Survey reports high retention of construction industry CEOs
Each year, Hornberger Management Company, performs an executive retention survey to determine the “Top 10 Reasons Construction Executives Leave Their Job.” The survey involves telephone and personal interviews with over one thousand construction executives and CEO’s from general building contractors, heavy contractors, specialty contractors, design builders, residential contractors and construction managers (referred to in this survey as contractors) operating within the United States of America. The survey also produces a report listing hundreds of CEO and Executive Insights that are collected from the interviews and online survey forms. This year’s survey concluded on January 11, 2005.
Executives (which includes only C-level, top management who report directly to the CEO and/or president) were asked to prioritize the reasons why they would leave and stay with their current employer, and what changes they would like to see made to their employer’s retention practices. CEO’s were asked for their insights on their employment, recruitment and retention practices. This year’s survey concluded on January 11, 2005, celebrating 11 years of survey excellence. Brief highlights from this year’s survey are published below.
Construction executive retention was at its highest level in over a decade with only 29% of executives choosing to change jobs in 2004. Although most construction CEOs acknowledge the importance in having an executive retention strategy, only 23% claim to actually have one. The primary reasons for the low executive turnover according to the executives interviewed were not due to the CEO’s efforts, but were due to the economic and political uncertainty of 2004.
Trailing a good year for executive retention will be one of the highest years of executive turnover. Even though 3 out of 4 executives believe that their current employer will adjust their compensation upwardly in 2005 to fall in line with the improving economy, 36% of construction executives are planning to change jobs in 2005. Many executives are looking for increased compensation and career advancement opportunity due to the restrictions levied upon them during the recent flat and negative growth years of 2002, 2003 and 2004.
Most construction executives considered the last few years a time of career stagnation. Many had to work harder with less staff and support, while receiving no pay increase or job advancement. 61% stated they were dissatisfied with their internal opportunities for career advancement, and 64% were dissatisfied with their current pay.
Change is also on the minds of CEOs. Many CEOs are planning on taking a harder look at their current executives to determine if they are the best candidates to lead their firms through the expected growth opportunities of 2005. 17% of CEO’s stated they were planning to increase their executive workforce in 2005, up from 11% in 2004. And 72% indicated they intended to increase their HR budgets for 2005.
Contractors on average increased their salary budgets 3.7% in 2004 with expected gains for 2005 to break the 4% margin, which would be the first time since 2001. Bonus levels for 2005 are also anticipated to rise marginally. Approximately 50% of CEO’s expected to keep their executive benefit levels the same for 2005, with less than 13% reducing their benefits. It is estimated by HMC that 2006 will see an even higher increase in salaries, bonuses and benefits given the increasing labor shortage for experienced executive talent, and the willingness of CEOs to pay premium wages to get accomplished talent.
For a sampling of this year’s Construction CEO insights, click here.
For a sampling of this year’s Construction executive insights, click here.
For a sampling of one of this year’s Top 10 Reasons, click here.
For the complete report of this year’s Construction Executive Retention Survey is available for purchase from Hornberger Management Company. For additional information on this survey or any other executive retention surveys conducted by Hornberger Management Company, please call the company at 302-573-2541.