Compensation Planning 2016: 4 Forecasts and Trends in Engineering

By: Leslie Stevens-Huffman

According to a recent survey by Electronic Design, nearly 51 percent of engineers reported that their companies were having a hard time finding qualified candidates. Couple that with the fact that only 64 percent of engineering professionals feel they are adequately compensated, and it’s easy to see why compensation planning needs to be a year-end priority for engineering managers.

Future Trends for Compensating Engineering Contractors

Of course, base salary is only part of the equation. Many companies are offering performance bonuses, extended parental leave, growth opportunities and training in order to retain STEM professionals. In this post, we take a look at some of the trends that are influencing compensation in 2016.

Salaries Rise

Although the nation’s professional workforce is expected to receive an average base salary increase of 4.1 percent, project engineers, network engineers and software engineers are expected to post some of the largest salary gains in 2016. The forecast seems realistic since wages for engineering jobs grew 0.9 percent during the third quarter of 2015 according to data from

And though engineering compensation varies based on geographic location and job function, the average compensation rate grew more last year than it has in almost five years, rising to $108,503 according to Electronic Design.

Bonuses Supplant Raises

Many companies are rethinking whether linking base salary increases to last year’s performance makes sense, according to a survey conducted by Towers Watson Data Services. Instead, they’re using short-term incentives or bonuses to reward top performers and taking a “ratingless” approach to reviews. Electronic Design reports that engineers received average cash bonuses of $3,880, $2,616 in stock/options and $2,500 in other compensation in 2015.

Work-Life Balance

Historically, engineering firms have had a bad reputation for providing work-life balance, but not anymore. An analysis by Glassdoor found that tech and engineering jobs are now among the best-ranked careers for workers who want to strike a balance between their professional and personal lives. A major contributor to work-life balance is parental leave with major tech firms like Google, Facebook, Netflix, and most recently, Amazon, leading the way. Work-life balance is the second most important workplace attribute behind compensation, so consider offering flex time, comp time and telecommuting.

Career Growth Trumps Salary

If you’re hobbled by a meager budget for salary increases, don’t overlook the motivational power of career growth. Opportunities for career development, learning and challenging work are top drivers of retention, especially among younger professionals.

For example, Generation Y workers (those born between 1980 and 1987) are least likely to be interested in pay increases and most likely to be interested in learning new skills. And both Generations Y and X (those born between 1965 and 1979) value opportunities for personal growth.

Research by WorldatWork shows that employers can differentiate themselves by investing in their employees’ career development. Even a relatively small investment in training has a positive impact on loyalty. As the report from Towers Watson points out: “It’s the value of the total package — compensation, benefits and nonmonetary rewards — that makes the difference.”


Other information of potential interest

It’s Time to Re-engineer Your Relationships with Recruiters

5 Ways to Get an Engineering Contractor to Accept Your Offer

Modern Tools for Managing an Engineering Team

Staffing Firms vs. Independent Contractors: What Engineering Managers Should Know

How to Engineer a Just-in-Time Talent Pool

Engineering Solutions to Today’s Talent Shortage

What to Look for in Contractor Engineering Resumes

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