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A Review of the 2010 MCAA Compensation Report

It comes as no surprise that MCAA members employed fewer people during 2010.

When compared to the average over the past five years, the incumbent base for this report is down 25%. All compensation categories showed a decrease in value from 2009 with an average change from all positions averaging 5.2%. Hardest hit for salaries were Software Personnel where average salaries were down 11%, incentive/commission compensation was down 66% and the incumbent base was down 43%. Least affected by the adjustments to salaries were Product Design & Development personnel where salaries averaged only a scant .8% decrease.

We have reported previously that companies in the measurement, control and automation industry appeared to be replacing more experienced employees with less seasoned workers. It would appear from the data that those younger, newer employees were ones that were outplaced during the economic downturn.

As a caveat as to comparability, readers should note several key things about this report:

1. Although the total number of companies participating in the report remained constant, 17% of the reporting population of companies changed-that is 9 companies participating this year while 9 others elected not to contribute data. It should be noted that some companies which did not report, specifically indicated that their HR professionals were carrying a heavier workload or wearing multiple hats. For the most part, the size of the companies in v. out was about the same.

2. The business downturn which started in 2008 continued throughout 2009 and into 2010, resulted in salary freezes, wage reductions and layoffs. This had a significant impact on the base rates and incentive compensation reported in 2009 as well as the employee count as noted above.

With these thoughts in mind, however, we also feel that-over the many years of this study-we have seen a reasonable consistency in the data, despite the changing mix of participating companies year to year and we feel that largely pertains this year as well. In our General Compensation section we learned the following about the participating companies:

o The participating companies reported a total employee population of 7,994 including both salaried and hourly workers. This is down significantly from the 16,336 reported in 2009. We believe this is due to a large company which had reported divisional employees last year for the first time and did not continue that expanded scope in 2010. Those included in the compensation report covering salaried employees only number 2,665 or 33% of the workforce.

o 67% of the participating companies reported some freeze on salaries in 2009 which dropped to 50% this year and 25% reported a freeze on incentive payments, down from 35% in 2009.

o In this reporting population, 68% of the employers have some incentive plan for employees (down from 75% in 2009) with 89% of those plans being based on performance (again, down from 95% last year).

o Company performance was the most important factor in determining compensation adjustments (according to 80% of participants) while last year Group Performance was the critical factor. Other factors included Regional factors/surveys, COLA and group performance.

o Employers indicated they allocate the "money pool" in annual budgets with an average of 84% for merit or performance increases, with 28% available for market adjustments and about 13% earmarked for promotions. Because there are multiple options, these averages won't total 100% but the breakdown is useful.

The annual report published by MCAA is targeted at salaried positions but does include an annual hourly wage rate section for both regular and temporary workers. The 51 companies who contributed data reported an average hourly rate for regular hourly employees of $16.14 (down 2.3% from the prior year). The average population of hourly employees was down significantly from 129 in 2009 to 65 in 2010 (a 50% decline). Conversely, nearly 50% of the companies this year reported using temporary hourly workers (an increase of 25% over 2009) and paid them an average rate of $11.81 (a decrease of 16%) with an average 32.5% agency add-on.

The report covers five job categories:

General Management Personnel-25 positions are reported here from CEO averaging over $200,000 down to Metrologist Managers averaging less than $45,000. There was an average decrease in base salary for this group of 3.9% with only seven positions showing base rates equal to or more than 2009. Meanwhile, the average incentive compensation for the group decreased a dramatic 51% over 2009 levels as companies tried to maintain the workforce by eliminating or cutting incentives (none of the positions showed any increase incentive pay).

Field Sales and Service-This category includes 18 positions ranging from Regional Service Manager averaging $91,000 in base pay down to Service Technicians whose base rates averaged under $47,000. The average decrease of this group was 3.1% with half of the positions showing increased base rates. The category saw a 25% loss of incumbents and a 51% decrease in average incentive compensation for the group.

Technical marketing & Sales Support Personnel-Represents 11 positions and salaries ranging from Industry Market Manager at over $96,000 base down to Inside Sales Specialist at $47,500. Seven of the positions showed decreases in base rates from 2008 with the average change for the group down 5.2%. Incentive compensation was only down 6.2%. In this category, we continue to see a shift to lower base salaries and higher incentive payments but the incentives in 2010 were definitely curtailed. Again, we see a shift in the mix in multi-level categories where there are more employees (by percent) reported at the lowest to middle levels even though this category saw a decline in population of 23%.

Product Design & Development-Covers six positions and ranged from Engineering Supervisor at over $90,000 down to Design Engineer Level 4 at under $57,000. The category reports a drop of less than 1% in base salaries and an average drop of 46% in incentive pay. This year the incumbent population is half of what was reported in 2009 and appears to be a continuation of an overall reduction in emphasis on R&D for MCAA companies and a "hunkering position in product development through the worst of the economic uncertainty. It may also be symptomatic of the lack of qualified engineering candidates in our industry.

Manufacturing Engineering Personnel-Includes three positions where the base salaries fell against 2009 levels by 7% and incentive pay dropped an average of 19%. Again, we note a shift of more employees in the two lower levels of this category.

Software Personnel-Includes eight positions for systems and application engineers and programmers. In 2009, there was a huge upswing in the number of incumbents reported in 2009 which was normalized this year, although the number of incumbents is still 42% higher than either 2007 or 2008 levels. Salaries of these employees were down over 11% (the greatest decline in the report) with incentive compensation also well down (66.5%) and based on relatively small average dollars ($2,600).

In 2010, the Association also published its Benefits Survey as a companion piece to the Compensation Report. The trend of shifting expense to employees continues but most benefits have been maintained by participating companies during the economic slowdown without substantial program change.

The MCAA Survey is conducted each summer and published in August. In an Excel spreadsheet format, each of the jobs reported includes information on the numbers of companies matching the defined responsibilities, the overall percentiles and for4 groups by sales volume percentiles, weighted and unweighted base rates, incentive and total compensation are reported. Where possible this same information is arrayed for regional breakdowns based on the specific locations of the 2009 reporting population. To add insight, the report also shows other position titles reported by participating companies. Only member companies contributed data in 2010 but participation is open to non-members for a $2,500 fee. Member participation is included in dues paid to MCAA.

Measurement, Control & Automation Association -

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