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Hold On For Another Wild Ride: Compensation Trends 2021

To me, this phrase means there are so many things you cannot control – but if you can control them, and have the right knowledge, then forge ahead.

With the uncertainty in the construction industry that began in the early months of pandemic, it’s no surprise that compensation has been top of mind for most contractors.

This article reviews the roller coaster of compensation activity that began in the months leading up to the COVID-19 impact and shutdown, tracks the changes by quarter to the end of 2020, and looks ahead with a prediction for 2021. It also looks at current executive compensation, how it has changed in the past year, and why 2021 will most likely continue as a white-knuckle ride if pay programs are not in line with market values.

2020: First Quarter

Based on surveys by PAS, Inc., 47% of contractors typically make their pay decisions during the four-month span from December to March each year (Exhibit 1). In January 2020, PAS, Inc.’s 2020 Executive Compensation Survey for Contractors projected increases of 3.9% for executives. At that time, only 4% of survey participants indicated they were not giving a 2020 increase, which is normal in most years.1

The 2020 Construction/Construction Management Staff Salary Survey was completed by PAS, Inc. just before the world began shutting down in March, and at that time, the projected increase for 2020 was 3.6%, with only 1% of the survey participants indicating they were not giving an increase.

Historically, these early increase projections are slightly lower than year-end actual increases – sometimes as much as 0.5%. Looking at the previous year’s increases of 4.2% for executives and 3.9% for staff/middle management, it was believed that 2020 would be another banner year for employee pay,2 but of course this was not the case.

The first quarter’s activity was important, though, as it impacted market values for the year. If almost half of all contractors granted their pay increases before the pandemic hit, then the other half of the contractors had a target to remain competitive in the marketplace. 

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About the Author

Jeff Robinson

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