AE firms increasing pay to retain employees

Faced with widespread staffing issues, managers in A&E are expected to continue doling out larger raises and bonuses in 2023 to retain current employees.

By Morrissey Goodale January 18, 2023
Courtesy: Morrissey Goodale.

A&E Insights

  • Eight in ten executives attending Morrissey Goodale’s 2023 Southeast M&A, Strategy and Innovation Symposium rank staffing at the top issue they are facing in the coming year.
  • 2022 saw architects, surveyors, planners, and environmental scientists receiving larger and more frequent raises and bonuses than in the past, which is expected to continue.
  • Pandemic-era raises and bonuses are expected to expand even further in 2023.

“Pedal to the metal” is a prevailing view among many leaders in the industry—with 73% of the attendees of our upcoming Southeast M&A, Strategy, and Innovation Symposium in Miami this March planning for an even better 2023 then their record-setting 2022. However, if you’re a designer with exposure in the tech sector, you’re likely going to spend a lot of this year scrambling as clients shut down capital projects across the country. What goes up must come down and all that.

Big speed bump ahead for A/E firms

Staffing. It’s a huge challenge for every CEO and CHRO this year—8 in 10 of the executives attending the Southeast Symposium place it as their top issue to address in 2023. (And that’s one reason why all of the symposium presentations and panels will feature discussions on what’s working and what’s not in terms of recruiting [Can you say “acqui-hires”?] and retention.)

Money talks

In December 2021, Word on the Street covered the The Year of the Big Raise and discussed how firms were throwing out their pre-pandemic compensation playbooks with annual raises of 1% to 3% and replacing them with something much, much more aggressive. Indeed, that’s what played out into 2022. More firms showered a greater number of their employees with bigger raises, more frequently (often quarterly) than ever before. And along with those record raises firms distributed record bonuses last year. When it came to making bank, last year was a banner one for architects, engineers, surveyors, planners, and environmental scientists.

2023 says, “Hold my beer”

Conversations with clients and buyers and sellers suggest that raises and bonuses in 2023 could move even further into uncharted territory. We’re hearing of firmwide raise budgets rising from 5% up to… wait for it … the mid-double digits. “Crazy!” you say? “Unsustainable,” you laugh. Maybe.

The fact is the stakes are now much, much higher for many firms. They are looking at backlogs that dwarf what they’ve experienced in the past. They are realizing a step-function change in their business models. Where pre-pandemic they had a year of backlog, now they have three. Which is great, except the additional two years of work needs to be compressed into one year of production. And there’s still no slowdown in sight for many.

So, they cannot afford to lose people. As a result, they are prepared to “out-reward,” “out-raise,” and “out-bonus” their competition – large and small – to acquire and retain the talent to keep the good times rolling. With not enough talent coming into the market, the only way this pressure dissipates is if there is a big and bad recession that hits all sectors. That is looking less and less likely. Besides, who wants to be the person who’s rooting for a recession?

Morrissey Goodale is a CFE Media and Technology content partner.

Original content can be found at Morrissey Goodale.

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