2. The Ariel Group Affiliate Compensation: New Structure

3. Context 2010 Ariel emerges from Recession
No increases to top tier affiliates since 2008
Feeling from IC’s we were under market
$75 across the board increase end 2010
Average day rate $1,324
Created Compensation Committee

4. Older tier system Up to 49 days $1,000 50 – 124 days $1,100
On-site/lead fee $100/day
Travel
More than 4 hours in air $500
More than 6 hours in air $1,000
More than 10 hours in air $1,500

5. Compensation Committee Charter
Within the context of the market and our company's financial structure, we will create an affiliate compensation structure that is: Clear, motivating, simple and competitive. We will:
Gather community input
Recommend concrete timelines and rates
Include market research
Include financial context

6. Affiliate Input – Value Us
Pay us what we are worth for the work we do. Respect and value our time. Pay us market rate for our work.
Day rate
Travel fees
Lead/onsite fees (distant third)

7. Ariel cost of delivery Goal – 30% 7 year average – 29.1% 2010 – 30.3%
COGS (Cost of Goods Sold) includes all fees paid to facilitators (design, coaching, teaching, other)
Goal – 30%
7 year average – 29.1%
2010 – 30.3% %

8. Under $5million to over $50million All use Independent Contractors
Peer company research
11 companies
Under $5million to over $50million
All use Independent Contractors

9. Compensation ranges Current Ariel Rates Market Rates
New Rates July 1, 2011
$1,500
$1,300
$1,600
$1,000
$1,350
$1,415
$1,475
$975
$1,324
Median
New Rates January 1, 2012
$1,575
$1,460

10. Some key findings No consistent tier system based on days worked
Most (7 of 11) include prep time in their day rate
7 of 11 include travel except for international
Most workshops are between 15 and 25 participants

11. CONCLUSION IF THE WORK REQUIRES MORE TIME AND EFFORT
THEN IT WILL BE COMPENSATED AT A HIGHER RATE

12. Differences in New Structure
Tier system based on days worked no longer in effect
20 days work to qualify
Above the market median
Flexible and simple to administer/understand
Fair

13. No more day rate
Old System: Day rate based on number of days worked. Additional Pay for one-day, Lead, Onsite
New System: Consistent Base Rate once past introductory rate. Additional Pay for Complexity factors (still Lead, Onsite, No stand-alone one-day)

14. Base Rate $1,300 Standard agenda including minor tweaks
Individual preparation time
Program prep (up to 2 hrs with AM, Design or client)
Room set up
Local Travel

15. Complexity Factors Rewarding Time and Effort
Number of participants
Custom programs / New client
Time (agenda, travel)
Role during program

16. Explaining the Model
Base Rate
X Level of Complexity
= Program Rate

17. Calculating Complexity
Complexity = points
More complex = more points
More points = more $$$

18. How it works Points Participants Custom/New Time/Travel Lead/Onsite 1
More than 2 over Standard Agenda
New
More than 1 hour over Standard 2
20+
Custom Level 3
Regional (More than 100 Miles from home airport or flight < 1 hr)
Lead or Onsite 3
Custom Level 4 4
Domestic (more than 1 hr total flight time)

19. Calculating the Program Rate using the Complexity Factor
For each Program score, a different program multiplier is calculated and applied to the appropriate base rate. The following chart shows how the Program score relates to the appropriate multiplier:
Program Score
Program Multiplier 1
1.04 2
1.06 3
1.08 4
1.1 5
1.12 6
1.14 7
1.16 8
1.18

20. Example 1
Ariel is contracted to deliver a 2-day custom level 3 program for 8 participants in Florida for a new client. A Boston based contractor is selected to facilitate.

21. Example 1 calculation 8 points
Participants
Custom/New
Time/Travel
Lead/Onsite
Points Earned 2 4
Notes
8 participants is standard for a LwP program
Custom Level 3 earns 2 points. An additional point is not earned for the new client because 2 have already been earned for the custom factor
Flying from Boston is more than a 1 hour flight to this is DOMESTIC
Consistent with past policy, the facilitator earns a lead fee for this program

22. Program Multiplier is applied to the applicable base
Program Multiplier is applied to the applicable base. (assume all facilitators are beyond the introductory base rate) so base rate is $1,300. Program Rates would be as follows:
Program Score
Multiplier
Program Day Rate
Example 1
8 complexity points
1.18
$1,534

23. The End
The IC’s are mostly happy with this solution. We’ll review every October and adjust accordingly