- Making Wage Determinations
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The level of the position (executive, staff, craft) makes a difference, but here is an example for an executive position using the PAS Executive Compensation Survey For Contractors.
Let's say you are trying to determine the appropriate pay for a controller. Here are the steps to follow:
- Make sure you have the most current version of the PAS Executive Compensation Survey For Contractors. Turn to the section entitled "Controller".
- Focus on the key correlate for the survey and position. A key correlate is the demographic break out that statistically accounts for the most variation in compensation. The key correlate for executive pay is revenue size. For staff it is revenue size, type of contractor and in some cases location. For craft the key correlate is location. You can visually check the key correlate for any title simply by reviewing the variation in wages for that title's demographics.
- Once you have the key correlate, you must know your pay practice. Is your company a market leader, market aligned or a market trailer. The 25th percentile column is roughly equivalent to a market trailer. The average and 50th represent market alignment, and the 75th percentile represents market leaders. Pick the number that is most appropriate for your pay philosophy. Use this number as your market benchmark.
- Now look at the national average for the title. This is the number in the base salary/average cell. Using this number see how it varies relative to your type of construction, type of contractor, your region of the country. For example, if your type of construction, type of contractor, or region indicates that the average is 5% higher than the national average, then consider escalating your market benchmark number upwards by 5%.
- What you now have is a benchmark number that represents the market rate that is adjusted for your specific type of company, construction, revenue size and location. Use this number as the midpoint for the position's pay range.
- Establish the floor and ceiling for the range based upon the percentage spread you want, for example, 50%. The floor number is where you would start an employee and the ceiling is the highest rate you would pay for this position. You now have the current market range for the position.
- Once you have established the pay range for the position look at the actual wages currently paid for the position. Is current pay within the range? If not, then the current pay is out of synch with the market. This requires a plan for getting pay back within range as soon as possible. If current pay is within the range, then your current rate of pay is synchronized with the market and your wage adjustments should be made based on your company's salary review practices, such as inflation and performance evaluations.
Remember that development of an appropriate pay range for a position is part science and part art. There is no one right answer. Rather there is a range that is appropriate and reasonable based upon the title's job description, the current employment market, and the pay philosophy of the company. It is important that your final decision uses as many of these factors as possible. The one error you want to avoid, however, is straying too far from the base numbers shown in the key correlate demographic. To do so invites numerous pay and personnel problems.
- Use of Asterisks
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There are two uses for asterisks in PAS surveys. One is simply to denote additional information (footnote) to the particular item. The second use is insufficient data. If there is insufficient data to provide meaning interpretation, the data field is filled with asterisks.
- Decreases in Salaries
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A job title's average wage can go down rather than up from year to year. Though this may seem perplexing at first, the reasons are pretty straight forward. First, the population of companies participating in PAS surveys changes from year to year. This can impact the average wage up or down. Second, some job titles have a relatively high turnover. When employees leave a company, frequently the company hires at a lower rate than the wages of those leaving. Both of these factors impact whether the average wage for a specific job title goes up or down. That is the reason it is important to look at the percentiles as well. In general, wage ranges (percentile distributions) will tend to increase.
- Meaning of Non-Manual
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We ask the question, what is the average number of non-manual employees of the firm during the past 12 months?
Manual employees means those that "work with their hands". In construction this refers to skilled craftsmen, such as carpenters, plumbers, electricians, etc. Non-manual, then refers to so called "knowledge workers", such as clerks, accountants, estimators, superintendents, etc. This distinction permits a better comparison of employee size, because some companies hire craft for specific projects and then release them when their part of the project is completed.
- Cost of Benefit To Payroll
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An important measure to track the cost of benefits is their percent of payroll. If the percent of payroll increases we can reasonably determine that the cost of benefits is increasing as a proportion of the total employment cost. Hence, what we are looking for are the costs of benefits that the contractor "elects to provide", such as retirement, health insurance, vacation, paid time off and the like, as a percentage of the firms total annual payroll. What this does not include are benefits required by state or federal government, such as FICA, Medicare, Medicaid, Workmens Compensation and the like.
- Percentiles Omitted
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Sometimes there are not enough companies represented in the survey population to create a percentile number. In these cases, the average is shown but the percentiles are replaced with asterisks in the data field.
- Why are some crafts omitted in special reports?
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We collect craft rates by county. There are over 4000 counties in the U.S. When a contractor makes a request for an area, we may or may not have data from that area depending on the narrowness of the search. Hence, we may not have data for all the thirty craft we cover. Consequently we provide the data that we do have. It is up to the contractor to interpolate what a craft might make based on the represented craft. For example, if painters are not represented, carpenters might be a rough equivalent.
- Timely Special Reports
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We will run special craft rate requests for specific areas and skills. Generally, these are run within a day to two of the request and then mailed. If there is need for a quicker response, the best solution is to purchase the Merit Shop CD that provides the breakouts of 50 states, the District of Columbia and 76 U.S. Metropolitan areas. The next best solution is to fax your request to 734-429-8507.
- Category Wages
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The wages shown in the Revenue, Region, and Construction Type categories are all base wages except for the columns specifically headed as Total Compensation. Total Compensation includes bonus distributions only. No benefits or perquisites are included.
- Mandated Benefits
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Mandated benefits are those benefit costs that are required by local, state or federal laws and regulations. For contractors these include such benefits as FICA, Medicad, Medicare, Workman's Compensation Insurance and the like.
If the contractor offers no benefits whatsoever, these mandated costs will still apply. What we are collecting are the voluntary benefits that contractors choose to offer their employees.
- Free Summaries
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When we send out survey packets for up-coming surveys, we will frequently receive several calls stating that the free summary for the last survey was never received. If that happens, simply request the summary and we will send it if you were a participant in the previous survey. Unfortunately, sometimes companies fail to include their name and mailing address when completing the survey questionnaire. In these cases, we can not use the data at all because we cannot confirm that it is a legitimate company entry nor can we send the free survey summary.
- Weighted Average
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An average is considered weighted if the units of the numerator are different than the units of the denominator (divisor). In the PAS surveys the numerator and denominiator are different because companies are asked for the average rate paid for a specific job title. In other words, a company may have 10 employees each having a different actual wage, the average of which gets reported. In such a case, the average is considered weighted toward the number of companies rather than the number of employees, e.g. , it is the average rate of pay for each company and not the average rate of pay for employees. This can be corrected by multiplying the number of employees by the average reported rate. The result is the average weighted by employees rather than by companies.
In PAS surveys "Average" is the average weighted by the number of companies reporting and the "Weighted Average" is the average weighted by the number of employees. Hence, the answer to the question, "What is the average rate paid by contractors?", is the "Average rate." The answer to the question, "What is the average pay earned by employees?", is the "Weighted Average."
Weighted Average is the sum of the average rate reported by each company divided by the number of employees in the sample.
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Percentiles
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Percentile is a descriptive statistic that provides a means for describing a range of values in an ordered array of numbers. Usually, percentiles are presented as either deciles, demarking tenths of an array, as in 10th, 20th, 30th, ... 90th percentiles, or as quartiles, as in the first quartile ( 1-25th percentile), second quartile (25th to 50th percentile), third quartile (50th to 75th percentile) and fourth quartile (75 to 99th percentile).
The percentiles most frequently used in PAS surveys are:
- 15th Percentile: Value within the sample which is higher than 15% and lower than 85% of the rates reported.
- 25th Percentile: Value within the sample which is higher than 25% and lower than 75% of the rates reported.
- 50th Percentile: Value within the sample which is higher (Median) than 50% and lower than 50% of the rates reported.
- 75th Percentile: Value within the sample which is higher than 75% and lower than 25% of the rates reported.
- 85th Percentile: Value within the sample which is higher than 85% and lower than 15% of the rates reported.
Mean and Median
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The mean an median are important because together they show the skew of the data sample. In a perfect sample, the mean, or average, and the median, or 50th percentile, will be roughly equivalent. In a skewed sample, however, they can be substantially different. For example, a few exceptionally high or low numbers can distort an average causing it to be higher or lower. High or low numbers have no such impact on the median. The median is the actual middle number of the array regardless of highs and lows. Hence, if you have the average and median, you can tell whether the data sample is "skewed" high or low by some exceptional numbers.
- The mean is equivalent to the average rate. It is calculated as the sum of the average rate reported by each company divided by the number of companies in the sample.
- The median is equivalent to the 50th percentile. It is the middle number an ordered array of numbers.
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Total Compensation
- Base salary plus any bonus or other cash distributions made to the employee during the taxable period. Total Compensation DOES NOT include any benefits, such as vacation, 401k, insurances, etc.
Base Salary
- Base salary of all companies reporting for a particular position. Does not include bonus, incentive, cash profit sharing, or additional forms of extra compensation.
Base Salary-No Bonus
- Base salary of those companies which did not give a bonus last fiscal year.
Base Salary-Bonus
- Base salary of those firms which did give a bonus within the past 12 months.
Bonus
- The amount of additional cash compensation provided in the form of a bonus. Does not include any deferred compensation to be distributed in the future, such as profit sharing, 401K or retirement programs.
Total Comp - Bonus
- Base salary plus any bonus amount for only those companies which provide a bonus.
Total Comp - All
- Base salary plus any bonus amount for those companies which provide a bonus and those that do not.
- States in Regions 1-10
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- Region 1 CT, MA, ME, NH, RI, VT
- Region 2 NJ, NY
- Region 3 DE, MD, PA, VA, WV, DC
- Region 4 AL, FL, GA, KY, MS, NC, SC, TN
- Region 5 IL, IN, MI, MN, OH, WI
- Region 6 AR, LA, NM, OK, TX
- Region 7 IA, KS, MO, NE
- Region 8 CO, MT, ND, SD, UT, WY
- Region 9 AZ, CA, HI, NV
- Region 10 AK, ID, OR, WA
- Who is PAS, Inc.?
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PAS is a survey research company specializing in compensation & benefits in the construction and design industry. The company was established in 1979 as Personnel Administration Services, but is commonly known as just PAS. PAS conducts annual industry surveys available to the general public as well as private surveys available only to participating companies.
The President and CEO of PAS is Jeffrey M. Robinson. Mr. Robinson's career started as a project field accountant and progressed up to Personnel Manager of a five hundred million dollar industrial construction company. He holds degrees in human resource management and geology. He is a member of the Construction Financial Management Association, the American Compensation Association, and has been appointed to numerous industry association boards and committees.
- Confidentiality of participant data
- All compensation information gathered by PAS is compiled, formatted and described in ways that provide complete anonymity to participating companies. Whether conducting public or private surveys, it is the PAS privacy policy to never provide information on individual companies. All survey reports are assembled and reported in the aggregate only.
- How is compensation data collected?
- PAS sends survey forms (via U.S. Mail) to construction/engineering companies across the United States and some foreign countries. These survey forms are completed under the direction of a company officer and signed by the person who completes the information. PAS uses only compensation information submitted by legitimate contractor or engineering firms. Unsigned forms or forms with no company reference are not used.
Online surveys must be signed using assigned Customer Care keys. In addition, each survey is scrutinized for inaccuracies and anomalies, such as "out of bounds" values.
By following these participant verification and data analysis procedures, clients are assured PAS wage and benefit reports are both accurate and current.
- Survey Schedules
- PAS annual surveys are conducted as follows:
- Construction/Construction Management Staff Salary Survey: Conducted in January and published in March
- Consulting Engineering & Design Staff and Executive Salary Survey: Conducted in April & May and published in June.
- Merit Shop Wage & Benefit Survey: Condusted in April and published in June.
- Benefits Survey For Contractors: Conducted in July and published in September.
- Executive Compensation Survey For Contractors: Conducted in October and published in December.
- Aggregates Industry Staff Salary Survey: Conducted bi-annually in August and published in Octo ber.
- Private surveys occur any time during the year. The information gathered is added to PAS survey databases during the year. The means that client specified special reports benefit from the latest and boardest base of information available.
- How can a firm participate in PAS surveys?
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Any firm that has purchased a PAS product in the last two years is automatically sent participation packets. However, these packets may not be addressed to the proper person due to organizational changes or turnover. To ensure that the proper person and address is on file in our offices please complete the online participant registration form or call PAS at 800-553-4655 with your proper address and contact person.
- Can PAS wage data be accessed on line?
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PAS maintains a special online Data Center that houses our most current wage and benefit information. This Data Center is available on a fee basis. If you have a need for online access to the PAS surveys and resources, call 800.553.4655 to arrange access rights.
- Does PAS have a return policy?
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Excluding wage and benefit reports (surveys), PAS will accept returns on publications if notified within 10 days of the purchaser' s receipt of the publication. All returns are assessed a shipping and restocking fee of $25.
- Advantages of Participation
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Contractors that complete the PAS survey forms are eligible to purchase the surveys at the participant rate of $95 which is discount of over 70% over the non-participant cost, they automatically received a free summary report of the survey and are guaranteed to remain on the participant mailing list. In addition, if the participating company purchases at the participant rate, it benefits from the added value of this Customer Care Center.
- Participant Discounts
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Participants receive the participant discount only for the surveys in which they participate.
- Accuracy of Online Surveys
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An example of a PAS online survey is the Hire Rates survey. The way we know the data is accurate is by physically inspecting the data before it is actually entered into the survey data base. The results that you see upon submission of your data is hard coded. We inspect the data and do the calculations off-line. The second way we maintain accuracy is by client ID. We know the name and company of the person making the submission. If we have any question about the legitimacy of the information the person making the submission is contacted or we simply do not enter the suspected data.