Here’s How to Conquer Construction Labor Shortages in 2016

People Development Is the Foundation for a Competitive Advantage in Construction

The construction industry faces a growing problem based on a shrinking resource. An FMI talent development survey published in October 2015 shed light on increased concern about labor shortages in the industry. Some 86 percent of survey respondents reported that their companies were experiencing skilled labor shortages. That’s a jump of more than 30 percent over the same survey two years ago, in which 53 percent of respondents claimed to be facing this challenge. It’s become increasingly clear that attracting and retaining good people will require looking beyond garden-variety hiring to include a focus on corporate culture, engagement and work-life quality.

To be sure, much of the blame for the labor shortage problem can be laid at the feet of the Great Recession, when significant numbers of workers were “downsized” or otherwise left the industry. The trouble is, these workers have yet to be replaced with workers of equal or better skills. Many, if not most, employers in the industry have responded to the problem by treating it as a “people problem.”

Applying the same principles they would apply to a construction project, employers have brought a hammer-and-nail solution approach to something that requires more thought. Companies are putting big dollars into training programs focused on sharpening employee skills and competencies. While training is important and has its place, if it’s not offered as part of a well-designed, individualized career development program, then training is simply a way of paying attention to human “doings” rather than considering employees as human “beings.”

Ken Wilson, founder of FMI’s Talent Development Group, points out, “Many companies just seem to want to check off the [training] initiative from their list and convince themselves that they are making a commitment to their people.”

With millennials (individuals born between 1980 and 2000) now making up 34 percent of the nation’s workforce — a number that’s expected to grow to 50 percent by 2020 — construction companies are faced with the even greater challenge of attracting and retaining a dynamic, young workforce. These young people want to do more than just punch a clock and take home a paycheck. They are looking to add value, make an impact and find meaning in what they’re doing. They also want to learn, improve and advance quickly through an organization and understand career advancement opportunities.

This is particularly relevant for companies in the construction industry, where many firms lack well-defined (or modernized!) career tracks, comprehensive talent development programs and/or effective leadership platforms. According to FMI’s 2015 talent development survey, only 19 percent of respondents define career paths for their employees — a human capital area that has been neglected far too long in the construction industry (Figure 1).
“The young people in this industry are eager to contribute and participate,” says Barbara Jackson, director at the Franklin L. Burns School of Real Estate and Construction Management at the University of Denver. “Oftentimes, standard job descriptions and policies stand in the way of them contributing at a level that would bring real value to the companies that they work for. This can result in frustrations, and ultimately people move on to more progressive firms and industries.”

Are Employers Missing the Employee Engagement Mark?

According to FMI’s talent development survey, competitive pay, enjoyable work environments and training opportunities are the top three methods that survey respondents use to retain key talent in the construction industry (Figure 1). Conversely, when we asked millennials in the industry how they stay engaged, they listed competitive pay, work-life balance and personal development as their top choices.

Given these findings, are employers missing the mark when it comes to employee engagement in the construction workforce? Offering competitive pay is important — perhaps even a prerequisite in today’s tight labor market — but beyond that, companies must present opportunities to their employees in a strategic and compelling way. As mentioned earlier, training is important and has its place, but if that training isn’t part of a well thought out career development program then it quickly becomes an expensive and time-consuming exercise for everyone involved.

Findings from our 2015 millennial study confirm this notion. Of the respondents indicating that they understood their career paths and the opportunities within their firms, 81 percent expected to stay more than five years at their company. Conversely, of those respondents not expecting to stay more than five years, one-third were unsure of their current role responsibilities and expectations. This isn’t necessarily a generational or age phenomenon. Rather, it seems that aspirations — more than age — determine why people remain with their companies or move on. From our research, it is evident that millennials care as much as older workers about career opportunities and getting ahead.

Engagement Starts at the Top

Culture and engagement have become strategic priorities in today’s competitive business landscape. According to a recent global Deloitte study, 87 percent of organizations cited culture and engagement as one of their top challenges. It’s no secret that leaders set the tone for engagement in the workplace. This fact was confirmed in our research, where employees (both millennials and non-millennials) who perceived senior management’s commitment to their wellbeing were more engaged and planned to remain long term with their companies compared to those who didn’t feel appreciated or valued by their leaders (Figure 2).

In the construction industry, where employee turnover is notoriously high and cyclical due to economic fluctuations and local market conditions, company leaders must build corporate communities that truly inspire and engage employees long term and across all generations.

The generational workforce “gap” may not be as wide as some think. According to a recent IBM study, much like their predecessors, millennials are interested in job security and stability. And despite popular belief, they aren’t poised to switch jobs as soon as another opportunity presents itself. However, these younger workers come from a “connected” generation that truly values collaboration, teamwork and social opportunities. The question is, how can company leaders create a culture that leverages these strengths while also engaging older workers and staying true to its core missions and aspirations?

The answer to that question lies in the development of sustainable cultural structures that enable organizational connectedness and strong employee engagement. It’s not enough to simply purchase a high-end espresso machine for the break room or host a weekly happy hour on Friday evening. The work environment as a whole must embody daily collaboration that encourages millennials to tap into their connectedness, share new ideas and offer up solutions to client problems.

Senior leaders must also evoke an established commitment to the workforce’s wellbeing by creating a culture of ongoing learning and feedback. Millennials, for example, like receiving feedback on a continuous basis because it enables them to understand the impact of their contributions on the organization. It was noted that, “Being noticed for the hard work you are doing is a big deal in the construction industry. When an executive tells you they appreciate your hard work, it really goes a long way in the industry.”

The construction industry is well positioned for an infusion of millennial workers. Indeed, the timing is perfect, particularly with the new virtual design and construction tools and integrated project delivery methods requiring higher levels of collaboration within and among project teams. Having new, young people focused on a common purpose, effective processes, excellent communication and solid relationships will help engage workers of all ages and transform the industry over time.

What’s Next?

Looking ahead, the construction industry must redefine the role of “human resources” to a much broader approach that gives top human capital executives a seat at the senior leadership table. This will require new tools, metrics and analytical capabilities that translate qualitative workforce information into the quantitative language of growth and profitability. The challenges confronting those responsible for providing the human capital needed for their organizations will require strategies and practices that lead to a sustainable competitive edge. Among other things, this means developing and engaging employees in ways that don’t neatly correlate to the old way of doing things — especially in the case of millennials, who want to do more than just punch a clock and take home a paycheck. This newer generation of individuals wants to add value, make a difference to the business and derive a sense of purpose from their work.

The key to accomplishing this will hinge on taking a fresh look at expectations on the part of workers. Among the many legacies of the Great Recession, the lesson learned regarding human capital is resoundingly clear. Businesses that can integrate professional and personal development of staff will have the best chance of attracting and retaining quality employees.

Sabine Hoover is the content director with FMI Corp., Raleigh, N.C. She can be reached at shoover@fminet.com.