Data Dive: How Satisfied are A/E firms With Their Bonus Programs?

PSMJ Resources, Inc.
Posted on: 11/27/19
Written by: PSMJ Resources, Inc.

clock-money-Article-201603311341-2-202967-edited.jpgNew PSMJ research finds that many architecture and engineering firms still struggle to find effective incentive compensation programs. According to PSMJ’s 2019 A/E Bonus & Benefits Benchmark Survey Report, a third (32 percent) of survey respondents believe that their A/E firm’s bonus program is not satisfactorily driving individual performance and behavior. 

Because the fundamental objective of any bonus program is to change behaviors and align them to achievement of well-defined goals, this is not a positive sign for the A/E industry.  Moreover,  this year's data does not represent improvement from two years ago when only 30 percent of survey respondents believed that their bonus program was not doing enough to motivate and inspire their staff.

Unfortunately, for too many A/E firms, there is much work to be done on building transparent incentive compensation programs that have a clear cause/effect correlation.  For starters, many firms are paying bonuses annually and that is far too infrequent for employees to draw a clear correlation between performance and payment.  In fact, some of the most successful A/E firms include small (but frequent) spot bonuses as a part of their programs. 

"Even something as small as a $50 gift card given immediately and unexpectedly for going that extra mile to meet a client deadline can be very effective,” comments PSMJ Director David Burstein, P.E. “The other element of transparency in bonus programs is a big one.  For many firms, when annual bonuses are actually paid out, the recipient sees bonus calculations as a ‘black box’ where he/she isn’t exactly sure what to do throughout the year to have an impact on that bonus amount.” 

PSMJ recommends establishing a clear framework of the type of behavior and performance that drives incentive compensation, sharing key performance indicators so that everyone can see how their behavior is impacting firm performance, and paying bonuses frequently enough to reinforce the connection between behavior and bonus.

 

2019 A/E Bonus & Benefit Plans Benchmark Survey ReportNow in its 10th biennial edition, PSMJ's 2019 A/E Bonus & Benefits Benchmark Survey  Report provides data on the various types of incentive bonus plans and other employee benefits provided by firms in the A/E industry. In addition, the report analyzes the level of satisfaction with various types of bonus and benefit plans. We report the results by firm size, type of service, geographic location, type of client, and client marketplace.  To benchmark your A/E firm’s bonus program, employee benefits, and much more, get your copy now.Learn More Now

 

You also might be interested in these related posts:

Project-Based Businesses and Incentive Compensation

Compensation Benchmarking: How Your Strategy Can Measure Up

 

 

 

 

SUBSCRIBE TO BLOG:
September 15, 2020

CARES Act Revises NOL Rules and Opens Door for Unclaimed R&D Tax Credits

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provides companies and individuals with a host of tax saving opportunities. We previously discussed the benefits..

Read More
September 10, 2020

SDNY Court Invalidates Parts of Recent DOL Guidance

A recent court decision has thrown into question some key federal government guidelines on COVID-related sick leave and family leave that AEC firms are following during the..

Read More
August 27, 2020

Is There Life After a Private Equity Investment?

M&A activity in the A/E/C space is far from dead right now. To the contrary, it remains quite active as many firm leaders continue to wrestle with long-term ownership transition..

Read More