The last three years have shown contractor executives little in the way of salary increases, but a new study shows that in 2005 they'll likely receive more than a pat on the back. PAS Inc., a Saline, Mich.-based construction compensation consultant, recently surveyed 2,835 executives from 270 contracting firms and found that contractors are planning to award average salary increases of 4.05% to executive-level employees this year. Jeffrey Robinson, president of PAS, attributes the increase to the fact that contractors are starting to pay more attention to compensation. On the other hand, some say staffing shortages are responsible. Frank Bruckner, executive vice president of Kimmel & Associates, an Asheville, N.C.-based executive search firm, says management shortages caused by the retirement of the baby boom generation are a major reason for the salary increases.

“In the past, contractors were looking for a 35-year-old with potential,” Buckner says. “Now we are placing 50- to 55-year-old seasoned managers, even people in their 60s, and nobody bats an eye.” Mike Ketner, president of Michael L. Ketner & Associates Inc., a Pittsburgh-based executive search firm, agrees, saying top contractor executives with a lot of operational experience are in high demand. “There's still a shortage of senior project managers, chief superintendents, and, especially, chief estimators,” Ketner says. Key shortages and salary caps are pushing more contractors to offer new kinds of incentives to potential executive hires, which increases total compensation (Table above). “Contractors are increasingly paying signing bonuses to top people they bring in to make up for not exceeding the salary schedules,” Bruckner says.