Stick a fork in it, it's done. The big bull market for construction recruitment, which began to waver in mid-2001, fell apart in the economic uncertainties after Sept. 11. In past years, experienced contracting professionals could virtually name their price. Now, they are finding that contractors have pulled in their horns and are becoming increasingly selective in hiring.
Most people in the personnel field see 9/11 as the turning point, but not the cause, of the pull-back in hiring. "We started to see a slight fall-off in recruitment in October 2000," says Linda Payson, search consultant for Daley & Associates, a Providence, R.I.-based recruitment and search firm. "We saw some peaks and valleys in 2001 until 9/11, when owners really put the brakes on projects," she says.
It was not just that contractors stopped looking; so did candidates. "We did a snapshot of contractor turnover in August 2001 and turnover rates were in the 15% range at that time, which is about average," says Jeffrey M. Robinson, president of PAS Inc., a Saline, Mich.-based management and compensation consulting firm. "But after 9/11, people just stopped looking." Only now are things beginning to kick into gear.
Market uncertainty has led to a significant pullback by contractors in planned salary increases. Contractors planned to raise staff salaries by an average 3.87% in 2002, according to a survey conducted by PAS. "But we found that planned raises fell to an average of 3.4% in the wake of 9/11," says Robinson. The situation is slowly starting to change for the better. "Now, the average raise is in the 4.0% range, and we expect it to go up to about 4.5% by the end of the year," he adds.
That doesn't mean that the purse strings are loosening. "Increases continue to be modest," says Thomas J. Helbling, president of Helbling & Associates, a Wexford, Pa.-based executive search firm. "Firms want to reward people critical to their future, but they also know that people talk and can't afford to alienate staff with selective raises." But job security may count for more than money in uncertain times. He says some firms are fighting staff worries by disclosing more to reassure employees.
Contractors are looking for compensation plans that don't seriously hurt the bottom line. "We are finding more interest in incentives as a way to offset base pay," says Robinson. This means more use of profit sharing, but contractors also are using nonmonetary recognition incentives. "This means vacation trips or even awards," he says.
Benefits also are becoming an issue. "We are seeing many contractors passing along increases in insurance premiums, and that can cause problems with employees," says Robinson. But some contractors are being more creative. "We are seeing more true cafeteria plans" where employees design their own benefit programs from a menu of options, says Mike Ketner, president of Michael L. Ketner & Associates, a Pittsburgh-based executive search firm.
The managers with design-build experience are finding opportunities even in the soft job market. "We are finding demand for operational managers with deign-build experience," says Jim Vockley, executive vice president of Kimmel & Associates, an Asheville, N.C.-based executive search firm. "But contractors want people with experience managing from womb to tomb, from the conceptual stage through actual construction," Ketner says.
Contractors are being very careful who they hire. "They want people to fill an immediate need and who can have an immediate impact," Helbling says. "So they are checking not just for experience but to make sure the applicant fits into the firm's corporate culture."