Understanding trends in compensation is paramount to attracting top talent and achieving compensation alignment within a firm. In this article, we will take a look at how and why compensation in the A/E industry has steadily increased in the last decade, as well as which disciplines are increasing at a faster rate.
Supply & Demand
Compensation trends are hinged upon a simple rule of supply and demand: if demand increases but supply remains unchanged, a shortage occurs. This reality is one of the major issues facing the engineering industry today - a market growing faster than the talent pool can support. As the need for innovation and new technology increases, so does the demand for talented engineers. However, only 4.5% of undergraduates leave school with a degree in Engineering. This small talent pool has caused increased difficulty for engineering firms looking to find qualified engineers that can manage projects, lead teams, and win work. According to a recent survey of 200 engineering firms, 74% of employers listed “a lack of qualified candidates” as their biggest hiring challenge over “specialized job requirements” and “non-competitive salaries.” Despite the decreased availability of qualified engineering candidates, demand continues to grow. 2013 has seen a new high in engineering opportunities overall, with more than 280,000 open positions.
Effects on Compensation
This lack of supply coupled with a steady increase in demand for qualified engineers is a major contributing factor to the significant compensation increases in the A/E sector. In a study released by the National Association of Colleges and Employers, seven of the top ten highest-paid college degrees are in Engineering. When analyzing compensation increases, it is important to not only look at the engineering field as a whole, but also to note how varied the increases are by discipline. According to US Census figures, engineering compensation has increased by an average of 3% annually from 2003 to 2012. This increase holds true for both managers and non-managers.
Discipline-specific Compensation Increases
While the industry average is an annual compensation increase of 3%, certain disciplines have seen staggering increases in compensation due to a variety of reasons. Average compensation for Civil Engineers nationwide in 2012 was $71,949. Civil Engineers were seeing a compensation increase of over 4.5% annually until the recession hit in 2008 when percentages began to decrease, and hit a low of 0.5% annual increase in 2011. The market seems to be on it’s way to recovering, as Civil Engineers saw a 1.73% increase the following year. Engineers in the Oil & Gas sector continue to see astonishing increases in salary. Compensation for Petroleum Engineers is growing at an annual rate of 6.7%, with the biggest increase happening in 2007 when salaries jumped 12.07% from the previous year. These large increases can be attributed to E&P companies who pay these engineers much more than traditional engineering consulting firms do, primarily because qualified engineers in this discipline are becoming so difficult to find. Petroleum Engineers in non-management have a current average compensation of $147,470 and according to a recent CNNMoney article, “salaries can reach as high as $200,000 to $350,000 for engineering professionals in senior, but not executive, managerial roles.”
How Compensation Affects Recruiting
Compensation undoubtedly has an effect on recruiting in the engineering industry. Based upon a 2013 survey released by Monster, only 39% of employers hiring engineers are confident in the ability to hire the talent they need. Depending on the type and location of recruitment, attracting qualified talent can range from difficult to almost impossible. From a talent pool perspective, those openings in Florida, Virginia, and Washington are easiest to recruit for. Currently, the most difficult states to recruit engineers include Texas, North Dakota, Minnesota, California, and Pennsylvania. In terms of types of engineers, the most highly sought after disciplines across the country are Industrial, Electrical, Mechanical, and Oil & Gas. According to CNNMoney, the most difficult engineers to recruit are the ones with five to fifteen years of experience. The search for these engineers in 2013 has increased 13% since January 2012.
Forecast for 2014
Demand for engineers is going nowhere but up. However, until the supply of skilled engineers increases, compensation will continue to increase and recruitment will prove more difficult than ever. In fact, the severe shortage and competitive dynamics may also slow economic growth as some companies delay big projects due to a lack of skilled workers. Based on our findings, we also predict compensation will continue to increase at a rate of 3-5%, depending on geography and discipline. Companies are now being forced to also place a greater emphasis on culture, perks, flexibility, and corporate responsibility in order to attract top talent as Generations X & Y head into the workplace.
We are so excited to announce the launch of our new candidate registration online portal on the ExactSource website! The changes were made to enable candidates to create online profiles with ease and streamline the job application process. “Our sole desired outcome was to make the registration process as easy as possible for job applicants. The development team has worked tirelessly to create a more user-friendly online portal and I think we did just that,” says ExactSource Director of Technology, Hope Bozec.
This redesigned portal is the only applicant registration page of its kind in the A/E/C industry and will emphasize a job applicant's specific skills and preferences throughout the hiring process. Take a look below for a quick tour through some of the improvements we've made to make your job search not only convenient, but fun!
Among the new features rolled out in the redevelopment include the added ability for an applicant to browse open job positions directly from their profile. This means no more hopping from your account to the ExactSource website to choose which positions you'd like to apply for - it's all available in one location!
We've also improved upon the communication features, including a built-in messaging window for faster support. This update means that a member of the ExactSource team is just an online message away and is accessible directly from your candidate portal, should you have any questions regarding your applications.
The "Location and Salary" preferences tab allows an applicant to complete detailed information regarding their preferred location and salary. Having this information as part of an applicant profile will now allow for the ExactSource team to match an applicant with available positions that are most appropriate and aligned with the applicant's wishes. This means quicker placements and higher job satisfaction!
The "View Your Applications" tab provides a look at all open applications, giving easy access to jobs that have been applied for. This includes the ExactSource point of contact as well as the Job Status. There's also a button for you to update your skills ratings pertaining to specific positions, increasing your likelihood for placement if the skills are a match with the job qualifications.
The new ExactSource candidate registration portal is expected to lead to more placed candidates and more jobs, due to the easier application process. Both candidates and clients can expect to benefit from the upgrade: The increased skills database will be an enormous value-add for ExactSource clients looking to tap into specific skills, while candidates will now be able to highlight specific skill-sets, making themselves more marketable.
To get started creating your candidate profile, click below!
Who is Your Next Hire?
By: Jerry Schmidt
President / CEO
It is sometimes said that the most important job of the CEO is recruiting talent. Some have gone so far to suggest that all CEOs should carry an additional title - Chief Recruiting Officer (CRO). Yet, it is so easy for CEOs to fall into the daily routine of operations and strategic activities that oftentimes they neglect or delegate recruiting.
Many years ago, I was conducting a board meeting as a CEO. Before adjourning, a Board member asked me a simple question: “So Jerry, who is your next hire?” At the time, I was taken aback and responded, “We do not need any additional talent right now”. The Board member did not seem satisfied with my response and it was not until a few weeks later that his question hit home. Before we even had our next Board Meeting, we experienced sudden significant turnover in the company and were in dire need for new talent. It was a tough lesson to learn but I realized that if I had focused on an ongoing Talent Management Strategy, my company would have never been caught off guard when the unexpected happened. I realized just how crucial it is to be prepared with excellent talent when growing a business.
The first step in developing an ongoing talent strategy is to begin thinking Proactively vs. Reactively. Too many times, as a Talent Solutions company, we get a call similar to a hospital emergency room. Clients have an “emergency need,” one that can often be avoided by taking preventative measures. For those clients who anticipate, plan, and prevent, hiring is much less of a reaction to an event and more of a strategic measure.
So what do you do once you start thinking proactively? Easy! Work with a talent solutions partner that can help you create a pipeline of talent. At ExactSource, we are proactive every day, working to find candidates across the country and identifying new talent that fits the skill needs and culture of our client base. We encourage clients to never miss an opportunity to interview a candidate that may be a great fit for your organization. This ongoing practice pays off, as you never know when you may find yourself in need of good talent.
Think of your talent strategy as your “4P” strategy: Proactive, Plan, Partner, Pipeline – these tactics will help keep you out of the emergency room and give you a edge in growing your business.
Some new laws go into effect this year that will impact your engineering firm - here's the breakdown so that your firm can be prepared. On September 24th, 2013, the Department of Labor issued The Vietnam Veterans Era Rehabilitation Act and Rule 503, both of which refer to the hiring of Veterans and disabled workers. These laws become effective March 24, 2013 and apply to all employers who must be OFCCP Compliant.
What do the new laws mean? They cover everything from benchmarks and data collection to correctly posting job listings. Two notable additions: Employers who must be compliant are required to have goals of 7% for disabled workers and 8% veterans. Whether obtainable or not, these two new rules require employers who must be compliant to take various new steps in the recruiting and applicant handling process...
Other highlights of the final rule:
Hiring benchmarks - Contractors are required to establish annual hiring benchmarks for protected veterans. Contractors must use one of two methods to establish their benchmarks. Contractors may choose to establish a benchmark equal to the national percentage of veterans in the civilian labor force, which will be published and updated annually by OFCCP. Alternatively, contractors may establish their own benchmarks using certain data from the Bureau of Labor Statistics (BLS) and Veterans’ Employment and Training Service/Employment and Training Administration (VETS/ETA) that will be also be published by OFCCP, as well other factors that reflect the contractor’s unique hiring circumstances.
Incorporation of the Equal Opportunity Clause: Specific language must be used when incorporating the equal opportunity clause into a subcontract by reference. The mandated language, though brief, will alert subcontractors to their responsibilities as Federal contractors.
Job Listings: When listing their job openings, contractors must provide that information in a manner and format permitted by the appropriate State or local job service, so that it can access and use the information to make the job listings available to job seekers.
Records Access: The new laws require contractors to allow OFCCP to review documents related to a compliance check or focused review, either on-site or off-site, at OFCCP’s option. In addition, the law requires contractors, upon request, to inform OFCCP of all formats in which it maintains its records and provide them to OFCCP in whichever of those formats OFCCP requests.
So, what do I do now?
These changes may bring new challenges and headaches to the recruiting and onboarding process. Not to mention, you may read that list a hundred times and still not know where to get started. If this is you, or you just want to know more information so you can take swift action to get your engineering firm on track, you are in luck.
ExactSource is launching ExactAcademy, a unique online educational initiative for A/E/C professionals. The online resource will bring relevant content to both candidates seeking jobs and companies involved in hiring engineers through live webinars with industry experts and a digital library of archived content.
The first ExactAcademy webinar is Thursday, January 16th 2014 at 2pm about... you guessed it! The new OFCCP Laws. Guest speaker Milt Cotter, CEO of CRI, will speak on the new laws issued by the Department of Labor and what your A/E/C firm needs to do to be ready when they go into effect. He will also take audience questions as they specifically relate to your company's circumstances.
Sign up for this exclusive webinar here. Space is limited, so be sure and register soon!
We'll also cover how our proprietary ExactTrack software technology will help your firm stay compliant through an easy and automated applicant tracking system and EEOC reporting features.
This is an educational event you simply cannot afford to miss. Subscribe to our blog for a webinar recap.
To sign up for the webinar, go here:
Facts are facts: Engineers are in HIGH demand. We don't use that phrase lightly either... As of 2013, the current national unemployment rate is sitting at around 7.3%. However, if you narrow that view to include just the engineering sector, the number decreases drastically to just 2%. Key Takeaway = it's a pretty good time to be an engineer right now.
This means hiring managers are facing quite the recruiting challenge. The basic rule of supply and demand explains why - Demand for skilled engineers is at an all-time high. Supply of these engineers is, however, not so high. Fun Fact: Over the past 90 days, there were more than 33,000 jobs advertised online for civil engineers, a 9% increase compared to the same 90-day period in 2012. Plus, 2013 has seen a new high in engineering opportunities overall, with more than 280,000 open positions!!
With all of this competition in the marketplace, it's more important than ever to be on top of your recruiting game. This includes being up-to-date on all of the latest trends in recruiting, which is why we've put together this trusty list.
1. Labor Pressure Varies By State
As you can see from this infographic, difficulty in A/E recruiting varies drastically by state. The easiest states to recruit from include Florida, Virginia, Washington, Nevada, and Arizona. The most difficult states include Texas, North Dakota, Minnesota, California, and Pennsylvania.
2. The Most Difficult Engineers to Recruit are Those With 5-10 Years of Experience
More specifically, the most difficult experience level to place is that of 7-10 years. Why is this? Engineers have invested several years in their firms. They want stability. They've established seniority at their current firm and are not looking to start over at a new company. Plus with something like, oh let's say a government shutdown, the newest employees are usually the first to get furloughed and subsequently laid off. Therefore, a firm looking to hire a skilled engineer with this level of experience must "sweeten the deal" a bit. Which is a marvelous segue into #3...
3. Compensation is Becoming Very Competitive
Salaries are quite competitive in the A/E sector, especially in oil & gas, primarily because of the scarce candidate pool. A few more stats to consider... 7 of the top 10 highest paid college degrees are in Engineering. Additionally, only 4.5% of college undergrads are in engineering and 74% of engineering employers have cited "lack of qualified candidates" as the biggest hiring challenge. So what does all of this mean? Too many jobs and not enough qualified candidates to fill them. When that gem of a candidate finally does come along, an employer is willing to shell out the big bucks in order to persuade the candidate to work for them.
4. Employment Branding is an Imperative Part of Your Recruiting Strategy
What is employment branding, you might ask? Put simply, it is how you explain to candidates WHY they should work for you over your competitors. By now, you know that candidates are scarce and when a quality potential hire comes along, your firm is probably NOT the only firm vying for them. Yes, you can throw lots of money their way, but you also better have a solid employment branding strategy. What is your company culture? Are work hours flexible? How extensive is the benefits package? The millenials you keep hearing about are taking many factors, not just salary, into account when deciding on where to accept a job.
5. The Recruiting Industry Has Hopped on the Social Media Bandwagon
Let's face it, the old-school resume databases and job board listings are SO 1992. These days, it's all about staying current and making sure you are in the places where the dialogue is happening. This means, maintaining an active presence on social media sites like Twitter, LinkedIn, and Facebook and using them as recruiting tools. A company blog is a great place to advertise your company culture and employment branding. Talk about your company, about the projects you are working on, or anything that might engage and interest a potential candidate. Being competitive and cutting edge with your recruiting techniques will definitely pay off in the end.
Don't let this list scare you - finding quality candidates is not an impossible feat. You just have to know where to look and how to approach this new generation of job-seekers. To download our entire presentation with more trends, tips, and tricks, go here:
Sources: Wanted Technologies Talent Intelligence Statics, Bureau of Labor Statistics, Georgia Institute of Technology, US Census Data, Mashable.com
Leading A/E/C talent solutions provider welcomes new talent, Sarah Walpert, to their growing Marketing Division.
ExactSource, a national leader in the delivery of talent solutions and software to architectural and engineering firms, welcomes Sarah Walpert to their marketing team. Walpert has an extensive background in social media, online marketing, and event promotions and will serve as the Marketing and Communications Coordinator.
Before joining ExactSource, Walpert worked for several noteworthy companies including TOMS Shoes, Ideas United, and College Battle of the Bands. She was a graduate from the Grady College of Journalism at the University of Georgia.
Walpert’s focus will be on expanding the ExactSource online presence as well as managing the company’s PR, media relations, and event marketing. "We are really pleased to welcome Sarah to the ExactSource team," says ExactSource COO Katy McDonald, "Her experience adds a tremendous amount of value as we continue to grow our brand and reach."
ExactSource is a leading organizational consulting, market research and talent solutions company that specializes in providing recruiting services and software to firms in the architectural and engineering sector.
ExactSource is best known in the A/E/C industry for their highly acclaimed ExactProfile technology, a system released in 2012 that assesses and catalogues more than 115 critical engineering skill sets and experience levels that aren’t typically identified on a resume. Using this breakthrough screening software, HR managers are able to instantly identify the technical candidates that meet their exact requirements. This methodology provides a smarter way to hire, and it is their objective to have every architectural and engineering firm across the country using ExactProfiles in their hiring process.
ExactSource has established a prominent presence in the Engineering community and successfully serves firms in 39 states across the nation, including over 20 firms on the Top 500 A/E list.
For more information about ExactSource and their consulting, research and recruiting services, visit their website or contact David Schmidt at dschmidt(at)exactsource(dot)com.