Are You Overpaying Your Employees?
“How much should we pay our employees?” An emotional question if you are an employer. Any tenured contractor has gone at least once without a paycheck. This while risking his financial future managing his construction firm.
No man is an island and no man is all powerful. We need employees to build work. People are a necessary ingredient to construction. However, seldom do contractors see the kind of effort that they, themselves have given. It is easy to be frustrated with anyone on a guaranteed salary. Just ask a sports team owner.
Employees on the other hand are never satisfied with their pay package. Seldom are they justly compensated in their opinion, and thus, feel as if the owner doesn't realize their full value.
Compensation is an age old question that has been answered by local customs, current markets and in the last twenty years, accurate salary surveys. Thus, the question of the amount of pay has been answered. There is little mystery as to what the range is.
Finding out the appropriate wage amount is easier today than years ago. Wage and Salary Surveys are available in this country and are furnished by some very conscientious researchers. They contain hundreds of data points that statistically provide “95% confidence”. These guides are just that, guidelines to assist us in making decisions that are based in reality. The construction industry has its own salary surveys, some for-profit organizations and some not-for-profit ones.
As a caveat, these compensation surveys are valuable in the open shop environment for management salaries. We have to state that they are not highly useful for hourly employees. In the open shop environment, there is too much variability among hourly wages.
The information is sorted and analyzed by several factors including:
1) Region – The country is segmented into up to 10 regions.
2) Contractor type – General, electrical, design build, construction management, and specialty contractors
3) Bid type – cost plus and firm price.
4) Size of firm – from less than $5 million, in increments to contractors over $250 million in contract revenue.
5) Construction Performed – building, highway, heavy, industrial, municipal, and residential.
For more information on this critical subject, purchase a copy of my McGraw-Hill book, Managing a Construction Firm on Just 24 Hours a Day. We offer a bundle with Excel templates that are featured in the book to help assist in making financial, estimating and project management decisions.
Matt Stevens is President of Stevens Construction Institute, Inc. A management consulting firm which works only with construction contractors. Learn more at www.stevensci.com
For further information about our public training schedule, click here. For a customized approach for your firm, please send me a note at mstevens@stevensci.com.
