Hey, it’s Collin. Welcome to Engineering Echelons, a newsletter full of ideas and insights to help engineers excel at management.

Here’s what I’ve got for you this week.

• New and noteworthy news

• A management perspective to consider

• Leadership insights to delve into

• And more…

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Alright, let’s get into it.

Noteworthy Headlines

4Q2025 Construction cost insights report (Gordian)

Highlights:

• Data shows modest upward pressure in metals that are offset by stable or declining prices in other categories such as framing lumber and insulation.

• Mixed signals point to a construction pricing environment that is steadier than earlier in the year but still shaped by selective volatility and regional variation.

Caterpillar posts all-time Q3 sales record despite tariffs (ConstructionDive)

Highlights:

• Results came in higher than expected, driven by higher sales volume across its construction, resources and energy, and transportation segments.

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Management Perspective

It’s that time of year when managers are reviewing their employees’ contributions over the past year to recommend raises. Usually, managers have a number they can work with, such as a 4% total increase over the team’s current salary costs. That 4% then needs to be divvied up amongst team members somehow.

Whether you know it or not, this is one of the most consequential parts of your job as an engineering manager. How you approach compensation decisions shapes not just your team’s financial well-being, but also their motivation, retention, and perception of fairness.

Here’s a quick guide to help you make effective decisions.

Value performance

This is the biggest one I see messed up. Managers often feel the need to reward based on years of experience or tenure at the company, rather than focusing on performance.

Experience is an indicator of performance. It is the means to an end, not the end itself.

Similarly, managers feel the need to reward effort. Effort is a good thing to incentivize. But it needs to be tied to something. Working 60 hours a week but delivering poor quality work is not something to be rewarded.

Last point on performance: assess each individual’s performance trajectory. If someone is showing significant progress, look for ways to reinforce that behavior.

Consider relativity

Relativity comes in many forms. From a top-down perspective, you may think in terms of an employee’s raise compared to another’s. Or compared to the total percent raise you’re allocated.

But your employees probably don’t think that way. They are thinking about their raise in terms of how it compares to their past adjustments, inflation, or numbers they may be hearing from friends at another company.

Ultimately, if your employee doesn’t feel the compensation is adequate relative to their metric, they’re likely to feel underappreciated and may consider looking elsewhere.

Look for parity ranges

The keyword here is “ranges.” Not everyone needs to be paid the same amount. But people who are performing similarly should be compensated similarly. That range can differ from organization to organization, but there needs to be some methodology for determining an acceptable skew.

It’s normal to have some people outside of these ranges from time to time. The pay span should be dynamic and adjust to reflect all the other points made here as time goes on. Don’t expect perfection, but endeavor to push and pull numbers to make things as fair as possible.

Think about total compensation

Base salary is only part of the equation. Can you give end-of-year bonuses? What about spot bonuses throughout the year?

For some employees, money isn’t their biggest motivator. Look for other ways to reward each employee in ways that are specifically meaningful to them. But be careful: do not underestimate the impact of salary bumps, even for employees who don’t care as much as others.

Seek feedback

Ask the people your staff works with frequently. Project members, clients, administrative staff, project managers, and HR are all resources you should consult to get a more holistic understanding of each person’s contributions to the organization.

No matter how plugged in you are, there are always other viewpoints that can provide valuable feedback.

Document your reasoning

Recording your thoughts covers you on multiple fronts.

First off, this helps you organize your thoughts. When you discuss with each of your team members (see next point), you should be able to clearly articulate why they received what they did.

Second, writing down your process helps ensure you are being fair and rational. Hopefully you don’t get questioned about this, but you need to be prepared in case you do.

Lastly, this log guides you in future years. By looking back at what was decided in the past, you can better determine changes in the future.

Give feedback

This is one of the most underutilized tactics: tell the employee what they are receiving and why. If you don’t do this, a lot is left for interpretation and potential misunderstanding.

If done right, the raise received won’t come as a surprise. The combination of consistent one-on-ones throughout the year and the end-of-year performance review should all align with compensation changes.

Final thoughts

Merit raises are both art and science. You’re balancing individual performance, competing firms, market dynamics, team equity, company budgets, and more. It’s a tough part of the job, but good managers take the time to develop a fair process and communicate it.

My belief is this: I should be an advocate for my team and get them the best bump I can justify. In order to do that, I need to be clear and direct with them throughout the year about what it takes to receive the best raises. I’m here to support them, but as professionals, it’s ultimately up to them to perform.

Management Insights

Jensen Huang on feedback:

“I give feedback in front of everybody. Feedback is learning. For what reason are you the only person who should learn from this? We should all learn from that opportunity. I don’t take people aside. We’re not optimizing for not embarrassing somebody. We’re optimizing for the company learning from our mistakes.”

—

Bill Belichick on preparation:

“Preparation is never wasted, regardless of outcome.”

—

Alexandr Wang on how leaders set the tone:

“As a leader, you are the upper bound for how much anyone in your company will care. You need to do more, care more, attempt more than would seem reasonable. It will seem like overkill. But too much is the right amount.”

Management Resource

A tactical guide for managing up (First Round Review)

Basically everyone needs to manage up. General staff has to manage up to managers. Managers manage up to higher-level managers. Higher-level managers manage up to directors. Directors manage up to executives. Executives manage up to the Board of Directors. The board manages up to owners.

As such, this article serves as a good guide for everyone who needs to manage up.

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• Let me know if you’ve found something worth sharing.

• Let me know what challenges you’re having as a manager.

• Let me know what challenges you see other managers having.

Send me an email at [email protected]

Looking forward to hearing from you. See you next time.

Collin

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