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 .

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.
How to use IPD; 2017 Commissioning Giants; CFDs and harmonic mitigation; Eight steps to determine plumbing system requirements
2017 MEP Giants; Mergers and acquisitions report; ASHRAE 62.1; LEED v4 updates and tips; Understanding overcurrent protection
Integrating electrical and HVAC for energy efficiency; Mixed-use buildings; ASHRAE 90.4; Wireless fire alarms assessment and challenges
Power system design for high-performance buildings; mitigating arc flash hazards
Transformers; Electrical system design; Selecting and sizing transformers; Grounded and ungrounded system design, Paralleling generator systems
Commissioning electrical systems; Designing emergency and standby generator systems; VFDs in high-performance buildings
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.
Automation Engineer; Wood Group
System Integrator; Cross Integrated Systems Group
Fire & Life Safety Engineer; Technip USA Inc.
This course focuses on climate analysis, appropriateness of cooling system selection, and combining cooling systems.
This course will help identify and reveal electrical hazards and identify the solutions to implementing and maintaining a safe work environment.
This course explains how maintaining power and communication systems through emergency power-generation systems is critical.
click me