|"Leadership Development & Career News for Construction Executives"
In this issue:
1) Feature Story: Are Construction CEOs Overpaid?
2) Employer Strategies: How Construction CEOs Manage the Board?
3) Executive Appointment: Perini Corporation Names Ken Burk as CFO
4) About: Construction Executive Online
1) FEATURE STORY:
Are Construction CEOs Overpaid?
So what does a construction CEO earn? A recent poll in July 2007 by Construction Executive Online of over 216 construction CEOs of specialty and general contractors (annual revenues $50M to $200M), concluded that construction CEOs earn between $200k and $300k in annual salary, and 100% to 200% in incentive/performance bonuses. Benefits and Perks for the top leader in charge continue to raise the bar. Pay for CEO's increased 1.3% over last year, and continue to go up even when contractors are cutting back on manager and staff pay.
The question on everyone's mind is "Are they worth it?" The argument in favor of raises for those in the corner office centers around who is in charge. Boards and owners typically view the CEO as the position more valuable to the life of the company. Even with their "golden parachutes," the CEO bears the primary leadership burden of risk and responsibility for the firm's success or failure. The wrong CEO can quickly sink a company, where the right CEO can quickly take it to new heights of success.
So what do boards and owners look for when shopping to hire a CEO? Most construction CEOs are hired based on their performance track record, in particular their performance in the last 24 months. Boards rarely go shopping for a bargain. While some CEOs earning $200K are wildly overpaid, others earning millions are a steal. Tom Hughes with the Executive Compensation division of Howard & Howard Consulting in Houston, Texas commented, "There are very few CEOs who can truly make a difference, and those that can are worth their weight in gold. It's impossible to measure the market value of a great CEO, which is why there is tremendous variation in CEO pay."
The difference between a good CEO and a great CEO can often be razor sharp margins in decision making and competence levels, yet bottom-line results can differ dramatically. According to Frederick Hornberger of executive search firm Hornberger Management Company(www.hmc.com) in Wilmington, DE, "Recruiting construction CEOs is about finding someone who has achieved recent success and has the verifiable (proven) ability to take a firm to the next level. CEO pay is rarely a firm's top consideration when making a hiring decision because CEOs with higher pay packages usually provide employers with lower ROI risks."
2) EMPLOYER STRATEGIES:
How Construction CEOs Manage the Board
One of the greatest challenges for a construction CEO is managing the firm’s board of directors. With the passing of the Sarbanes-Oxley Act of 2002 and the general push for more CEO accountability, many firms have added additional outside board directors who can offer a CEO more support while holding the CEO’s feet to the fire. CEO’s for both public and private construction firms must learn to develop their board management skills if they want to remain “fully qualified” in the minds of owners.
Building and managing a quality board requires the level of commitment that goes into building and managing the firm’s executive team. Although the CEO is the key team player for both teams, he or she must learn to effectively manage both to be successful. There are no shortcuts and the commitments necessary are intense, but if properly managed the board can be a CEO’s secret weapon to success.
The board needed for a startup company is very different from that needed after the firm takes root and begins prospering. When recruiting for outside board directors, CEOs should look for special expertise, sound business experience and skill sets that compliment the board directors. Finding a big name or a great resume with a golden rolodex does not always result in a successful board. In choosing outside directors,
CEOs should look for business professionals whose experience parallels the construction industry, who can offer a lot of fresh insight and who will challenge the CEO to be the best he or she can be. A board with “yes men” can often be a CEO's worst enemy.
It's the CEO’s responsibility to keep the board educated about the construction industry and the details of the firm’s business. However it’s up to the CEO to make the board as productive as possible. CEO’s should hold regular board meetings, and call on the board members often for advice and support. A successful board will contribute ideas; help with strategy and with problem solving.
Board management is a challenge for any construction CEO, but as boards become increasingly influential over company business, CEO’s must apply a similar commitment managing their board team as they do managing their executive team. Not only is board management becoming a necessary skill for a CEO’s business success, but successful board management experience is what many owners are looking for in a selecting their construction CEO.
3) EXECUTIVE APPOINTMENT:
Perini Corporation names Ken Burk as CFO
Perini Corporation is pleased to announce today the appointment of Kenneth R. Burk as Senior Vice President and Chief Financial Officer. Michael E. Ciskey, Vice President and Chief Financial Officer since November 2003, will become Senior Vice President, Civil where he will assist in the growth of Perini’s Civil Segment.
Mr. Burk joins Perini with 24 years of experience in the engineering and construction industry. Since 2001, Ken has held the position of President and CEO of Union Switch and Signal of Pittsburgh, Pennsylvania, a transportation system, engineering and electronics subsidiary of Ansaldo STS of Genoa, Italy. Mr. Burk, 47, previously held various senior level positions since 1989 including Executive Vice President and Chief Operating Officer of Railworks Corporation, a Baltimore, Maryland based rail services and supply firm and Senior Vice President and Chief Financial Officer of Dick Corporation, a Pittsburgh, Pennsylvania based engineering and construction firm.
Robert Band, President and Chief Operating Officer stated “We are very pleased to have a person with Ken’s depth and experience to join our executive team. As we continue to grow and strengthen our businesses, both domestically and internationally, he will be a prominent figure in our long term succession plans.”
4) ABOUT CONSTRUCTION EXECUTIVE ONLINE:
What you'll find inside Construction Executive Online (CE)
Construction Executive Online (www.constructionexecutive.com) is a career management center for construction executives. CE provides construction executives access to Construction Executive Jobs, and to expert career counseling from the nation’s leading executive coaches. CE is also an established information provider of construction salary surveys, construction career polls, and construction employment demographics, and maintains over 250,000 subscriptions to its distinguished Construction Executive Report.