2006 Wage & Benefit Survey

When it comes to employee compensation, the emphasis today is on the total package. No matter what the size of your company, paying a competitive hourly rate is only the first step to attracting and keeping employees. Often the true differentiator is the variety and value of fringe benefits your company offers.

But how much is enough? And which benefits are perceived to be most valuable by the industry workforce? We hope this Wage & Benefit Survey will help you find the answers to these and other questions about employee compensation. The wage portion covers a spectrum of job descriptions that, while it may not match up perfectly to your company's employees, will give you a benchmark against which to compare pay scales for key positions. It may also provide you with a starting place for creating a career track that spells out the prerequisites for advancement. The benefits section covers everything from health, vision, and dental insurance coverage to retirement and profit-sharing plans; and from paid holidays, vacation, and other leave benefits to vehicle, cell phone, and work clothing allowances.

More than 540 remodelers nationally completed this Wage & Benefit Survey, which is the first in what will become a regular December research feature on the indirect costs of running a remodeling company. We hope you find it useful.

Wages

Hourly pay is the foundation for hiring and keeping good employees. “We try to exceed what our competition is paying. That's the only way we are going to attract people,” says owner John McCloskey of J. Francis Co. in Pittsburgh. He tracks field wages by networking with area carpenters, remodelers, and union representatives. He also checks classified ads for those that include a salary range. To attract qualified carpenters, McCloskey has had to increase the lead carpenter salary by 20%. He has also hired a few union carpenters who were willing to give up union membership for the steady work his company provides.

In Shreveport, La., remodeler Jeb Breithaupt of JEB Design/Build has had to be vigilant about field wages so he does not lose employees attracted to the high wages being offered to rebuild New Orleans, which is just a six hour drive. On the administrative side, Breithaupt says he is competing against other office positions, so he asks temporary employment agencies for information about average wages.

Christine Ramaekers of Mainstreet Restorations & Remodeling in Birmingham, Mich., says wages are just 60% of the equation. “It is the entire package in our case. We offer full benefits,” she says. “Experienced carpenters and office staff ask about benefits.”

Bonuses

More than half the surveyed companies distributed a bonus in 2005. Of those companies, 63% distribute the money annually; 13%, semi-annually; 16%, quarterly; and 5%, on a monthly basis. Most company owners (81%) decide who receives a bonus and most (68%) decide how much.

For 15 years, Christine Ramaekers of Mainstreet Restorations & Remodeling has offered an annual bonus based on company profit and individual performance. “We feel that if we are profiting then our employees should be profiting,” Ramaekers says. The bonus is usually one week's salary, and she makes it clear that it is not guaranteed. “We want them to strive for it, but it is not included in their salary package,” Ramaekers says, although she admits that a bonus is part of what it takes to find people to create a professional environment.

Three times per year, Jeb Breithaupt of JEB Design/Build distributes a performance bonus that can add up to a possible 8% of salary. The system is based mainly on profit, but Breithaupt also factors in things such as accurate paperwork, client satisfaction, and teamwork. Breithaupt used to pay the bonus annually, but he changed it so he could use the occasion as an opportunity to ask for and give feedback to employees throughout the year. “I think what employees want more is to feel they are included in the company's visions and goals,” he says.

Instead of percent of salary, Karen Morse of Morse Construction distributes an equal amount to all employees. She feels that this prevents competition and builds teamwork. “If a job goes well and just one team or project manager gets a bonus, that does not acknowledge that everyone in the company is putting forth an effort and that everyone has a hand in our success,” Morse says.

Bonuses

Of companies that distribute bonuses:

51% are full-service remodeling companies
26% are design/build firms

24% have 10 or more full-time employees
14% have three full-time employees

16% have two full-time employees
26% have one part-time employee
37% have no part-time employees

19% have 10 or more field employees
16% have two field employees
37% have one office employee

Of the companies that do not offer bonuses:

46% are full-service remodeling companies
17% are design/build firms

14% have two full-time employees
26% have only one full-time employee
25% have one part-time employee
50% do not have part-time employees

33% have one office employee
33% have no office employees

22% have two field employees
17% have one field employee
17% have no field employees
Statistics do not total 100% because not all possible answers are shown.

Profit-Sharing

Of the 16% of companies that offer profit-sharing:

46% are full-service remodeling companies
26% are design/build firms

34% have 10 or more full-time employees
25% have 10 or more field employees
29% have one office employee

Of the 84% companies that don't offer profit-sharing:

49% are full-service remodeling companies
21% are design/build firms

16% have two full-time employees
20% have two part-time employees
36% have one office employee

What percentage of revenue does your company distribute through bonuses?

In most cases, on what are your bonuses based?

Reviews

Most survey respondents pay employees weekly and provide yearly raises and annual reviews, but there are some exceptions. For example, 25% of basic skilled carpenters (Carpenter 1) receive an annual raise, 5.5 % receive raises twice annually, and 2% receive raises quarterly; 19% receive annual reviews, 8.5% are reviewed twice per year, and 2.6% are reviewed more often. Six percent receive a review less than once per year.

Mainstreet Restorations & Remodeling reviews employees on the anniversary of date of hire. “We let them know four weeks prior and ask them to fill out a questionnaire about their strengths and weaknesses,” Christine Ramaekers says. “This contributes to longevity. People know exactly what is expected of them.”

Morse Construction's employees receive twice-yearly reviews. “One is just a performance review. The other is both pay and performance,” Karen Morse says. “Even with the two reviews, we still try to regularly revisit what is on those sheets so we can point out situations that employees can participate in to meet their goals.”

What is your company's overtime policy?

Owners

For their salary, owners Karen and Paul Morse of Morse Construction adhere to the industry standard of 10% of revenue, plus a bonus. “We have a formula to figure out what percentage of profit goes back into business, what goes to us, and what is shared with employees,” Karen Morse says. Leon Noel, of Your Kitchen and Bathroom Remodeling in Roseburg, Ore., adheres to a theory he says the founders of Ben & Jerry's ice cream used and takes just 25% more than his top-paid employee as a salary. As sole owner, however, he does receive additional funds through a bonus.

Christine and Steve Ramaekers each have a salary and receive a bonus similar to the one they distribute to employees. “It is truly based on what the company can afford,” Christine says.

Of the companies that responded to the survey…

Company Owners

Of the one-owner companies, the average owner salary was $74,523, the average bonus was $11,020, and the average profit share was $11,234. The owner received 5% of the company's revenue as a bonus, and 7.4% of revenue was distributed through profit-sharing.

Of the companies with two owners, the average owner salary was $59,742, the bonus was $13,005, and the average profit-share was $6,209. The owners received 3.8% of the company revenue as a bonus, and 6.4% of revenue was distributed through profit-share.

Benefits

There's more to employee compensation than wages. Even if benefits — such as taking staff to a ball game or paying for workers' vehicle use — are intangible (i.e., employees can't spend them), they can raise employee morale, improve accountability, and aid in retention. And it's a good idea to make your overall compensation package known to employees. “Show employees how much investment the company is making in them. The package is often more than they've anticipated and they may be astounded,” says remodeling consultant Victoria Downing.

But delivering benefits grows more costly each year, and unfortunately, they may be the first thing cut during lean times. In fact, according to REMODELING's Wage & Benefit Survey, 75% of respondents said that insurance rate increases/decreases had the most impact on the type and amount of benefits a company offers.

What types of benefits are remodeling companies offering? Everything from health, vision, and dental care, to financial, holiday, vacation, and other leave benefits, as well as vehicle, cell phone, and uniform use and allowances.

Although, historically, union shops tend to offer better benefits, 97% of REMODELING's survey respondents said they do not necessarily use union labor. Most, however, do offer benefits packages, and 66% of respondents said that if none of their competitors offered any benefits, they would maintain their current level of benefits.

Of the factors below, which three have the most impact on the type and amount of benefits your company offers?

If none of your competitors offered any benefits, which benefits would you offer to your employees anyway? (Select all that apply.)

Health Insurance

Cost is one of the major hurdles to providing health insurance. Findings in a summer 2006 survey by the Kaiser Family Foundation and Health Research and Educational Trust show that employer-sponsored health insurance premiums increased by an average of 7.7% in 2006 — twice the rate of employee wage increases, 3.8%, and overall inflation, 3.5%. The numbers in REMODELING's survey back up cost claims, with higher premiums paid by employers in 2006 than in 2005. REMODELING's survey also shows a near even split between those companies that provide health insurance (51%) and those that don't (49%). (These figures don't meet the national average. A March 2006 national compensation survey by the U.S. Department of Labor found that 62% of private establishments offered health insurance to their workers.) And 44% of REMODELING's respondents offer family coverage: Of those companies, 69% have always paid for family coverage. The most popular time to begin health insurance coverage, say 47% of respondents, is 90 days.

Of those companies that provide health insurance, 45% take on 100% of the cost. Bill Koehler, office manager of the five-person Lamb's Construction outside Syracuse, N.Y., says the company sees benefits as a way to set itself apart from other construction and remodeling companies in the area. “It helps us retain good help,” he says. Because the company is small, Koehler says, Lamb's Construction is able to pay 100% of the health insurance costs for the three employees that take advantage of the health care option. “We changed to a higher deductible plan because the cost of insurance went up,” Koehler says, “but we still have good coverage.” Lamb's Construction is one of a small number of companies that offer dental insurance (22%) and vision insurance (13%) to their employees.

Larger companies can offer more health insurance choices, but although more consumers often mean lower costs, there is a point of diminishing returns. Many companies cover less of the health insurance bill but cover more individuals. HartmanBaldwin, in Claremont, Calif., pays 50% of the health care costs for its 50 employees. The company, working through a health care broker, offers HSA (Health Savings Account) as well as PPO (Preferred Provider Organization) options. “We're doing what we can to keep up with health care; it's a company value,” says principal Devon Hartman, “but [the United States] is really in a health care crisis, and it's not getting better.”

What was the total annual dollar amount your company paid for employee health insurance premiums (including coverage for owners)?

What portion of employees' health insurance does your company currently pay?

How many employees are covered by spouses's employer's insurance?

Although 57% of respondents offer some form of financial benefits — 401(k), various IRAs, or profit sharing — to their employees, REMODELING's survey shows that in some cases just 17% of a company's employees take advantage of those offers. Oft-cited reasons include procrastination, fear of market fluctuations, and lack of discipline. Yet it's in an owner's best interests to increase employee participation for company tax and owner benefit and to improve employee retention.

Southborough, Mass., design/build remodeler and survey respondent David Morgan offers his five employees a 401(k) plan with 100% matching funds up to 4% of their income. To encourage participation, Morgan had the Paychex payroll representative speak to the group. “I wish someone had pushed me into it when I was in my 20s or 30s. It's the magic of what Albert Einstein said about compound interest. It's the eighth wonder of the world,” Morgan says. “They can have a handsome retirement if they start young.”

Which of the following financial benefits does your company offer to employees?

What percentage of your company's employees take advantage of the financial offers provided?

“Benefits in general is an area where you can really make a difference and be creative. It doesn't have to cost the employer a lot of money,” says consultant Victoria Downing, who cites as examples trips, flexible work hours, and tuition reimbursement, “things that won't raise overhead.” Parties and picnics fall into that category. “It's a morale booster,” says Michael Myers of Vogan Associates, Silver Spring, Md. “We do a picnic every summer and a Christmas party every year, and occasionally we have dinner and invite everyone and their spouses. Work is not always about dollars and the paycheck, [employees] appreciate things like this.”

Do you offer an allowance for uniforms, cell phones, gasoline, or vehicles?

Of all benefits, paid vacation and holidays are the most common. The survey found that a high percentage of respondents offer paid national holidays and at least one week of paid vacation time to employees who have been with the company for at least one year. But as many respondents (61%) offer no sick days and 73% offer no personal days.

This example is a composite of a typical compensation package for a skilled carpenter working in the Washington, D.C., metro area.

Which holidays are paid days off?

Vacation Days*