Compensation Trends

1
Compensation Trends Negotiations August 2007
Whitney Taylor WellPoint, Inc.
2
Water Cooler Speculation

• Bet I could get 10,000 more if I left my company
  and went somewhere else!
• Are you in the 80?
• How do you really know?

3
Should I Stay or Should I Go?

• Instead of counting on a new employer to make
  us happier, or more successful, lets keep in
  mind that to a large extent a job is what WE make
  of it!
• Price Pritchett, New Work Habits for the Next
  Millennium.

4
Compensation What is it?

• Base Salary
• Paid Time Off (PTO), Holidays, Vacation, Sick
  Time, etc.
• 40 Hour Work Week
• Home Office/Home Office Set Up
• Part Time Schedule/Job Sharing
• Pension
• 401(K)
• Relocation
• Stock Options

• Sign-On Bonus
• Performance Based Bonus
• Employee Stock Purchase Plan
• Insurance Health, Dental, Vision, Short
  Long-Term Disability
• Healthcare Childcare Reimbursement Accounts
• Car allowance
• Training, Professional Development
• Travel Perks or Requirements

5
Salary Budget Trends

• 2006-07 Salary Budget Survey reported an actual
  average total salary budget increase of 3.8 for
  all employee categories.
• Consumer Price Index (CPI) rose 3.5
• 92 of employees are expected to receive an
  increase in base pay

6
Salary Trends

• Pay rates for average salaried exempt workers
  will increase 4 while cost of living index
  increased 4.1
• Employers are moving away from pensions and stock
  options and are offering more incentives tied to
  individual contribution and company performance
• In 2005, 36 of largest US companies offered no
  traditional pension, only a 401(K) plan (Watson
  Wyatt)
• Globalization pressures are forcing companies to
  focus on improving their cost structures making
  purchasing managers the new unlikely corporate
  rock stars.
• Purchasing Managers will earn the highest raise
  in 2006 (9.35)
• Business Legal Report, Inc. 2006 Exempt Salary
  Survey. Career Journal

7
Recruiter/Employer Perspectives

• 60 leave room for negotiations in first offer
• 30 say final offer
• 10 say it depends on candidate
• 4 out of 5 recruiters are willing to negotiate
  (Society for Human Resource Management)
• Few job seekers ask for more
• Loeb, Marshall. MarketWatch. www.careerbuilder.c
  om
• Base salary drives other aspects of compensation
• Impact of title on salary organizations are
  flattening
• We are negotiators/buyers for our companies
  therefore, it should be expected and accepted
  that we WILL negotiate

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2005-06 Salary Averages
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Impact of Experience
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Impact of Education
2003 poll conducted National Organization for
Competency Assurance (NCOA) as reported by Louise
Wehrle in How Much is Certification Worth?
Contract Management. May 2004.
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Title Salary Benchmarks
Titles apply to contracts, subcontracts,
procurement, purchasing, sourcing
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Impact of Responsibility
13
Impact of Company Size
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Impact of Location
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Variable Pay

• More organizations (79) are using variable pay
• Sign-on bonuses 69
• Referral bonuses 65
• Spot bonus 45
• Retention/stay bonus 35
• Pay above market 30
• Part time employment w/ benefits 28
• Stock option program 24
• Market adjustments/increase to base salary 64
• 2006-07 Salary Budget Survey
• ISM Reports
• 61.7 receive bonuses
• 15.6 receive stock options

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Paid Vacation Benchmark

• 1 Yr Service 10.2 Days
• 3 Yrs 12.1 Days
• 5 Yrs 14.7 Days
• 10 Yrs 17.4 Days
• 15 Yrs 19.1 Days
• 20 Yrs 19.9 Days
• 25 Yrs 20.6 Days
• Averages reported for White Collar Occupations
• U.S. Department of Labor, U.S. Bureau of Labor
  Statistics. National Compensation Survey
  Employee Benefits in Private Industry in the
  United States. March 2006.

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US Median Household Income 2005
USA Today Snapshot, December 2006
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Personal Compensation Analysis

• Step 1 Internal Analysis
• Step 2 External Analysis
• Company
• Industry
• Step 4 Set Realistic Goals

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Internal Analysis

• Develop spreadsheet of salary, bonus, stock
  options, benefits
• Quantify current benefits
• Prioritize benefits
• Quantify overall spend managed
• Analyze your contributions as savings - be
  realistic!
• Define future role, title, responsibility you are
  seeking

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External Analysis

• Company
• Revenue
• Industry
• Location
• Research company benefits online and ask HR Rep
  or other employees likelihood of benefits (work
  at home, job sharing, part time, increased
  vacation, flex scheduling, etc.)
• Research tax implications (traveling jobs, work
  at home)
• Industry
• Do homework, know industry averages and where you
  fit in (salarycalculator.com, salary.com,
  careerinfonet.org, jobstar.org, professional
  associations)

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Set Personal Goals

• Discuss locations and life styles/cost of living
  with family
• Define salary ranges for locations
• Determine base and variable pay ranges
• Prioritize benefits and trade offs

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Negotiation Tips

• Delay salary conversations until you fully
  understand role
• Practice responding competitive market salary,
  help me understand salary range or midpoint, or
  provide a range and state that your actual is TBD
• SSS Sucky Salary Surprise
• Offer is greater than 20 off respond with
  surprise
• Seek to understand variable pay
• Ask how they determined the salary offer
  benchmark data
• Discuss a more senior title
• Ballpark
• Thank you I need a few days to fully consider
  your offer
• MSBS Maybe I should be in SALES!
• Over target
• Understand expectations, deliverables and confirm
  ability to meet these

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Negotiation Tips (Contd)

• Re-visit your priorities to leverage benefits,
  quantify and determine trade-offs
• Be creative in offering solutions
• Ex. Enthused about the possibility of working for
  X however, Id like us to work together to to
  enable me to feel comfortable
• Some solution ideas that Ive briefly considered
  include (mention one at a time wait for response
  so you understand likelihood)
• Sign-on Bonus
• Additional vacation
• Performance based bonus
• Stock Options
• Work from home 2 days a week
• Women Remember you are representing your
  colleagues, department, company, customers and
  impacting trends!

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Communication Tips

• Convey enthusiasm/intrigue without clear intent
• Be confident
• Be tactful may help confirm youre worth it
• Request additional clarification re cost of
  living differential, bonus, benefits, travel,
  etc.
• Establish timeframe for response
• Its not what you ask, its the way you ask it!
• Your negotiation style will reflect how you work
  with suppliers and team members

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Communication Tips

• Once offer is made, dont feel obligated to
  respond
• Be appreciative and ask for time to consider
• Dont reveal happiness or disappointment
• Get all offers (including revisions) in writing
• Obtain full understanding of benefits and
  quantify their value (expected bonus, stock
  options, etc.)
• Be courageous, ASK FOR MORE!!!!
• Review written offer in detail before responding
  or signing make sure everything is documented
  correctly
• Once signed, do not go back to bargaining table
  done deal!

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Internal Negotiations

• Do research, use benchmarks
• Quantify contributions to bottom line
• Make sure your accomplishments support strategic
  objectives
• Focus on performance-based pay arrangement
• Negotiate if/then milestone accomplishments with
  agreed to changes including dates
• Variable pay is sometimes easier to access

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Walt Disney - Leadership

• Courage is the main quality of leadership, in
  my opinion, no matter where it is exercised.
  Usually it implies some riskespecially in new
  undertakings. Courage to initiate something and
  to keep it goingpioneering and adventurous
  spirit to blaze new ways, often, in our land of
  opportunity.

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Sources

• Avery, Susan. Purchasing Compensation How to
  negotiate a higher salary. July 14,
  2007.http//www.purchasing.com//index.asp?layouta
  rticleprintarticleIDCA645821
• Capell, Frances. The Biggest Raise at the
  Mid-Management Level in BLRs 2006 Exempt Salary
  Survey A Big Surprise. www.WorldatWork.com.
  June 14, 2006.
• Institute for Supply Management (ISM) 2006 Annual
  Salary Survey (2005 data from 1,223 respondents)
• Keller, Walter S. Ten Commandments of Salary
  Negotiations. Careerjournal.com sponsored by
  WSJ.com.
• Loeb, Marshall. MarketWatch. www.careerbuilder.c
  om
• National Contract Management Association Annual
  Salary Survey (2005 data from 2,572 respondents
  and 2006 data from 4,482 respondents)
  http//www.ncmahq.org/publications/docs/salarysurv
  ey2006_ExecSum.pdf
• Supplier Selection Management Report, published
  by Institute of Management Administration, Inc.
  (IOMA) October 2004
• Wehrle, Louise. How Much is Certification
  Worth? Contract Management. May 2004
• U.S. Department of Labor, U.S. Bureau of Labor
  Statistics. National Compensation Survey
  Employee Benefits in Private Industry in the
  United States. March 2006.
• Yentes, Lindsey. ISMs 2007 Salary Survey.
  Inside Supply Management. May 2007.

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Whitney Taylor

• WellPoint, Inc.
• 972-234-1828
• Whitney.taylor2_at_wellpoint.com