Building and Maintaining Effective Compensation Plans
One of the continuing challenges that construction companies are facing today involves designing the best compensation strategy that helps attract and retain top talent, while also achieving the business goals of the company. At the Barnes Dennig Annual Construction Seminar on February 7th, 2018, Pryia J. Kapila, of FMI Corporation, presented some insightful information on the current industry and compensation trends. She also shared some best practices for how companies can implement an effective incentive plan.
Here are some of common trends that are currently happening in the industry:
- 85% of U.S. organizations provide some form of short-term incentive compensation plans
- 50% of U.S. organizations provide at least one long-term incentive plan
- Total Compensation is increase by a 2.5% Average Annual Growth Rate for 2017, projected 3.0% for 2018
- 206,000 jobs added to construction industry in 2017
- 36,000 jobs added to construction industry in January 2018
With the projected continuing growth and competitiveness of the construction industry in 2018, establishing and maintaining an effective incentive compensation program can help attract and retain top talent. Kapila provided that, although compensation is still a large portion of attracting and retaining top talent, there has been a more recent push to focus on the true value of employees rather than just compensation alone. Kapila shared some best practices for effective incentive plans:
- Contractors should create incentive plans that:
- Impact the company
- Influence results
- Pay at least market compensation
- Creates and maintains engagement with the employees
- Communicate the plan early and often with employees
- Evaluate the plan annually and make changes to improve effectiveness
- Set performance measures that are “SMART”
Those in attendance of the Annual Construction Seminar gathered important insight on maintaining and building an effective compensation plan to help their company achieve its business goals. We encourage you to listen to Kapila’s entire presentation so that you can hear all of her insights and ideas by visiting our website.
If you have questions about the material covered in this seminar, or how Barnes Dennig can help your construction business become better positioned in the market, have a team member reach out to you by asking a question here or call us at 513-241-8313.