A Review Of The 2015 MCAA Compensation Report

It is widely accepted that industry in general, and high-tech based industries in particular, have been facing a tremendous “brain drain” as so-called Baby Boomers are retiring and taking with them years of knowledge and experience. In the measurement, control and automation industry—both on the vendor side (MCAA’s member companies) and the user side (our customers)—this is keenly felt. Sidebar conversations with companies indicate that they are paying bigger dollars to new employees and find that it takes up to 18 months to get these “young guns” up to speed about our industry, products and practices not to mention the customer industries and their utilization of the instrumentation that we make and sell. Customers (and MCAA) are trying to work with technical schools and community colleges to help with the need for knowledgeable and skilled technicians, not to mention the need for science and engineering capable employees for higher level requirements. Nothing on the horizon—not even the nationwide focus on STEM subjects in our primary and secondary schools—indicates a solution to the dilemma.

What we see in this year’s Compensation Report is a little more reliance on BASE SALARY adjustments rather than big changes in incentive compensation. This seems to us to indicate that there is more push to include a few more $$$ in the regular paycheck than the end-of-year bonus.

The Compensation Report which MCAA publishes is based on data contributed voluntarily by its member companies—both manufacturers and channel partners. This year for the first time we have included a specific line item which includes the average information for the channel firms, thus separating them from the manufacturers but providing the insight to all the companies. It’s a little easier to compare apples to apples this way. Fifty-six (56) companies participated in the report—42 manufacturers and 14 channel firms. Most of the participating companies are privately held (41) and they represent a workforce of 10,301 full time employees of which 53% are Exempt. That is a bigger workforce than 2014 but a lower percent of it as exempt employees. In 2015 the respondents indicated that their overall turnover rate was 7.5% with most of that voluntary terminations (5%)—this represents a slightly higher turnover rate than the prior year. When planning their resources, survey participants have the predominance of the money pool reserved for merit or performance adjustments, followed by market adjustments to salaries and a small proportion reserved for increased salaries due to promotions. Often that latter category is offset by attrition of higher compensated employees.

This report is targeted at salaried positions but it does include a wage rate report for both regular and temporary workers. There was a very small 3% increase in the average hourly rate from $18.08 in 2014 to $18.61 this year. Conversely, there was a 1% decline in the average hourly rate for temporary workers.

The MCAA Compensation Report is NOT an historical review. That is to say, the reporting population changes every year and we do not require historical information from companies— especially since employment populations can vary significantly in a number of scenarios such as acquisitions or mergers without a rational index against which to benchmark. However, over the many years that MCAA has run this study, there is a consistency in the data despite this changing mix of participants and we feel that we can make some comparisons based on results from last year. We do recommend the report to members primarily for the actual benchmark and ranges that it provides for them to evaluate whether their compensation program is sufficient to attract and retain the best caliber people for their company. This year 10 companies are new to the report while 13 that participated last year did not do so in 2015. Three companies of significant size added to the growth in the employee pool of 15% over the total from last year. There was some interesting shuffling of the incumbents in job categories this year. Jobs in the Field Sales and Service category were DOWN overall by 2% while the number of incumbents in the Manufacturing Engineering category were up by 77%! Perspective, however: the manufacturing engineering population is only 20% of the size of the sales and service group of jobs. Looking at the engineering positions as a whole (product design & development, manufacturing and software) the numbers of employees were up a substantial 31% from last year and represented a full 30% of the total non-management positions.

As we looked at the five categories of jobs detailed below, we noticed a number of interesting changes. One significant one appears in the Field Sales and Service categories where overall, salaries were UP (about 6%) while total compensation was down 3%. For a group that typically is compensated with incentives or commissions that seems to indicate a greater reliance on the base salary to drive total compensation. Technical Marketing and Sales Support told the opposite story—base salary up only 4% with total compensation up in every job category for an average of nearly 12%. No other group showed such significant increase in total compensation as a percent change from 2014.

General Management Personnel—25 positions are reported here from CEO averaging over $411,000 in total compensation down to Document Control Managers with total compensation averaging $82,000. Five jobs in this group had a decrease in both base salary and total compensation in the reporting period but the average change from 2014 in base salary was 9% and an 11% increase in total compensation.

Field Sales and Service Personnel—This category includes 18 positions (only 15 were able to be reported this year) including Regional Sales Managers at the top end and entry-level service technicians at the bottom of the spectrum. Three positions reported lower base salary AND total compensation compared to 2014 but in most jobs we did see a higher base salary as against a lower total compensation average.

Technical Marketing and Sales Support Personnel—As mentioned above ALL of the jobs in this category showed higher base rates and total compensation than 2014 and total compensation showed a nearly 12% increase over last year. At the top end of these 12 jobs (10 reportable) are Product Sales Managers running down to Inside Sales Specialists.

Product Design and Development Personnel—Nine jobs are reported here with an average increase in base salary of 3.5 compared to 2014 while overall compensation increased 5%. Engineering Supervisors are at the top of this job group while entry-level Manufacturing Engineers are at the other end.

Software Personnel—These 8 jobs (2 not reportable) jobs are most dependent on the nature of the reporting population because they typically are ones carried in the larger companies. This year the incumbent population of this group is up by 13% reflecting the addition of those larger companies mentioned above. Compared to 2014 base salaries are up about 3% and total compensation improved about the same—but there is very limited use of incentive compensation with these employees. The spectrum of total compensation is small ranging from $79,500 to $106,500.

The Association surveys its members over the summer and publishes the report in September of each year. Both PDf and Excel spreadsheet formats are available without individual company data (aggregated figures only are used). The report includes information on the number of companies matching the defined responsibilities, the overall percentiles and salary ranges. For comparative purposes the data is stratified for five groups—4 by sales volume and a separate category for channel partners. These show percentiles, weighted and unweighted base rates, incentive and total compensation. Where possible this same information is arrayed for regional breakdowns, based on the specific locations of the 2015 reporting population. To add insight, the report also shows other position titles reported by participating companies. Only member companies contributed data in 2015 but participation is open to non-members for a $2,500 fee. Member participation is included in dues paid to the Association.

MCAA provides resources to the world’s leading process control suppliers. The Association exists to help the management teams of process and factory automation product and solution providers run and grow successful businesses by offering timely, unique and highly specialized resources acquired from shared management benchmarks and strategies—such as the annual compensation Report and biennial Benefits Report—where proprietary companies information is secure. The 2016 report will be fielded in May 2016 and will include the biennial Benefits Survey.