What Your E&C Peers are Paying and How to Remain Competitive in 2023
With inflation still hovering near 40-year highs, intense competition for skilled labor and other factors affecting the labor market, many companies are increasing base pay and benefits to attract or keep workers. The average engineering and construction (E&C) firm increased employees’ pay by 4.7% this year, according to the latest FMI Salary Increase Survey. Early indications are that raises in 2023 will also notably exceed the 10-year average of about 3.5%.
Being able to accurately understand pay and benefits trends at the onset of 2023 planning will help E&C firms craft accurate budgets for attracting new hires and make sure they have pay structures that align with competitors to continue to attract and retain talent. While it is not unusual for companies to adopt a wait and see approach, especially in uncertain times like these, the estimates from FMI’s survey data can help inform the annual planning and budgeting process earlier in the cycle.
Most of the pay growth FMI is reporting is among newly hired employees, especially those in key project planning and execution functions, according to FMI’s Construction Professional Survey. Unfortunately, this trend justifies a common employee perception that it can be advantageous to boomerang, that is leave the company and come back after a relatively short period of time. As a result, it is important that companies review existing employee compensation and make adjustments as needed to remain both fair and competitive.
Both the Executive and Construction Professional Surveys continue to show that total cash compensation, not just base pay, should be evaluated, as the vast majority of employees receive annual incentives as part of their packages. Clear incentive opportunities for top leaders are particularly important since a greater portion of total cash compensation tends to be variable (i.e., incentive based). Target incentive levels are on the rise, according to the Executive Compensation Survey, with primary C-suite positions seeing a 10% to 20% increase over prior years’ target values.
Putting together base pay, bonus and benefits that align with market conditions for various E&C roles continues to be critical, especially with 434,000 open construction jobs as of May, according to the Associated Builders and Contractors. Furthermore, with unemployment at near-record lows and fewer workers entering the E&C industry, the reality for employers is that poaching will be necessary, which often requires more aggressive compensation practices.
No matter your sector of the built environment, FMI’s industry-leading compensation tool can help you make sure your pay and benefits are aligned with current market trends. It’s not too late to participate in this year’s survey to harness the power of our benchmarking analysis for specific jobs and segments.
Those who commit to survey participation by October 1 will have access to the online reporting and benchmarking platforms, and will be invited to our members only 2022 Compensation Summit.
