple average increase (the total of all increases divided by the 27 positions) from 1990 to 1992 was 9.3%, compared to 9.4% for 26 positions from 1988 to 1990.

Peggy Espy Schiffers, president of Schiffers Associates, a human resource management consulting firm in Arlington, Virginia, feels that more modest salary increases are not only the result of recession but also of increased visibility of executives' salary levels. "Members are feeling the pinch of recession and at the same time are seeing more stories about salaries of top-paid nonprofit CEOs. |So it may be~ that budgets for salary increases are being scrutinized more carefully. One big difference from the for-profit world that members often don't appreciate, however, is that most association executives don't get bonuses, making comparison with published corporate salaries difficult."

In 1992, changes in average compensation for specific positions ranged from a 28% increase for the Washington office head to 1% increases for the field staff director and regional office manager. Compensation increased by 10% or more for 12 positions between the 1988 and 1990 studies; only 9 positions increased by that amount between 1990 and 1992. Furthermore, 6 positions increased by 15% or more between 1988 and 1990, while 5 positions increased by that amount from 1990 to 1992.

Association chief staff executives. Average compensation for the chief paid executive in the 1992 study was $88,676, an increase of 7% from the 1990 average of $83,128. Chief executive officers (CEOs) in Washington, D.C., New York City, and Chicago reported the highest average total compensations of $125,657, $122,158, and $107,790, respectively, representing changes of +3.5%, +9.7%, and -1% since our 1990 study.

Trade versus individual membership organizations. CEOs in trade associations earned approximately 14% more in total average compensation ($93,740) than their counterparts in individual membership organizations, who earned $81,954. The difference when comparing median salaries is not so dramatic: The median salary for CEOs in trade associations was $80,400, 7.2% greater than the median of $75,000 in individual membership organizations.

Sixteen of the 27 surveyed positions are more highly compensated in trade associations than in individual membership organizations. Of the 11 positions faring better in individual membership organizations, a number of them--such as director of communications, education and membership directors, and advertising sales manager--are in areas representing member interests that one usually associates with individual membership organizations. Still, these differences between average salaries of like-titled positions in trade associations and individual membership organizations are often relatively small.

TABULAR DATA OMITTED

Men's versus women's compensation. While women's salaries in association management overall improved somewhat relative to those of men, they still lagged behind. At the CEO level, for example, women still earned only 60% of their male counterparts' salaries, though this is greater than the 55% ratio in the 1988 study and 57% in 1990.

Female CEOs in national trade organizations appear to fare somewhat better, according to the American Research Company's recent National Compensation Study, which reports that women earned about 86% of men's salaries. Jeannine James, president of American Research Company, Great Falls, Virginia, an independent research firm, says, "Several variables were accounted for to maximize those factors that directly determine compensation. These variables included geographic location, annual gross revenues of the association, type of industry, and type of membership base. Once these variables were controlled, we found that women in comparable positions still earned less than men. But we need more data on women's earnings in the big trade organizations, since 92% of the trade organizations in this study with annual revenues of $1.8 million or more are run by men. More than half of the women in our study run associations with revenues of $500,000 or less."

The positions that were compensated most equally in ASAE's 1992 study were field staff director, with an 88% ratio of women's to men's salaries, and the chief staff attorney, research director, and advertising sales manager, with 87% ratios. The positions that were the most disparate were director of consumer affairs at 45% and regional office manager at 55%.

The median ratio of women's to men's salaries for all 27 positions in the 1992 study was 75%, a slight improvement from the 72% ratio in the 1990 study and 69% in 1988. Compare that to data of the U.S. Department of Labor's Bureau of Labor Statistics (Bulletin #26): The bureau reports that for the overall national work force in 1991, the median of women's earnings as a percentage of men's was 66.5% in managerial and TABULAR DATA OMITTED professional positions at the executive and administrative levels.

In this comparison, it appears that women fared somewhat better in associations than in the overall national work force. One variable to note between the two studies is that women comprise a larger proportion of the survey sample in ASAE's study--48% of the more than 6,900 association executives surveyed--compared to 43% in the national work force.

Of the 27 positions covered in the ASAE study, the ones with the highest ratio of women's to men's salaries also tend to be ones with low concentrations of women in those positions. For example, the proportions of women in the positions of chief staff attorney, field staff director, and research director were 32%, 30%, and 33%, respectively, while the median proportion of women occupying the 27 management positions in 1992 was 57% (up 2% from 1990). One notable exception to this finding is the position of advertising director, where the ratio is 87% and the percentage of women in the position is 59.

Schiffers, of Schiffers Associates, postulates that since there are growing numbers of women in management positions, they are well-poised to begin filling the higher-profile, higher-paid positions in the larger associations during the next 5 to 10 years. According to the National Compensation Study already mentioned, men fill about 74% of the CEO positions in national associations. In addition, most of the associations with large revenues are administered by men, while about 53% of the associations with revenues under $500,000 are headed by women.

Fringe benefits 

Since the 1990 study, the number of associations offering cafeteria plans for benefit selection nearly doubled, from 9% to 17%, with more than half offering dependent care and nearly half (45%) offering flexible spending accounts rather than the traditional "one size fits all" fringe benefit package.

Insurance. Among the more common fringe benefits were health and life insurance, with 91% of the survey respondents offering medical insurance and 81% offering life insurance. It is interesting to note that although salaries did not rise as much in 1992 as they did in 1990, association payment of insurance premiums was more widespread. Among respondents in 1992, 83% paid all of the cost of employee-only insurance, compared to 48% in 1990, and 49% paid all of the premiums in 1992 for family coverage compared to 37% in 1990.

TABLE 3
Retirement Benefits for All Management Staff
Type of Plan                              1988     1990    1992
IRS-qualified plan                        65%      71%      73%
Non-qualified plan                        12%      13%       6%
No retirement benefits                    24%      24%      21%
Type of Non-Qualified Plan
Section 457                               37%      42%      36%
Supplementary Executive Retirement Plan   NA       18%      12%
(SERP)
IRA                                       (*)11%   (*)12%   28%
Other                                     38%      43%      20%
* Previously reported under "Qualified Plan" section.
Source: ASAE's Association Executive Compensation Study,
published by the American Society of Association Executives,
Washington, D.C., 1993, |C~ ASAE

The converse of higher association payment of premiums, however, was significantly higher deductibles for employees. The average deductible in 1992 for individual plans was $240, a 21% increase since 1990 and a 42% increase since 1988. For family coverage, the average deductible in 1992 was $461, a 35% increase over 1990 and a 75% increase since 1988. There were maximum out-of-pocket unreimbursed expenditure limits in about 75% of the associations (the norm being between $500 and $1,000 for individuals and less than $1,900 for families).

These trends seem to indicate an attempt to balance rising employer health care costs and competitive salary plans for employees.

Salary increases. Approximately 69% of the associations in the study granted merit increases, reflecting a 5% average increase, compared to a 6% average in the 1990 and 1988 studies. Twenty-six percent of the respondents granted across-the-board increases (again, with an average 5% increase, compared to 6% in 1990 and 1988), and 28% granted cost-of-living increases (with an average 4% increase, compared to 5% in 1990 and 4% in 1988).

Schiffers anticipates that associations will need to find better ways to measure performance in the future in order to attract and keep the best talent. "In the private sector," she says, "performance is measured by such things as profitability and shareholder equity, but associations don't yet have this parallel. They will need to look more at total compensation in terms of salary, fringe benefits, short- and long-term incentives, forms of profit sharing, and other methods to improve accountability and incentives."

Echoing this thought, Paul Dorf, managing director of Compensation Resources, Inc., Upper Saddle River, New Jersey, a management consulting firm specializing in compensation, says, "In order for these incentive and bonus systems to become more commonplace and effective, they are going to have to be implemented in tandem with a carefully planned method of delineating performance. We have seen these systems work very well in both for-profit and not-for-profit organizations because they help to justify rewarding top performance. During the past two years, we have seen that companies in general are less tolerant of mediocre performance. But we have also seen that high achievers are not rewarded accordingly either, leading to poor morale and to the employee eventually seeking another job. The incentive/bonus system is a way to keep high achievers."

Retirement plans. Nearly three quarters of the responding associations offered some type of IRS-qualified plan, with 81% of those offering a defined contribution and 25% offering a defined benefit program (see Table 3).

According to the terms of their plans, almost a third of the responding associations offered immediate vesting, with the minimum age of 21 common for more than half of the respondents. The normal retirement age was 65 or older for 86% of the organizations; 64% reported 55 as the age for early retirement.

The 1992 data regarding what percentage of the retirement plan is paid by the association are a complete reverse of the 1990 data. In our 1992 study, only about 12% of the responding associations paid all of the costs for the retirement plan, compared to 74% in 1990. Likewise, about 84% of the respondents in 1992 paid less than 25% of the program cost, but in 1990 that number was 11%. Again, these findings appear to be an attempt to strike a balance between rising costs and the association's offering some form of coverage to employees.

Some special benefits available to chief executive officers and their deputies have changed dramatically as budgets have tightened. Since 1981, most of these benefits have been reduced by nearly half (see Table 4).

TABLE 4
Special Fringe Benefits for CEOs and Deputy CEOs
                                         CEOs       Deputy CEOs
                                      % of assns.   % of assns.
Benefit                               1981   1992   1981   1992
Car or car allowance                   78      47     50     17
Country club/residential membership    19      11      5      5
In-town club membership                36      19     13      7
Spouse's travel expenses               51      33     22     11
Association dues paid                  89      47     55     20
Liability insurance                    49      19     34      8
Educational expenses                    #      22      #      8
Physical examination                    #      12      #      8
Low/no-interest loan program            #       2      #      1
Personal tax service                    #       2      #    (*)
Financial planning services             #       2      #      1
# These data were not collected in 1981.
* Less than 1 percent.
Source: ASAE's Association Executive Compensation Study,
published by the American Society of Association Executives,
Washington, D.C., 1993, |C~ ASAE

Executive contracts

While it has become common for chief paid executives to have some form of contract with their associations, fewer than half (41%) have a formal contract, and 17% have only a verbal agreement. As in the 1990 study, 13% of responding associations had no form of contract for the chief paid executive, and 42% had no contracts for their deputy chief paid executives. The most common contract term was three to four years for both the chief paid executive and the deputy.

The length of notice for termination was most typically three months for the chief executive and one month for the deputy. Sixty-six percent of the chief paid executives reported having severance clauses (compared to 44% in 1990), and 55% of deputy chief executives had them (compared to 22% in 1990). Severance pay was based on "salary for a set period" for three fourths of the chief executives and deputy chief executives.

These and other data in the ASAE study indicate that despite a sluggish economy over the past two years, compensation for association executives still rose, if but modestly. At the same time, associations shifted some of the burden of escalating health care costs and retirement plans to employees. These findings may appear to be tracking the same general course of for-profit organizations, except that one significant difference persists: Unlike most senior-level executives in the for-profit sector, association executives do not have a share of equity in the organization. When associations find themselves competing with for-profit organizations in hiring the best candidates--especially in the chief executive and deputy executive positions--the size and scope of the compensation offer gains ever more significance. Without the promise of equity, the reward for association executives is pretty much limited to the here and now.

Tracy Casteuble is ASAE's associate director of research and information.