Year-End Bonuses Vary Significantly Among Design Firms


Most employees who receive cash bonus payments usually compute them as a percentage of their own individual salary (e.g., “I received a 14% cash bonus!”), according to the 2005 PSMJ A/E Bonus & Benefits Survey , which reports the lowest, average and highest cash bonus—as percentage of employee salary—paid to eligible individuals. The survey yields some surprising results:

• For the overall survey, the bonus percentages ranged from a low of 2% to a high of 15% with firms providing an average of 8% bonuses.

• With respect to firm size, the large firms (staff size over 500) award the largest average (12%) as well as the largest highest (40%) bonus percentages.

• By type of service, the engineering (prime), A/E and full-service (A/E/P/I) firms report the widest variation in bonus awards from the 25th percentile to the 75th percentile. Bonus awards vary from 2% to well over 20% in these engineering firms.

Even though individuals compute their bonus as a percentage of their own individual salary, the firm should benchmark their total bonus awards compared to the other design firms competing for this same pool of employees. Many firms benchmark their total cash bonus dollars as a percentage of both gross revenue and total payroll for the year.

The median design firm spends 3.2% of gross revenue in payments to cash bonus programs. This percentage varies from 1.4% (25th percentile) to 5.7% (75th percentile). It is clear that design firms attach varying levels of importance to their cash incentive plans.

In addition, the survey revealed:

• Smaller firms (staff size less than 100) report percentages that are higher than the larger firms. It appears that smaller firms assign higher priority to awarding cash bonuses as part of their compensation program.

• Engineering (subconsultant) firms report the highest percentages and full-service (A/E/P/I) firms report the lowest percentages.

• Geographically, Midwest firms report the highest percentages and the firms operating in the Southwest report the lowest.

• Firms providing services to private-sector clients report higher percentages than do those serving government-sector clients.

Even though more than 90% of the firms report that they offer their employees a cash bonus program, the amount these firms actually pay (relative to either gross revenue or total salary) varies significantly. Although these percentages are based on the total salaries for the entire firm, one might ask what motivational value is obtained from a cash bonus program that awards payments of less than 10 percent of an individual's salary.

For more about resources from PSMJ, click here .

No comments
Consulting-Specifying Engineer's Product of the Year (POY) contest is the premier award for new products in the HVAC, fire, electrical, and...
Consulting-Specifying Engineer magazine is dedicated to encouraging and recognizing the most talented young individuals...
The MEP Giants program lists the top mechanical, electrical, plumbing, and fire protection engineering firms in the United States.
Commissioning lighting control systems; 2016 Commissioning Giants; Design high-efficiency hot water systems for hospitals; Evaluating condensation and condensate
Solving HVAC challenges; Thermal comfort criteria; Liquid-immersion cooling; Specifying VRF systems; 2016 Product of the Year winners
MEP Giants; MEP Annual Report; Mergers and acquisitions; Passive, active fire protection; LED retrofits; HVAC energy efficiency
Driving motor efficiency; Preventing Arc Flash in mission critical facilities; Integrating alternative power and existing electrical systems
Putting COPS into context; Designing medium-voltage electrical systems; Planning and designing resilient, efficient data centers; The nine steps of designing generator fuel systems
Designing generator systems; Using online commissioning tools; Selective coordination best practices
As brand protection manager for Eaton’s Electrical Sector, Tom Grace oversees counterfeit awareness...
Amara Rozgus is chief editor and content manager of Consulting-Specifier Engineer magazine.
IEEE power industry experts bring their combined experience in the electrical power industry...
Michael Heinsdorf, P.E., LEED AP, CDT is an Engineering Specification Writer at ARCOM MasterSpec.
click me