The construction market has been on a roll, causing a major personnel crunch. For contractors, design firms and construction management firms, top people have been next to impossible to find and the pressure on wages and benefits has been extreme. But with increasingly ominous economic news and some signs of a flattening, or even a tailing off in some markets, many firms see the pressure easing.

Two recent compensation surveys have shown the impact of the hot market on industry salaries, particularly for those in critical positions. Salaries for projects managers in design firms have risen 23% on average over the past four years, and design firm IT manager salaries are up 30%, according to the 2001 Management Compensation Survey published by ZweigWhite, a Natick, Mass.-based management consulting firm. On the other hand, the average salary for marketing directors is up only 5% during that period and human resources director pay actually fell an average of 5% during the period.

"People don�t always act rationally [over salaries] when the market heats up like it did," says Mark Zweig, CEO of ZweigWhite. He notes that the job market is easing somewhat, but he cautions that this doesn�t mean that the pressure is off. "Good people are still hard to find. But firms are now being a little more cautious and thoughtful in making hiring decisions. They want quality people, not just strong backs," says Zweig.

For contractors, the story is the same. The average staff-level salary increase at contractors and construction management firms in 2000 was 5.14%, according to a survey conducted by pas Inc., a Saline, Mich.-based management consulting firm. And these firms plan to provide an average 4.52% increase in 2001, according to pas.

"We thought that the raises last year seemed on the low side," says Jeffrey M. Robinson, president of PAS. But on closer examination, he found that the top quarter of the firms surveyed gave raises averaging above 8% across-the-board. "That was more in line with our experience," he says. "And we expect that the actual average raise for this year will be above 5% again."

It may still be tough to find top-flight people, but things aren�t as tight as last year, when companies were raiding each other for talent. "For the last couple years, we couldn�t find anyone and were being robbed senseless by other contractors," says Sandy Werthman, vice president of marketing for Kitchell Corp., Phoenix. "I�d bet that half the calls coming into our offices were from headhunters trying to recruit away our people." But she says that pressure has eased, particularly in the lower levels.

Robinson notes that bonuses have seemed to level off, after soaring the past few years. "And we aren�t hearing as much about things like signing bonuses," he says. Blake Peck, executive vice president of construction management firm McDonough Bolyard Peck, Fairfax, Va., has a simple explanation. "When there�s news of a downturn, people start looking for safe harbors," he says. "Now, job candidates are more likely to ask about your backlog and whether there will be work two years out than signing bonuses and shares in the company."

Zweig has three tips for attracting and keeping good people. First, invest in the growth of the firm, because a growing firm presents more opportunities. Second, maintain an open-book management system. "Only the stupid would want to work for a company that kept important information secret," he says. And third, provide opportunities for ownership. "Becoming an owner is a psychological measure of success for a designer," he says. "Plus, if all you can offer people is money, that�s what they will demand. If you offer opportunities at ownership, you may be able to pay less."