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As architecture, engineering, planning (A/E/P), and environmental consulting firms look to grow talented employees, they often run into the issue of balancing variable and fixed costs (salaries). In its 2016 Incentive Compensation Survey of A/E/P & Environmental Consulting Firms, Zweig Group uncovers some underlying themes that firms are using to reward their employees.

There are a variety of mechanisms by which a firm can distribute bonuses to or share profits with staff. The firm can distribute these gains at only the management level or to the entire firm based on a formula or calculation deemed to be most effective. Either way, there are unique differences and distinct qualities that companies are measuring to quantify how they dole out their profits. The 2016 Incentive Compensation Survey provides key metrics comparing payroll and net service revenue to a variety of incentive spending options so firms can benchmark themselves and see where some of the top firms in the industry are spending their money.

Almost 40 percent of survey respondents say they have an “overall firm-wide budget,” while 14 percent budget by the particular “type of bonus,” and nearly 10 percent budget by particular “business unit/service lines or branch offices.” Because companies are looking to run lean and get the most out of the quality staff that they have, many firms are using increased incentive spending as a way to motivate their staffs. More than half (52 percent) of the survey respondents are expecting to increase their overall incentive compensation spend next year.

This year, survey respondents spent a median of $5,020 per employee on incentive compensation. As a percentage of payroll, total incentive compensation spending for firms was on par with that of previous years; however, there was a slight increase year over year. The survey analyzes a variety of incentive plans — such as compensation for owners, equity-based plans, profit sharing, signing bonuses, retention bonuses, referral bonuses, performance bonuses, spot bonuses, sales commissions, holiday bonuses, and service awards — and provides feedback on the effectiveness of each plan.

While every firm is looking to find the best mix of plans to motivate its staff, 53 percent of respondents found that performance bonuses were the best way to effectively compensate employees for their efforts; 25 percent of respondents have had success with profit sharing and almost 12 percent with spot bonuses (see Figure 1).

Zweig Group’s 2016 Incentive Compensation Survey looks across the spectrum of rewards systems and provides meaningful metrics that can help firm leaders identify where they might be spending too much and where they might be able to distribute profits to keep their teams motivated. The 2016 Incentive Compensation Survey includes responses from presidents, CEOs, and human resources directors of some of today’s most successful A/E/P and environmental consulting firms, combining great management advice with standardized metrics.

The 2016 Incentive Compensation Survey of A/E/P & Environmental Consulting Firms is available for purchase (print or digital version) at http://zweiggroup.com/surveys

WILL SWEARINGEN is director of Books and Surveys. He can be contacted at research@zweiggroup.com.

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