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![Page 1: Engineering Compensation in Houston and Beyond 090814 Touhey.pdfAverage Age of Engineering Professionals in Houston E&C Market ... ©2009 Pearl Meyer & Partners, LLC 4 Houston Office](https://reader030.fdocuments.us/reader030/viewer/2022011800/5ab78b127f8b9ac1058b8ea0/html5/thumbnails/1.jpg)
©2009 Pearl Meyer & Partners, LLC
Engineering Compensation in Houston and Beyond
Rice Global E&C ForumAugust 2009
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1©2009 Pearl Meyer & Partners, LLC
Discussion Points
About Pearl Meyer & Partners
Historical Base Salary Movement Nationally Among E&C Companies
Historical Base Salary Movement Among Houston E&C Companies
Engineering Rates – E&C v. Energy
E&C In Houston – March 2009 Poll
Base Salary Movement Among College New Hires
Average Age of Engineering Professionals in Houston E&C Market
Opportunity To Address Compensation Inequities
Questions
![Page 3: Engineering Compensation in Houston and Beyond 090814 Touhey.pdfAverage Age of Engineering Professionals in Houston E&C Market ... ©2009 Pearl Meyer & Partners, LLC 4 Houston Office](https://reader030.fdocuments.us/reader030/viewer/2022011800/5ab78b127f8b9ac1058b8ea0/html5/thumbnails/3.jpg)
2©2009 Pearl Meyer & Partners, LLC
About Pearl Meyer & Partners
Founded in 1989, we are a 100 person firm headquartered in New York CityExclusive focus on compensation consultingIndependentFull range of executive compensation and employee pay consulting serviceshttp://www.pearlmeyer.com
Office locations
Representative compensation surveys conducted by PM&PNational Engineering & Construction Services SurveyHouston Engineering & Construction Services SurveyOffshore ConstructionInternational EngineeringOilfield Services SuiteOffshore Drilling SuiteCHiPS Suite
New York ChicagoAtlanta HoustonBoston Los AngelesCharlotte
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3©2009 Pearl Meyer & Partners, LLC
About Pearl Meyer & Partners
Chris Touhey, Vice PresidentManages the Houston office Employee Pay and Survey practice
Over 20 years experience in compensation
Extensive experience with design & management of both domestic and international surveys
Managed numerous compensation review projects in a variety of industries
Experienced in the design and implementation of global pay programs
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4©2009 Pearl Meyer & Partners, LLC
Houston Office – Representative Client Listing
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5©2009 Pearl Meyer & Partners, LLC
Historical Base Salary Movement Nationally Among E&C Companies
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6©2009 Pearl Meyer & Partners, LLC
Historical Base Pay Movement – National
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
Perc
ent C
hang
e
Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 Level 8Job Level
Base Pay Percent Change - Drafting / Design
Jun 2005 - Jun 2006 Jun 2006 - Jun 2007 Jun 2007 - Jun 2008 Jun 2008 - Dec 2008
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7©2009 Pearl Meyer & Partners, LLC
Historical Base Pay Movement – National, continued
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
Perc
ent C
hang
e
Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 Level 8Job Level
Base Pay Percent Change - General Engineering
Jun 2005 - Jun 2006 Jun 2006 - Jun 2007 Jun 2007 - Jun 2008 Jun 2008 - Dec 2008
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8©2009 Pearl Meyer & Partners, LLC
Historical Base Pay Movement – National, continued
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
Perc
ent C
hang
e
Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 Level 7Job Level
Base Pay Percent Change - Process Engineering
Jun 2005 - Jun 2006 Jun 2006 - Jun 2007 Jun 2007 - Jun 2008 Jun 2008 - Dec 2008
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9©2009 Pearl Meyer & Partners, LLC
Historical Base Pay Movement – National, continued
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
Perc
ent M
ovem
ent
Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 Level 7Job Level
Base Pay Percent Change - Project Management
Jun 2005 - Jun 2006 Jun 2006 - Jun 2007 Jun 2007 - Jun 2008 Jun 2008 - Dec 2008
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10©2009 Pearl Meyer & Partners, LLC
Historical Total Cash Salary Movement Nationally Among E&C Companies
This section was not part of the original presentation and has been added by PM&P at the request of Forum members.
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11©2009 Pearl Meyer & Partners, LLC
Historical Total Cash Movement – National
Total Cash % Movement Within Selected Engineering Job Families, 2007-2008
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
Per
cent
High 10.7% 7.5% 7.5% 7.9% 11.0%
Average 6.9% 3.9% 3.9% 7.8% 6.6%
Low 4.4% 1.6% 1.3% 7.7% 3.4%
Drafting/Design General Engineering Process Engineering Project Engineering Project Management
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12©2009 Pearl Meyer & Partners, LLC
Bonus Eligibility v. Receiving
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
Per
cent
2006 2007 2008
Bonus Eligibility v. Receiving - Drafting/Design
Eligible Receiving
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13©2009 Pearl Meyer & Partners, LLC
Bonus Eligibility v. Receiving, continued
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
Per
cent
2006 2007 2008
Bonus Eligibility v. Receiving - General Engineering
Eligible Receiving
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14©2009 Pearl Meyer & Partners, LLC
Bonus Eligibility v. Receiving, continued
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
Per
cent
2006 2007 2008
Bonus Eligibility v. Receiving - Process Engineering
Eligible Receiving
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15©2009 Pearl Meyer & Partners, LLC
Bonus Eligibility v. Receiving, continued
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
Per
cent
2006 2007 2008
Bonus Eligibility v. Receiving - Project Engineering
Eligible Receiving
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16©2009 Pearl Meyer & Partners, LLC
Bonus Eligibility v. Receiving, continued
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
Per
cent
2006 2007 2008
Bonus Eligibility v. Receiving - Project Managment
Eligible Receiving
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17©2009 Pearl Meyer & Partners, LLC
Historical Base Salary Movement Among Houston E&C Companies
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18©2009 Pearl Meyer & Partners, LLC
Historical Base Pay Movement – Houston Market
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
11.0%
Perc
ent M
ovem
ent
Piping Mechanical Instrument Electrical Civil / Structural ProcessDrafting/Design Job Families
Base Salary Movement - July 2007 to Jan 2009
Jul 07 - Jan 08 Jan 08 - Jul 08 Jul 08 - Jan 09
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19©2009 Pearl Meyer & Partners, LLC
Historical Base Pay Movement – Houston, continued
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
Perc
ent M
ovem
ent
Mechanical Instrument Electrical Civil / Structural ProcessSelected Engineering Job Families
Base Salary Movement - July 2007 to Jan 2009
Jul 07 - Jan 08 Jan 08 - Jul 08 Jul 08 - Jan 09
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20©2009 Pearl Meyer & Partners, LLC
Historical Base Pay Movement – Houston, continued
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
Perc
ent M
ovem
ent
Project Engineer Project Manager
Base Salary Movement - July 2007 to Jan 2009
Jul 07 - Jan 08 Jan 08 - Jul 08 Jul 08 - Jan 09
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©2009 Pearl Meyer & Partners, LLC
Engineering Rates – E&C v. Energy
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22©2009 Pearl Meyer & Partners, LLC
Engineering Rates – E&C v. Energy (2008)
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
Electric
alMec
hanic
al
Electric
alMec
hanic
al
Electric
alMec
hanic
al
Electric
alMec
hanic
al
Electric
alMec
hanic
al
Electric
alMec
hanic
al
Job Level & Discipline
Rate Comparison By Job Level
Nat E&C Hou E&C Energy
Level 1 Level 2 Level 3 Level 4 Level 5 Level 6
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©2009 Pearl Meyer & Partners, LLC
E&C in Houston – March 2009 Poll
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24©2009 Pearl Meyer & Partners, LLC
March 2009 Poll
Twenty-two E&C firms that either have a large presence in Houston or have their headquarters here
Invited to participate in poll jointly sponsored by Foster Wheeler and URS Washington Division
Topic areas includedNon-executive base salary changes and budgets
Reduction in force / layoffs
Severance benefits
Benefit program changes
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25©2009 Pearl Meyer & Partners, LLC
Highlights of Poll Results
Non-executive base salary changes / base salary budgetingMore than two-thirds of respondents expected 2009 base salary changes to be significantly less (20% or greater decreases) than in 2008
Almost 60% of respondents had frozen or were considering freezing base salaries
Just over half have delayed or were considering delaying merit increases for 2009– Delays ranged from one quarter to a full year
– Most who were delaying merit reviews were reevaluating in the second quarter
– About 60% were still accruing for merit budgets in the range of 2% to 4%
Pay cutsAt the time of the study, no one had implemented pay cuts
A few were considering pay cuts in the 4% to 8% range
At least two companies have implemented pay cuts in the second quarter
Reduction in force / layoffsMore than 80% of respondents have experienced a layoff or were considering a RIF
Half of those expected further action in the second quarter
Layoffs have affected 8% to 10% of the employee population
Almost one-third have implemented or are considering a reduced hours program
Most firms had not changed their benefit programs at the time
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©2009 Pearl Meyer & Partners, LLC
Base Salary Movement Among College New Hires
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27©2009 Pearl Meyer & Partners, LLC
Oilfield Services v. E&C New Grad Hire Rates, 07-08
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
Perc
ent D
iffer
ence
Electrical Mechanical Engineering TechnologyDiscipline
Differential Hire-In Rates For New College Grads, 2007 - 2008
Oilfield Services National E&C
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28©2009 Pearl Meyer & Partners, LLC
College New Hire Rates Fell In Latter Half of 2008
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
Perc
ent D
iffer
ence
Civil Engineering Electrical Engineering Mechanical Engineering
Differential In College New-Hire Rates, Houston E&C Companies
Jan - Jul 2008 Jul 2008 - Jan 2009
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©2009 Pearl Meyer & Partners, LLC
Average Age of Engineering Professionals in Houston E&C Market
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30©2009 Pearl Meyer & Partners, LLC
Engineering Incumbents’ Age – Houston – July 2008
Job Title Job Level
Average Age
Discipline Average Job Title Job
LevelAverage
AgeDiscipline Average
Mechanical Engineering Level 1 26 Process Engineering Level 1 26
Mechanical Engineering Level 2 29 Process Engineering Level 2 29
Mechanical Engineering Level 3 35 Process Engineering Level 3 35
Mechanical Engineering Level 4 43 Process Engineering Level 4 42
Mechanical Engineering Level 5 55 Process Engineering Level 5 52
Mechanical Engineering Level 6 58 Process Engineering Level 6 55
Mechanical Engineering Level 7 57 43 Process Engineering Level 7 56 42
Instrument Engineering Level 1 26 Systems Engineers Level 1 26
Instrument Engineering Level 2 32 Systems Engineers Level 2 31
Instrument Engineering Level 3 39 Systems Engineers Level 3 36
Instrument Engineering Level 4 47 Systems Engineers Level 4 43
Instrument Engineering Level 5 53 Systems Engineers Level 5 53
Instrument Engineering Level 6 56 Systems Engineers Level 6 53
Instrument Engineering Level 7 56 44 Systems Engineers Level 7 61 43
Electrical Engineering Level 1 26 Offshore / Subsea Level 1 28
Electrical Engineering Level 2 30 Offshore / Subsea Level 2 33
Electrical Engineering Level 3 32 Offshore / Subsea Level 3 38
Electrical Engineering Level 4 45 Offshore / Subsea Level 4 47
Electrical Engineering Level 5 54 Offshore / Subsea Level 5 50
Electrical Engineering Level 6 57 Offshore / Subsea Level 6 53
Electrical Engineering Level 7 57 43 Offshore / Subsea Level 7 45 42
Civil / Structural Engineering Level 1 26 Project Engineers Level 1 42
Civil / Structural Engineering Level 2 29 Project Engineers Level 2 50
Civil / Structural Engineering Level 3 35 Project Engineers Level 3 54 49
Civil / Structural Engineering Level 4 42 Project Managers Level 1 49
Civil / Structural Engineering Level 5 54 Project Managers Level 2 54
Civil / Structural Engineering Level 6 58 Project Managers Level 3 56
Civil / Structural Engineering Level 7 57 43 Project Managers Level 4 57 54
Overall Average Age, Engineering 44
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©2009 Pearl Meyer & Partners, LLC
Opportunity To Address Compensation Inequities
![Page 33: Engineering Compensation in Houston and Beyond 090814 Touhey.pdfAverage Age of Engineering Professionals in Houston E&C Market ... ©2009 Pearl Meyer & Partners, LLC 4 Houston Office](https://reader030.fdocuments.us/reader030/viewer/2022011800/5ab78b127f8b9ac1058b8ea0/html5/thumbnails/33.jpg)
32©2009 Pearl Meyer & Partners, LLC
Opportunity To Address Compensation Inequities
The past few years of escalating wages, especially in Houston, have resulted in wage compression issues for most companies
Escalating college hire-in rates have placed new-hire compensation at or above 0-2 year engineers
Merit budgets, while exceeding the National norms, have not been large enough to address all the compression problems
In a depressed economy, many are more focused on retaining employment and less focused on wage movement
With minimal salary increase budgets, focus on high performers low in their range as well as internal and external renowned experts
Be sure your performance management system is actually working
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33©2009 Pearl Meyer & Partners, LLC
Q&A
Questions?