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Companies Seeking ‘Game Changers’ Boost Pay to Sway More Candidates

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With optimism surrounding a market upswing, contractors seem to be willing to offer higher compensation to talented top-level executives as a strategic way to adapt to new markets and draw in new business.

“Companies are taking a proactive approach to upgrading overall talent pools as part of strategic business planning,” says Paul Marchionna, director of construction at Specialty Consultants, Pittsburgh. Power, industrial and heavy highway sectors as well as specialty contracting are seeing the most activity, but commercial building remains sluggish.

One emerging hiring trend in the last 18 months is the demand for candidates with financial experience, Marchionna says. “We are seeing contractors hiring people [for] the sole function of getting financing for building projects,” he says. The positions are so new that only one of 100 larger companies have such positions, he says.

Reversal of Fortune

Following one of the worst years for executive compensation in decades (see chart), contractors are now giving salary hikes and fewer companies are freezing compensation, says Jeff Robinson, president of research firm Personnel Administration Services, Saline, Mich. In 2010 45% of contractors froze salaries, but only 32% expected to freeze them in 2011, he notes. “This is a reversal of a trend with companies trying to maintain a number of higher pay positions despite fixed costs,” says Robinson.

Executive salaries are set to increase 3.1% this year, according to the 2011 PAS contractor executive compensation survey. In 2008, increases averaged 4.6%. Results are based on data received from 2,645 executives and middle managers in 18 positions reported by about 235 U.S. companies.

Pay increases are typically a good sign, Robinson says. “As construction rebounds, one of the fears is that if employers don’t take care of their people, other contractors could raid them,” he says. Despite pay increases, average bonus amounts have remained flat from 2010 to 2011, while the total number of firms providing bonuses has declined, Robinson points out.

Mike Ketner, head of Michael L. Ketner Associates, Pittsburgh, says he has observed pay increases for C-level talent since last fall. “Demand has really escalated since the second week of January and continues to escalate,” he says. In the second week of March alone, Ketner says he observed a 35% increase in companies jumping into the market. “There’s only so long you can keep your finger in the dike before you have to move, and we’re at that point,” he says.

The hottest positions are for senior estimators, Ketner says. “They continue to be the scourge of the marketplace because there just aren’t enough of them and nobody wants to do the job,” he says.

Executive pay has been rising as firms hunt for broadly skilled talent to take on complex jobs and new markets

Many large companies are proactively forming project teams so they can walk into presentations ready to exploit the market, Ketner says.

“They are hiring people with unique skills, such as senior project managers with experience in heavy highway construction projects of more than $50 million,” he says. “This gives those companies a distinct advantage.” Demand also is strong for chief financial officers and top-level executives with unique skill sets who can meet the demands of more complex projects.

According to Tom Callahan, founder and partner of Pittsburgh-based executive search firm Crown Advisors, companies today are looking for a “game changer”—someone who can make an impact in the organization by capturing market share in a new sector or accomplishing a strategy shift. More firms are also offering guaranteed bonuses and incentives since candidates are seeking to hedge the uncertainty associated with making a position or career change, he says.

But with many senior-level managers less willing to leave their jobs today, there is not a high incidence of unemployed candidates. “Superstars are gainfully employed and secure and generally confident about the future, so it is difficult to even get their attention in this market,” Callahan says.

Contractor Exec Pay Was Off in 2010
TITLE MEDIAN TOTAL
COMPENSATION ($)
MEDIAN
BONUS ($)
President
389,203
444,948
Chairman
550,355
638,586
Executive V.P.
341,736
324,441
Senior V.P.
240,783
261,139
Vice President
193,185
210,679
V.P. Estimating
177,230
192,569
V.P. Business Development
167,852
191,294
V.P. Preconstruction
192,243
198,114
V.P. Administration
238,791
226,400
V.P. CFO
208,648
238,081
V.P. Human Resources
160,760
177,349
General Counsel
211,031
236,883
Operations Manager
151,098
167,047
IT/MIS Director
110,367
118,768
Divisional Manager
174,112
155,570
General Superintendent
132,626
161,426
Controller
105,687
114,484
Source: PAS Inc. 2011 EXECUTIVE COMPENSATION SURVEY

 

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