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Do You Know Your Value?


Building Materials companies and professionals find themselves in a tough spot as inflation continues, interest rates climb, housing starts decline, and the cost of living rises. Companies are asking, what are the compensation trends? Professionals are asking, what is my value? Companies are trying to determine a path for economic certainty, at the very least, sustainability. Professionals are trying to stay ahead of inflation while searching for career growth.


Companies traditionally use base salaries to mirror the cost of living for the workforce. June 2022 inflation hitting 9.1%, the largest jump since 1981, certainly earns the "volatile" title. But don't be frustrated if your company did not immediately increase your base salary. When inflation declines, would you want them to reduce your base salary? Inflation is elastic, but wages are not. Humans do not respond well to loss, and cutting base salaries or layoffs negatively impacts retention and morale. Incentive-based compensation "bonuses" are structured to reward high individual or overall team performance and will fluctuate. Incentive bonuses for some in 2023 will be down 100% or more.


It's many of the mid-level leaders who are hurting the most. The compensation and profits at the executive level have been rich. Most LBM companies are measuring their earnings in 2022 in 2x or 3x multiples compared to previous years. For example, LBM company's 7% profit in 2019 grew to 14% or 21% in 2022. Many leaders' bonuses reflected those profits, while others were overlooked. Outside salespeople's compensations have soared over the past couple of years. The number of outside salespeople making over $1,000,000 per year in 2022 is common. Truck drivers with a CDL have seen their hourly wages increase by 50% since 2019, while non-CDL drivers' wages have increased 100% in the same time frame. A classic LBM behavior pattern: Sales dollars and deliveries attract the most attention, so they receive the highest wage increases.

Positions commonly left behind with lower compensations:

Purchasing Managers, Operations Managers, General Managers, 

Millwork Managers, Truss Plant Managers, and Wall Panel Plant Managers.

Independent LBM dealers with a solid strategy and competitive advantage are taking share. They aggressively leverage their millwork, truss, and wall panel manufacturing resources while pivoting to serve the build-to-rent single-family home market, multifamily, and renovation and remodel builders. If COVID has not made your company adaptable and resilient to market changes, it's time to ask yourself… will it ever be?

Builders FirstSource, US LBM, and Kodiak, the 3 largest consolidators in the LBM dealer segment, have purchased 48 companies since 2019. The supply chain, labor constraints, and high housing demand over the last 3 years have pushed integration initiatives to the bottom. They have been left with multiple brick-and-mortar locations covering the same tight geography, duplicate salespeople, and leaders at many levels: whether it is Wall Street investors (BFS), Bain Capital (US LBM), or Court Square (Kodiak), the nationwide high-interest rates and lowered 2023 profits projection add up to massive budget cuts. If you are not a fan of these trends, brace yourself it will only worsen in the coming months. The major consolidator's only choice is to strip out higher-compensated, longer-tenured location leaders while centralizing decision-making to the corporate headquarters.


It's important to respect every company has a different philosophy when it comes to compensation. Company leaders create strategic plans considering the industry, competition, competitive advantage, company culture, financial health, and goals for the future. Companies must be competitive with compensation to attract and retain good talent, but only as it relates to the talent's willingness to seek new opportunities. Actions speak louder than words. In good companies, high-performing people who are valued never have to ask the question as they know how they are valued by looking at their W2 income relative to the average talent. 

Don't be upset about companies making changes based on financial analysis. Do your own financial analysis. How are you valued in your current company compared to peers in the industry? Please feel free to contact the Misura Group Team for any questions. 

Hire Smarter™,


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