Engineering salary guide

2015 U.S. Compensation Outlook: Salaries Edging Upward

As the recession slowly recedes and Americans continue to gain confidence about a slow but steady economic recovery, U.S. workers will see their salaries track a slight upward trajectory in 2015. The newest Mercer 2014/2015 U.S. Compensation Planning Survey says American employees can expect a median base salary increase of 3.0 percent in 2015, up just slightly from Mercers reported 2014 median increase of 2.9 percent.

Mercers 2015 projection is expected to hold fairly steady across most industries and suggests that regional fluctuations will be negligible, ranging a maximum of 0.2 percent.

For example: North Central and South Central budgets are in line

with the national average of 3.0 percent. Northeast, Southeast and West Coast regions are

slightly lower, hovering between 2.8 percent and 2.9 percent.

This years anticipated boost exemplifies the trend of paychecks inching upward year over year in the post-recession economy. For example, an Aon Hewitt survey reports that the average pay raise for salaried employees climbed to 3.7 percent in 2008 and then fell to an all-time low of 1.8 percent in 2009 when the economic tumble was in full force. Since then, employees have seen slight pay improvements, and this years anticipated 3.0 percent figure will be the highest percentage gain since the 2009 low point.

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U.S. employers on track to increase median base salaries by 3 percent

Rationale for Raises

Theres No Escaping the Fundamental Appeal of Money

In the Mercer survey, 99 percent of the more than 1,500 participating companies expect to raise salaries in 2015. A solid majority (68%) of those organizations report their primary reason for doing so relates to greater competition for their workforce or anticipated labor shortages and concern over retention and losing good employees.

To illustrate the effect of salaries on talent retention strategies, the Mercer data shows that employers continue to tie pay hikes to performance and reward top employees with raises averaging 4.8 percent, while the weakest performers averaged a pay increase of just 0.1 percent. Additionally, variable pay plans are now the norm and encourage ongoing high performance by offering monetary rewards that employees must earn on an annual basis.

In its 2014 Global Workforce Study, the professional services firm Towers Watson studied how a workers age impacts the importance of compensation. The result? Regardless of age, employees most frequently cited base pay as the motivation for joining or leaving an organization.

Randstad recorded a similar result in its 2014 Workplace Trends and Salary Survey of hiring managers across the United States. When asked why employees resign, over half (59%) of respondents said the number-one reason employees depart is to accept a better offer of pay/benefits elsewhere.

99%salaries in 2015

RA

ISE of companies expect to

4.8%

are rewarded with raisesaveraging

Source: Mercer 2014/2015 US Compensation Planning Survey

Randstad Engineering: 2015 Salary Guide2

The Bottom Line

Gen Y vs. Gen Z:Whos Most Motivated by Money?

Although salaries continue to move upward, this years limited increase indicates that employers do not feel extreme pressure to focus on employee pay as a recruiting and retention strategy, which likely reflects the measured tempo of the post-recession economic recovery. However, as more employment choices become available and companies intensify their recruiting efforts, workers expectations for salary augmentation will likely rise as well. Now is the time for employers to adjust their compensation plans in preparation for the next wave of economic growth.

When it comes to the importance of earning more money, do Gen Ys think differently than Gen Zs, the youngest demographic group currently entering the workforce?

In the first study of its kind, Randstad US and Millennial Branding compared the workplace expectations of Gen Y (ages 21 to 32) and Gen Z (ages 16 to 20). Money ranked as a top-three work motivator for both groups; however, Gen Ys report that money is their primary motivator to work harder and stay with their employer longer, whereas younger Gen Zs are most interested in advancement opportunities.

(ages 21 to 32)

(ages 16 to 20)

Source: Randstad US/Millennial Branding, 2014 Gen Y vs. Gen Z

Workplace Expectations Study (global results)

While the majority of employees can expect their wallets to be a bit fatter this year, high-performing workers will fare even better and see the biggest payoff for their efforts. Companies nationwide continue to focus on retaining and engaging top performers and are willing to pay more for the best, which explains why growing numbers of companies are adopting variable pay incentives.

Variable compensation is a pay-for-performance model that is budgeted for separately from fixed-cost base salaries. Employees generally earn variable pay incentives on an annual basis for meeting business and individual goals, which allows companies to hold the line on base pay and incentivize workers at all levels with rewards tied to performance.

Variable Pay Plans: Growing in Popularity

Five-year trend of average base pay increases

How popular are alternative pay plans? Aon Hewitt says 90 percent of companies offer broad-based variable pay plans, and in 2015 employers expect to spend 12.7 percent of payroll on variable pay for salaried exempt employees.

Source: Mercer 2014/2015 US Compensation Planning Survey

With more than 5,000 workforce specialists in the United States, our field offices are well-suited to spot salary trends and observe current dynamics within recruiting and hiring. Weve therefore asked our recruiting teams across the country to share their salary-related observations and have compiled their thoughts in the Q&A below. The information cited here does not apply to every industry or geographic area but instead reflects the most significant trends reported by our teams.

The industry is in flux. Engineering professionals know they are in high demand and as such are demanding higher pay, but many employers are not yet meeting the talent pools increased salary requirements. Candidates frequently receive several competing offers, and weve therefore seen new-hire pay inching up, but not nearly to the level expected by candidates and especially by those who are currently employed.

As a result, most candidates are content to stay with their current employer vs. move to another company for the same pay, especially if they are in line for a promotion and dont want to become the low person on the totem pole at a new organization.

Many companies need engineers with five to 10 years experience. However five years ago we were still in a recession, and many candidates were unable to find jobs, especially entry-level positions. The result was that fewer engineers entered the workplace, and we now see extreme competition for mid-level professionals. On the one hand, employers need to increase salaries to attract talent with the desired experience, and on the other hand they must extend counteroffers to current employees to keep these tenured individuals on board. This is a very different market than a few years ago when higher unemployment tempered engineering salaries.

What salary trends has the engineering profession experienced in the last 12 months?

What particular effects does the constricted labor market have on the engineering profession?

What Were Seeing:Salary Insights from Randstad

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5Randstad Engineering: 2015 Salary Guide

Weve seen companies sweeten new-hire deals by offering flex time or adjustable work hours, increased 401(k) matches and more generous vacation or PTO packages. Weve also seen companies give promotions to current employees so as to retain them, and in some instances organizations have offered employees reduced work schedules in tandem with a pay increase. Companies are also more open to bringing in nonlocal talent, which has caused greater negotiation on relocation packages or signing bonuses in lieu of increased salaries.

Hiring activity in Detroit and much of the central United States has picked up in response to the automotive industry recovery, with salaries moving upward as well. Houston is also a hotbed for engineering activity, and the war for talent is particularly high in that metropolitan area. Los Angeles (and California in general) is another area where engineering hiring is expanding rapidly.

It used to be taboo for engineering candidates to have jumpy job histories, but now we see an increased number of candidates move from company to company for more money because they are in such high demand.

What strategies are employers taking to attract and retain employees in addition to offering higher salaries?

What regions of the United States have recently experienced the most salary change for the engineering profession?

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Money and commute are of paramount importance to employees, so one scenario producing reduced salary negotiations is when candidates compare job offers with significantly different travel or relocation requirements. In these cases, candidates will frequently accept a lower salary so they can stay closer to home. Another instance when salaries do not dominate occurs when a new or exciting employment sector opens up and many people want to work in it. For example, weve seen environmental/civil engineers take a pay cut so they can get into energy/sustainability companies because they knew the future is strong for that particular industry.

Are there situations in which employers dont need to compete on salary?

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Using the Randstad Salary Guide for Engineering Positions

The data presented within this section represents a geographic listing of starting salary ranges typical for new hires with approximately three to seven years experience. Each job title listed includes three salary data points: low (25th percentile), mid (50th percentile) and high (75th percentile).

Please note that salaries in your area may vary based upon local market conditions and position-specific requirements such as experience levels, professional certifications or certain software knowledge. In addition, the salary data has been drawn from multiple industries and may not accurately portray a companys specific situation.

Salary data was provided by Economic Research Institute (ERI). ERI is a widely known provider of robust job competency, cost-of-living, executive compensation and salary surveys (containing 565,000 organizations data). www.erieri.com

Because every organization structures its internal departments differently, the job titles presented here may not match those within your organization. For more detailed information and market-specific analysis, please contact one of our staffing and recruitment specialists at your local Randstad office.

Salary KeySalary data is reported for six geographic areas:

MidwestIllinoisIndianaIowaKansasMichiganMinnesotaMissouriNebraskaNorth DakotaOhio South DakotaWisconsin

MountainArizonaColoradoIdahoMontanaNevadaNew MexicoUtahWyoming

NortheastConnecticutMaineMassachusettsNew HampshireNew JerseyNew YorkPennsylvaniaRhode IslandVermont

PacificAlaskaCaliforniaHawaiiOregonWashington

SoutheastAlabamaDelawareFloridaGeorgiaKentuckyMarylandMississippiNorth CarolinaSouth CarolinaTennessee VirginiaWashington, DCWest Virginia

West South CentralArkansasLouisianaOklahomaTexas

Job Title Low Mid High



Aerospace Engineer $72,243 $79,871 $89,729

Biomedical Engineer $66,180 $71,376 $78,097

Civil Engineer $61,478 $67,483 $75,302

Construction Manager $83,225 $91,997 $103,233

Electrical Engineer $70,649 $77,624 $86,644

Engineering Manager $95,666 $105,544 $118,265

General and Operations Manager $75,036 $83,378 $94,178

Instrumentation/Controls Engineer $50,467 $55,312 $61,641

Manufacturing Engineer $59,880 $65,715 $73,318

Mechanical Engineer $66,415 $72,945 $81,420

Mountain

Midwest



Civil Engineer $62,516 $68,550 $76,374


Electronics Engineer $66,961 $73,434 $81,817





Quality Engineer $58,120 $63,716 $70,982



11Randstad Engineering: 2015 Salary Guide



Civil Engineer $70,006 $76,712 $85,334








Pacific


Civil Engineer $67,533 $74,066 $82,507









Northeast




Chemical Engineer $72,635 $80,645 $90,885

Civil Engineer $61,153 $67,463 $75,578







Petroleum Engineer $102,262 $111,648 $123,571


West South Central


Civil Engineer $61,820 $67,977 $75,928









Southeast

Sources

Aon Hewitt Surveyhttp://aon.mediaroom.com/2013-08-29-Aon-Hewitt-Sur-vey-Shows-2014-Salary-Increases-to-Reach-Highest-Levels-Since-2008

Mercer 2014/2015 US Compensation Planning Surveyhttp://www.mercer.com/newsroom/pay-raises-for-us-employ-ees-continue-to-grow-steadily-new-mercer-survey-finds.html

Randstad US and Millennial Branding, 2014 Gen Y vs. Gen Z Workplace Expectations Studyhttp://www.randstadusa.com/about/news/millennial-branding-and-randstad-us-release-first-worldwide-study-comparing-gen-y-and-gen-z-workplace-expectations/

SHRM (Society for Human Resource Management)http://www.shrm.org/hrdisciplines/compensation/articles/pag-es/variable-pay-high.aspx

Towers Watson 2014 Global Workforce Studyhttp://www.towerswatson.com/en-US/Insights/IC-Types/Sur-vey-Research-Results/2014/07/balancing-employer-and-employ-ee-priorities

Randstad US is a wholly owned subsidiary of Randstad Holding nv, a $22.0 billion global provider of HR services. As the third largest staffing organization in the United States, Randstad holds top positions in permanent placement, office and administrative, IT and accounting and finance. From professional services, commercial staffing and recruitment process outsourcing to managed services and more, Randstad delivers a comprehensive range of temporary, temporary-to-hire, permanent placement and outsourced placement services. With its 5,324 employment experts, Randstad puts approximately 100,000 people to work in the United States each week through its network of nearly 1,000 branches and client-dedicated locations.

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