2020 2Q Cost Report: Two-Thirds of Firms Held Steady on Salary Increases
Despite the economic uncertainty created by the COVID-19 pandemic, most contractors continue to reward staff with strong compensation packages. Still, a large percentage of firms are putting those raises on hold—at least for now.
Firms that increased staff salaries in 2019 offered an average raise of 3.9%, according to the 2020 Construction Management Staff Salary Survey complied by PAS Inc. The survey, which was released in March, showed that companies anticipated giving raises of 3.6% in 2020.
Although the data for the survey was gathered prior to the COVID-19 shutdowns that started in March, Jeff Robinson, president of PAS, says that he expects contractors who give raises in 2020 will offer packages at those rates or even higher.
Companies generally recognize that the market for talent is still strong, Robinson says. The PAS Contractor Compensation Quarterly for June showed that, among contractors who will grant raises in 2020, on average they expect to offer a 3.55% bump.
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Robinson says his most recent data shows that 61% of responding companies have given or plan to give salary increases in 2020. By comparison, 11% have postponed those increases and another 11% decided to freeze all salaries this year. An additional 15% reported that “everything is on hold because they just don’t know yet,” Robinson says.
Robinson expects most companies will eventually provide raises. “The demand for really good people hasn’t gone away,” he says. “People who don’t pay attention to market values and hold off [on raises], when they need to recruit someone or they start losing people, there will be sticker shock.”
Around 10% of companies won’t give raises in 2020, if construction activity continues to improve. according to Robinson. However, if another large wave of shutdowns occurs, it could be closer to 20%.
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Megan Morris, vice president of recruiter Adams Consulting Group, says roughly half of her clients who planned to hire prior to the March shutdowns have since frozen those plans. Morris says she sees many companies that have a need for additional staff, but they are nervous about hiring.
Still, when a need arises, companies will step up with strong offers. Morris recently saw two superintendents get 30%-plus counteroffers. Superintendents and estimators continue to be in the highest demand, she says, while requests for project managers is slightly down from 2019.
Bob Honour, head of Charlotte, N.C., recruiting firm H&H Consultants, says most of his clients are being cautious. One common misperception he sees among contractors is that there have been significant layoffs in the industry, creating a larger pool of available top candidates. “The expectation is that there more quality candidates than in the past and that’s just not true,” Honour says.
Getting those high-quality candidates to leave a company for another employer is particularly challenging, he says. “No one wants to be the last one into a company. There’s too much uncertainty.”
