What Should You Be Paid?
The art and science of rates and salary guidelines
In March, we pulled out and dusted off our old rates and salary guide from 1987. No surprises that so much has changed since then – back then if you were an architect with 3 years’ experience you would’ve been sitting on $13-14 per hour. Fast forward to 2017, and it’s more than doubled.
Bloomfield Tremayne & Partners 1987 Rate and Salaries Guide
We recently released our new rates and salary guidelines, in line with the end of financial year to assist our clients in setting fair remuneration for their employees.
However, we are conscious that employees or candidates may not always be clear on what is affecting their salaries.
After all, the end of financial year is more than just the accountants running frantically around to cross the t’s and dot the i’s.
Annual review time
Annual reviews crop up around this time for example – we had them in our own offices a couple of weeks ago. Some ranged from thirty minutes for our newest team member who joined us 3 weeks prior to a solid few hours for myself. We find reviews are a complicated beast: highly rewarding, and difficult. Often when they occur there is the question raised of money, money, money.
What impacts salaries?
When we adjust rates and salaries, we look at several different external impacts such as:
- changes in technology usage,
- market growth in relation to the consumer price index (CPI),
- statutory requirements.
This is arguably the science side of adjusting, but I find there is also an art – or at least an art to adjusting remuneration from an employer side for individuals.
Understanding the different impacts is critical when navigating the job market – you’ll be more informed, and both parties, employers and employees, will be able to find a solution that is fair and equitable.
The different impacts can be simplified to market considerations (the science), and individual candidate considerations (the art).
Market considerations are the external impacts that affect rates and salaries.
The obvious impacts are legal requirements, and how the market is going: are activity levels high? Are we in a downturn?
However, the big-ticket item and major change we see is how skills in building information modelling (BIM) software is becoming increasingly critical.
Technology: BIM is here to stay
In case you aren’t aware – or have been living under a rock – BIM software allows users to generate and manage digital representation of physical and functional characteristics of building projects.
There is a range of different BIM (and CAD) software in use, and the extent to which they are used on a project will vary from firm to firm and project to project.
We find that the market is craving candidates with BIM expertise – the demand for this is about 85% of the market, and around 90% of all new positions created require it.
This demand moves BIM from being a bonus to an expectation.
Revit and ArchiCAD are of specific interest – if a bus load of candidates suddenly appeared outside with Revit skills we would be able to find them all a job. If you saw our Autumn Market Update, roles for Design Architects, Project Architects, and Interior Designers are now being expected to demonstrate a degree of Revit capability, and we’ve seen an increasing need for technical documentation roles.
On the flipside, AutoCAD is becoming less valued, resulting in lower rates and salaries for individuals with these skills.
Positive and negatives of market growth
As we mentioned before we dived into the BIM talk, changes in the Australian market will continue to impact us. This financial year we have seen the market move by 4% across board due to consistent demand.
Returning to the bus load of architects’ analogy – we’re currently seeing a demand for architects in the 3-8 years of experience bracket.
The consistent demand has meant high activity levels, and we can expect to see an increasing demand for jobs for the remainder of 2017. Sounds fantastic, right? It is, but we must consider other economic impacts.
Market growth has moved past the cost of living, with market growth approximately double the consumer price index (CPI) this year. If the market was to suddenly enter a downturn, this could create significant challenges to businesses.
Understandably, due to the amount of work, job seekers and employees will be seeking higher wages and this will be a point of discussion during hiring and reviews. The market can sustain this currently, however in the event of sudden changes employers may find themselves saddled with additional business costs in proportion to their profitability if they were to increase wages to extremely high levels.
It is kind of a Catch 22 – we have more business so we should pay more, but if we do we may not be able to sustain ourselves in the future if the market suddenly takes a dive. Due to this, the need for consistent and sustainable increases is critical when adjusting.
The final consideration is the new legal requirements. The Australian Fair Work Ombudsman just released its new national minimum wage, rising it by 3.3%, affecting base rates of pay in modern awards. We can often pre-calculate these changes beforehand as they are suggested in May of each year, however further adjustments will occur when they confirmed in late June.
Fair Work Ombudsman
Market considerations are clear and the building blocks for adjusting rates and salary guidelines. However, of course, there are other considerations when looking at remuneration which are individual to each candidate or employee.
Being self-aware of your own abilities and attributes will help you better navigate remuneration – and more critically understanding why others could have a higher rate though appear to be in a similar position.
Not all skills are equal
As mentioned, we see the market as focussing on software skills such as BIM ahead of technical skills, in some cases due to the demand. However, having BIM skills is not the sole determining factor – candidates who can combine both BIM and strong construction knowledge will be able to command industry leading remuneration either based on hourly rates or salaries.
Taking a step back – recall those Industry Super Fund advertisements on television – Compare the Pair? Well it’s an accurate descriptions for this next section.
Returning to our bus load of architects with 3-8 years’ experience: you have two architects with 5 years’ experience. Both have strong technical skills. They both have an edge for Revit. Yet, one has a higher remuneration, and we often find it’s due to a different value add.
Different value add skills can be marketing, project procurement, and client development in some cases. These tacit skills, whilst can be taught, are difficult to replicate, and this is why comparing individuals with the same years of experience based on their official role is tricky, as additional responsibilities may not be officially listed.
Recall the old ‘industry talk’ situation – ‘a friend of a friend is earning X amount’. When considering salary, we need to understand that people talk, and often when they do the full story isn’t being conveyed. While understanding what the market is paying is critical so you are not being underpaid (or underpaying), the exact reasons may not always be known.
For example, people may or not include super when discussing their salary – this can create unfair comparisons.
After someone has 10+ years of experience, there is naturally more negotiation due to increasing levels of responsibility. I typically see and refer to senior hires as strategic hires. Strategic hires are required for firm sustainability and longevity, and it’s here you look beyond software or technical skills when hiring.
This is in comparison to roles for mid-level employees, say Revit technicians, which are generally a response to increased project flow and requires immediate recruitment.
And yet, despite this, we’re beginning to see finding a candidate with the exact requirements for the role being more critical than overall years experience.
We’ve covered off how we adjust our salary and rates and what other factors will need to be considered. The question still comes back to how can employers and employees work together to meet employee’s desired salary expectations, without increasing business costs to unsustainable levels.
We’ve discussed job reviews before, however I see that there are three critical considerations to emphasise.
Businesses are always looking at the bottom line. This goes without saying.
Therefore, when it comes to negotiating salary changes, you may need to realise that change may not happen immediately as certain requirements may not be met, unknown to you. Setting new goals and key performance indicators, and working with your employer to define these requirements, will assist both the employee or employer in determining how and when an increase should occur.
As an employee, you need to ask for feedback – and in turn, employers need to listen to employee aspirations or concerns. Once all the information is out on the table both parties can set down some key goals.
Write it down
No matter what the outcome, put it in writing! When there is a record, both parties will be able to look back and asses what was agreed. This will prevent loose ends or misunderstandings.
Think of it like an additional contract – if either parties do not satisfy the requirements, then you have a reference point, and a platform of conversation from which you can pick up next time or if a problem should arise!
When writing it down be sure to include the specific objectives and a timeline for these to be achieved – this will allow for a more focussed approach to be adopted, and prevent meandering in uncertainty.
The key thing to remember is that rate and salary increases are affected by a broad range of different factors – and then there are additional individual factors that will make comparing the pair exceptionally challenging.
It is important to reward staff for excellence and achievements, but all parties need to understand that there should be a degree of consistency in salary increases in case of unpredictable market impacts. This is how my team and I have always operated – consistency is key as it leads directly into sustainability.
For more information, please contact us for our updated rates and salaries guidelines.
Partner – BT&P Melbourne