The FMI 2026 Compensation Trends Study, which surveyed 218 companies across 40 states, indicates that while base pay inflation is cooling to an average increase of 4%, the structure of total rewards is undergoing a significant transformation. For the first time, over half of the responding firms now offer long-term incentives, marking a sharp rise from previous years where adoption hovered between 35% and 40%.
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AEC Firms Shift Compensation Toward Strategic Long-Term Incentives
With 99% of architecture, engineering, and construction firms planning raises in 2026, the industry is moving past simple base pay hikes toward formal incentive structures. A new study from FMI Corporation reveals that firms are increasingly treating compensation as a primary lever for long-term talent retention and business strategy.
Firms are also prioritizing consistency in their pay practices. While 78% of companies have established base pay ranges, fewer than half possess a formal, written compensation philosophy. This gap extends to mobility and travel; although 58% of firms require employee travel, only 28% have codified policies for the associated benefits. Priya Kapila, partner and head of FMI’s Compensation team, emphasized that companies must align their pay decisions with broader business goals to secure high-impact talent. As retention becomes a critical priority, the data suggests that firms are increasingly tying short-term incentives—now offered by 94% of participants—directly to corporate strategy to ensure that pay reflects performance and long-term organizational stability.
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