News from the Safety Equipment Distributors Association

January 2004              return to the newsletter contents page

Who Makes What: The SEDA 2004 Employee Compensation Study

One of the major challenges facing business owners is in establishing a fair and adequate compensation system for employees. If compensation is too low, the company cannot attract and keep qualified personnel. If compensation is too high, profit tends to suffer.

In trying to establish a sound compensation system managers are continually looking for benchmarks. That is, they want to know how much other companies are paying for certain

positions. They also want to know what fringe benefit packages are being offered. Such benchmarking is required for the two key employee groups and requires two different types of analysis.

  • Executive Compensation—For top management positions such benchmarking is often national in scope. In attempting to attract a top CFO, for example, the firm may compete with a large number of distribution firms across the entire United States.

  • Employee Compensation—In terms of operating employees the relevant market is always local. Comparisons for truck drivers and warehouse employees in a particular geographic area are much more useful than are national averages.

Even though compensation benchmarks are critical, developing such benchmarks has always been a very difficult undertaking in distribution. Compensation surveys have almost always focused on one particular line of trade. As a result, they have had very small sample sizes. The resulting information has been fragmentary, at best.

The 2004 Employee Compensation Study eliminates these problems. SEDA has joined together with more than 30 other distribution trade associations in sponsoring the largest cross-industry compensation survey ever conducted. It is anticipated that approximately 2,000 firms will take part. With such a large sample, SEDA members will receive a wealth of information.

The Power of a Cross-Industry Survey

The survey will provide basic information on SEDA members as a group. That is, firms can compare their compensation levels and benefit programs to other SEDA members. This ability to compare to similar firms in your industry is of significant value.

With the combination of over 30 distribution trade associations, though, much more powerful data is available. This power comes to participants in two ways—geographic information and sales size information.

  • Geographic Information—The competition for most employee talent is local. The survey will allow precise analysis down to specific regions, states or even local metro areas, such as Atlanta or Denver. It will be possible to know what distributors of all kinds are paying for various employee positions at a local level.

  • Sales Size Information—With the larger sample, 22 or more sales size breaks are also possible, from under $1 million to over $1 billion. This allows firms to look at the compensation practices of various size firms to determine at what point specific benefit programs become affordable.

The availability of such a large sample size broken out into so many specific sub-categories provides managers with a wealth of information for decision making. For example, firms thinking about opening additional branches in new geographic regions will have precise payroll information at hand for the target geographic area.

Likewise, firms of a specific sales size will have an idea of the extent to which specific fringe benefits are provided by similarly sized firms. They will also have information on what sales volume level must be attained before specific fringe benefits become realistic additions to the company's compensation package.

The Types of Information

The survey is broken out into two key areas—compensation levels and fringe benefits. Each section provides a wide range of information for the typical SEDA member.

  • Compensation—Information on median compensation levels, as well as a range of common experience for high and low compensation levels will be provided. Such information will be broken out into base salary, bonus and total compensation. The types of positions that will be covered include:

    • Executives—positions such as the chief executive officer, chief financial officer, chief marketing officer and the like.

    • Operating Employees—this includes such positions as office manager, purchasing agent, warehouse employee and warehouse supervisor.

    • Sales Employees—Including both inside and outside sales reps.

    • Branch Managers

As mentioned earlier, all of this information will be available at the national level as well as by geographic location and sales size of firm. It provides an unprecedented opportunity to fully understand labor markets.

Fringe Benefit Programs—This section will review benefit programs being provided by various size firms. Topics of interest will include:

  • Health Care Plans

  • Retirement Income Programs

  • End of Year Bonus Arrangements

  • Paid Vacations and Holidays

As with compensation, the level of detail provided is unprecedented in the distribution industries. It is available only by the combined efforts of more than 30 different trade associations.

Scheduling

Questionnaires were mailed to SEDA distributor members in early January. Since all firms in the United States are required to report employee financial information to the federal government by the end of January, almost all of the information required for the survey should be readily at hand.

 Questionnaires are due back by February 15. This should give every firm ample time to complete the questionnaire. All information in the survey is absolutely confidential. No member of the SEDA staff will have access to any of the information. All questionnaires are returned directly to the Profit Planning Group, the research company conducting the survey.

The final report providing all of the detailed breakouts should be back in the hands of SEDA members in May, 2004. Since the report will cover the 2003 calendar year, the information will be extremely current as well as timely.

© 2004 Safety Equipment Distributors Association

 

You are receiving this email as a benefit of your membership with SEDA. You are not receiving this message because you are subscribed to an electronic list. If you have any input you would like to provide about mailings of this type, please e-mail jackie@ksgroup.org. To unsubscribe to this newsletter, click here.

Important links from this article

Profit Planning Group

SEDA Compensation Survey

Notes

Questionnaires were mailed to SEDA distributor members in early January. Since all firms in the United States are required to report employee financial information to the federal government by the end of January, almost all of the information required for the survey should be readily at hand. Questionnaires are due back by February 15.