May 11, 2011
New evidence points to a brightening mood among the leaders of design firms, with bonuses, raises and incentives now poised to make a comeback.
A majority of A/E/P principals are optimistic that business will pick up this year, according to ZweigWhite’s 2011 Principals, Partners & Owners Survey. Eleven percent of the respondents stated that business will be much better in 2011, and 57 percent said they believe it will be somewhat better. Only 16 percent believe the business environment will be somewhat worse, and no respondents said they felt things would be much worse this year. Seven percent expressed no opinion.
As a result of the renewed optimism, firms like Engineering/Remediation Resources Group, Inc., an engineering and construction management firm in Martinez, Calif., are reinstating raises, bonuses, and other compensation.
“For the periods of 2008-2009, due to the recession, we took the conservative approach to cut all increases and bonuses due to declining margins and flat revenue,” said the firm’s CFO, James Hudson, in a recent issue of The Zweig Letter, ZweigWhite’s weekly management journal. He said salary increases were reinstated this year, averaging 3 percent firm-wide, and “bonuses were approximately $360,000.”
Stuart Jacobson, president of Stuart K. Jacobson & Associates, Ltd., a Northbrook, Ill.-based consulting structural and forensic engineering firm, said rising optimism provides hope for the industry. Though 2010 was the first year Jacobson’s firm saw a decrease in profits from the previous year, bonuses were still provided to employees, he told TZL.
“The bonuses were proportionately lower based upon reduced profits; however, as the principal of the firm, my bonus was lower by a greater percentage than the other employees, because my bonuses are typically larger proportionately than theirs,” he said. As profits increase, bonuses will increase proportionally. “It is always better when you can show business is on the upswing and not vice versa,” he said.
Draper Aden Associates, a consulting engineering firm in Blacksburg, Va., reinstated its spot bonus program, said Theresa Turner, the firm’s CFO. Other programs are on the way.
“We are hoping to reinstate our employee bonus program sometime in 2011,” she said. “Certainly, we hope that economic conditions will improve in 2011 and allow us to experience increased profits from 2010, and in turn, reward our employees.”