Click on the link to view the pdf of the survey report.

Jim Davis says he sees three major trends shaping the employment market in industrial distribution: Outsourcing, industry consolidation and the shifting demographics of the American workforce.

Davis is a recruiter with Russell Reynolds Associates, an executive search and assessment firm with 39 offices worldwide. He leads the company's distribution services and supply chain division in the Americas, recruiting senior-level executives for wholesaler-distributors, third-party logistics providers and related companies of all sizes. He says the trends he cites tend to drive up compensation levels for the industry's top executives, as companies seek more sophisticated, experienced managers to lead them through tough times and a changing market.

“I'm seeing a call for a higher level of professionalism … and you've got to pay for that professional,” says Davis, explaining the trends this way: Outsourcing by customers sends more business distributors' way, emphasizing their importance in the supply chain; consolidation contributes to a dearth of executive-level talent as seasoned entrepreneurs sell their businesses and retire; and a shrinking labor market means there are fewer top performers to choose from, as baby boomers retire and smaller generations line up to take their places.

It's a similar story at the non-executive level, where employers are seeking creative ways to compensate top performers even in a down economy, according to human resources consultant Nancye Combs.

“I am seeing much more pay for performance,” says Combs, who works with companies of all sizes in a range of industries, including industrial distribution. “Now we are rewarding people who do great things—and the mediocre people need to find a place to work where results are not important.”

These trends are in line with INDUSTRIAL DISTRIBUTION's 2008 Compensation and Job Satisfaction Study, conducted in February and published this month on our Web site. Though the weakening economy is a top concern to many industry professionals, our study shows they are doing well overall and are largely satisfied with their jobs. More than 500 readers responded, citing a 5 percent raise in 2008 to a median paycheck of $80,000 a year. The average pay raise nationwide was 3.8 percent in 2008 and has remained below four percent for the last three years, according to Combs.

What's more, respondents to our survey agree that performance-based pay is important, noting that it represents 15 percent of their annual salary. And when it comes to job satisfaction, nearly 60 percent of respondents said they are either extremely satisfied or very satisfied with their jobs.

Despite these trends, a portion of industry workers say their companies are feeling the stress of tough times and, as a result, say they feel overworked and underpaid. More than three-quarters of respondents told us they've taken on additional job responsibilities in the past two to three years, for example, and 36 percent say they'd leave their job for a higher-paying one.

ID's Compensation Survey highlights industry pay each year. What follows is a look at the trends and issues facing workers at all levels.

In February, ID surveyed readers via e-mail, the results of which were tabulated by Research Results, an independent research firm. Respondents include executives, middle managers, salespeople and customer service representatives.

We found that: Owners, presidents and CEOs earn a median annual paycheck of $137,500; sales/marketing mangers earn $107,500; outside salespeople earn $71,000; and inside salespeople earn $48,000. All figures are based on median scores and represent salary plus bonus/commission.

Those figures are in line with other industry studies. For example, the 2006 Cross-Industry Compensation Report by the Profit Planning Group showed that industrial distribution executives earn an average of $170,000 in total compensation; sales managers earn an average of $84,000; outside salespeople earn $62,000; and inside salespeople earn an average of $42,000. PPG is a financial consulting company for small to mid-sized businesses. Its Cross-Industry Compensation Report is published every two years. The 2006 report was the most recently published data available at press time and is based on 2005 earnings data for distributors in a range of vertical markets.

A closer look at ID's data reveals a snapshot of the typical distribution professional. He (89 percent of respondents were men) earns a median salary of $80,000, received a 5 percent pay increase this year and spends an average of 51 hours per week at work. He is 47 years old, has 20 years of industry experience and has been with his present company for 13 years. Most respondents report having a bachelor's degree, though the majority say their degree is in something other than industrial distribution. And they say that, on average, 15 percent of their salary is variable and based on certain performance measures.

Those with management titles earn a median paycheck of $87,400 a year and those with sales titles earn $75,000 a year. From a regional perspective, professionals in the western states take home a higher paycheck than their colleagues in the rest of the country. Respondents in the West report earning median compensation of $100,000 a year, while those in the South said they earn $80,000, followed by the Northeast at $79,500 and the Midwest at $78,000 a year.

Not surprisingly, employees with the longest company tenure are paid more: Those who've been with their present company for more than 20 years report a median income of $90,000 while those with 10 to 19 years' tenure report earning $85,000 and those with less than 10 years at their companies said they earn a median paycheck of $74,200.

In terms of benefits, medical and dental insurance are givens, and more than 80 percent say they have a 401K/pension plan. In addition, roughly half of respondents say they receive professional training/development as a company benefit and also participate in a profit-sharing plan. When asked which benefit is most important to them, 65 percent of respondents cite a 401K/pension plan.

Seventy-seven percent of industry professionals say they've taken on additional job responsibilities in the last two or three years and, despite the industry's rising pay levels, many say they're not being compensated for it. When asked what they dislike most about their jobs, “additional workload” and “salary” ranked second and third, respectively. “Lack of management support” is the number one dislike. What's more, respondents say the primary reason they would leave their present job is for a higher-paying one.

The weakening economy may be a key factor here, as many companies seek to do more with fewer resources. Industry professionals list the economy as their top concern by a wide margin: 45 percent say economic pressures are at the top of their list, followed by management support (14 percent), job security (12 percent) and keeping current on technology (10 percent). One-quarter of respondents say their companies have implemented hiring freezes or lay-offs in the last 12 months.

“Although my company is a leader in the markets they serve, economic conditions are creating uncertainties,” one respondent tells us.

These findings don't surprise Combs, who says the pressures of a weakening economy can create an unhappy workforce. This is especially true among Generation X and Y workers, who place a higher emphasis on work/life balance than their baby-boomer counterparts and are experiencing these pressures for the first time.

“We have a rising cost of living—enormously rising—and we have [generations] of workers who are never going to work like their dad and grand-dad or mother and grandmother worked—and now they're being asked to do exactly that,” Combs says, citing downsizing at all levels and the need for existing employees to pick up the slack. “Particularly with Generation X, they want to be paid. They're saying, 'You want me to work extra? Sure, give me the money and I will.'”

The good news is, many employees understand the cyclical nature of business and realize that conditions will eventually improve, Combs adds.

“Some [employees] will adjust, some will leave and some will be bitter and do bad work,” she explains. “And some are smart enough to know, 'Hey, this will get better.' We have some smart young people today in the professional ranks.”

Combs adds that many of those people will, in fact, be rewarded for their efforts—especially in distribution, where global market forces are emphasizing the need for new talent.

“[Distributors] hold a wonderful niche in that, no matter where it's made in the world, when it comes to our borders, we have a role in getting it where it needs to go. So customer service and sales and marketing have become incredibly important to us. We're looking for people who can do that work. And if you can do that work, you've got a chance in this industry for being successful and well rewarded.”

Despite economic pressures and pay concerns, most distributors enjoy what they do and would recommend a career in the industry to young people entering the workforce.

Nearly 60 percent of respondents say they are either extremely satisfied or very satisfied with their jobs. They say they are most satisfied with their companies' financial standing, location and the relationships they have with their colleagues. Thirty-three percent of respondents say they are somewhat satisfied with their jobs, 8 percent say they are somewhat dissatisfied and just 1 percent say they are very dissatisfied.

So, what do the satisfied workers like most about their jobs? By a wide margin, they say simply, “the work itself” (43 percent). The daily challenges of their jobs are a distant second when it comes to job satisfaction (18 percent).

As one respondent tells us, “Every job has its downside, but I enjoy providing a service to companies that results in solutions to their everyday problems.”

Another respondent refers to his job as challenging, with a great work environment, adding that, “Growing this company has been fun.”

Distributors say the most difficult challenges they face include competition, staffing, time management and communication. They point to price competition from “big box” distributors and the race to reach customers online as key issues.

Eighty percent of respondents say they'd recommend a career in industrial distribution to someone just starting out or to those looking for a career change. Some of their reasons are that the industry is “challenging and rewarding,” offers “excellent financial opportunities and [is] very rewarding personally,” and gives workers “complete control of your own destiny.”

“[Industrial distribution] is challenging,” another respondent says. “Our industry must change quickly; business is much different than it was even three years ago.”

And according to another, “I believe the skills attained working in industrial distribution can form a solid background for many types of career paths.”

For some industry professionals, the people side of the business is the greatest attraction.

As yet another respondent puts it, “You won't get rich, but you will have a comfortable income and meet a lot of great people.”