The Truth About What You Should Pay Your Construction Industry Workforce
The topic of conversation across many industries continues to revolve around employees and how to retain your workers. For many companies, the initial reaction is to raise pay, something that employees are also requesting as the competition for labor remains high, inflation hits 6% and heath care costs continue to soar.
Given these pressures many firms, especially those in highly competitive or skilled sectors of the engineering and construction (E&C) industry, are questioning their compensation strategies, and looking for information on how quickly and by how much they need to raise pay entering 2022 to remain competitive.
Yet, our data shows that you may not need to be as aggressive in increasing base pay as you previously thought. In our 2021 Salary Increase Survey, we found that for our E&C respondents the average pay increase was projected to be 4.1% in 2022.
While that is a jump from the 3.8% gain in 2021 and the 3.2% increase recorded in 2020, it’s not as far out of line with previous years as perception would have you believe. The data demonstrates that companies are keeping pay relatively consistent despite tight labor markets and anecdotal stories of outsized raises. Furthermore, we have continued to track increase projections after the survey’s publication, and companies appear to be trying to hold firm on their budgets.
Recently I was talking with a company’s executive team after they chose to cut the bottom line in half to bolster bonuses and raises for 2022. While that decision likely makes workers happy, particularly in the short term, based on our data, this isn’t necessarily needed to remain competitive. And it puts their long-term operations at risk with less money to invest in the business or a lower cushion to weather potential downturns.
Raises for the E&C industry have generally been higher than other sectors, indicating that labor markets continue to be tight. Some of this can be attributed to the need for highly specialized skills or the need for more people in certain times of the year.
So, what does this mean for you? First, it’s important to know your market so that you can accurately answer questions about compensation. It’s much easier to challenge an outsized request for a pay increase with data than with vague reasons. Employees are more likely to respect your explanation and counteroffer.
It’s also critical to remember that it isn’t just about money. Workers will stay with companies that offer training, clear career paths and ways to take on more responsibilities, while treating them fairly. Competitive benefits such as health care, paid time off and bonuses should also be articulated as part of a compensation package.
It’s more common for workers to leave due to poor management or conflict with other employees. Part of retention is also creating a culture where people feel good about their work/life balance, the jobs they’re doing and how they’re treated.
As you consider your pay and bonus structure for 2022, be sure to access relevant and credible compensation data to help you make the most informed choices and clearly articulate those to your workforce.
