Your Blueprint for Greater Construction Industry Success
Published on by Eric Goodman in Construction
Armed with new data and deeper insights, contractors can gain a competitive edge in recruiting and retaining top talent thanks to the 2024 Construction Compensation & Benefits Study. Barnes Dennig, North Side Bank and Trust, and USI Insurance surveyed regional contractors about salary, benefits, and other benchmarking data, and released our findings in an exclusive virtual event.
Here are the key takeaways from the report.
Survey & Participant Overview
Construction industry experts Dan Holthaus of Barnes Dennig, and Nick Maronde of USI discussed the key findings from a survey on compensation trends in the construction industry. The survey, conducted biennially for the past 20 years, provides valuable insights into various operational and financial aspects of participating companies.
The majority of the 71 participating companies are specialty trade contractors predominantly operating in the commercial sector. Most have been in business for more than 30 years, are family-owned, and operate primarily in Ohio, Kentucky, and Indiana.
An optimistic outlook on revenue
A significant finding was the positive projected revenue change from 2023 to 2024, with a whopping 85% of respondents anticipating their revenue would either remain the same or increase. This optimism aligns with anecdotal evidence suggesting many companies in the industry have a strong backlog.
Financial data highlights the need for compensation creativity
Financial metrics based on 2023 data showed an increase in all six key performance indicators for the average total of all contractors from the previous survey. The key indicators are:
- Gross margin/profit per total FTE employee
- Gross revenue per field FTE employee
- Gross revenue per non-field FTE employee
- Gross revenue per total FTE employee
- Net income per total FTE employee
- Gross revenue per FTE accounting dept. staff
This promising trend, combined with growth in revenue and record backlog, reinforces the positive outlook within the industry.
Challenges for the construction industry
The survey also highlighted several challenges facing the industry. Unsurprisingly, attracting and retaining qualified personnel topped the list, with 90% of respondents identifying it as their primary challenge. Other operational issues such as industry-specific training and supply chain-related issues also featured prominently.
In their efforts to retain top talent, the most popular tactic is increasing compensation, closely followed by providing additional benefits, but companies are resorting to creative strategies as well, including offering flexible work schedules and providing stay bonuses – a new trend that emerged in this year’s survey.
Overall, the survey findings suggest that compensation is generally on the rise across the industry. From 2022 to 2024, an impressive 92% of the 27 relevant position profiles reported an increase in average base salary. This trend is significantly higher than in previous years and is likely a strategic response to the industry’s labor challenges.
Employee benefits can make or break your strategy
The top concerns related to employee benefits in the construction industry revolve around payroll contributions, plan design comparisons, value-added services, and employee satisfaction and retention.
In terms of benefits offered, 100% of the participating companies offered 401(k), dental, group life, and medical benefits. There has also been a rising trend in providing long-term care insurance. Typically, participating organizations offer one to two health plan options with a standard being a health savings account with a high deductible or a traditional Preferred Provider Organization (PPO) plan.
59% of the participant companies are fully insured, while the remaining 41% use different types of funding arrangements, such as partial or full self-funding. The health insurance cost increases over the years have been modest, with a slight increase from 2023 to 2024.
The median total plan cost for health insurance ranges from about $450 a month for a single person to just over $1100 a month for a family. To mitigate these costs, companies are considering strategies such as increasing the employee cost share, raising the deductible, conducting audits of the plan, and reviewing pharmacy contracts. High performance networks and reference-based pricing were highlighted as potential ways to save on costs. High costs for specialty drugs are averaging 48% of the total medical spend and were flagged as a continual challenge.
In terms of satisfaction, nearly 74% of the participating companies were satisfied with their current broker partner, 73% with their current health plan partner, and 67% with their current benefit administration system. However, only about 60% were happy with their current pharmacy partner, an area that merits further scrutiny to improve transparency.
Contractors should not overlook the importance of creating a strategic communication plan to effectively convey the benefits on offer and the employer’s contribution.
Benchmarking the plan design against peers can also provide valuable insights. Additionally, considering benefits based on tenure and creating custom benefits, such as financial wellness, elderly care, and virtual care, can meet the diverse needs of a multi-generational workforce.
So, what’s your blueprint for success?
Thanks to the 71 companies who participated in this extensive compensation and benefits study, contractors of all sizes can see where they are outperforming the industry and identify areas for growth looking ahead. Whether you are seeking creative strategies to recruit and retain top talent, or trying to find ways to reduce healthcare costs, the study is an invaluable resource for contractors.
To get deeper insights and explore trends in pharmacy plans, you can watch Dan and Nick present on-demand and you can get your copy of the full study for more insights and an overall competitive edge.
This survey and the final report are sponsored by Barnes Dennig, North Side Bank and Trust, and USI Insurance.
Have questions about building your competitive edge or want to talk with a top construction industry pro? Contact us for a free consultation. As always, we’re here to help.
