The Future of the Construction Industry

August 20 2007

Part 3: How to Attract and Retain Workers in the Future

The construction industry needs a paradigm shift in the way it deals with the workforce. The industry must develop a pro-worker environment because nothing less will attract and retain the necessary workers.

The industry must understand and accept the fact that the workforce is not being unreasonable. Considering factors such as income, stress, physical demands, potential growth, job security and working environment, higher wages may be needed to balance the equation. The Jobs Rated Almanac agrees with the workers, placing every construction trade in the bottom 20 percent of career opportunities. While the compensation issues can’t be ignored, other issues may be more important.

A contractor told me, “I have a bunch of stiffs working for me.” Exactly, they were bored stiff. Because the industry has had difficulty finding and retaining a sufficient number of skilled craftspeople, jobs have been dumbed down. While this works in the short term, it drives away the best workers. The industry must find ways to increase the complexity to attract the best skilled workers and achieve the resulting higher productivity and performance.

The labor shortage is real. The U.S. Bureau of Labor Statistics calculates that by the year 2010 there will more than 10 million unfilled jobs in the United States. Today the average age of construction trade workers is 56. That means that more than half of construction workers are scheduled to retire within the next nine years, causing an enormous problem – a huge brain drain.

Based on current demographics, it’s unlikely the industry can replace the number of people retiring, let alone deal with the increased demands. This is without addressing the estimated 15 to 25 percent of undocumented construction workers in the current workforce. The issues are complex because there is really a worldwide labor shortage, even in China. However, ignoring them will place your company at risk.

The options

A labor challenge such as the one faced by the construction industry can’t be resolved here, but this can provide insight into the labor problem. There is no single solution that fits all conditions. For example, three distinct age groups – 34 and younger, 35 through 54, and 55 and older – provide a different set of demands that must be balanced with those of the clients and the contractors.

The 55 and older group is the most important, especially in the short term, because of their numbers and experience. The industry must convince some of this group to not retire, or at least to not completely retire, because the industry needs their knowledge and skills. The industry must create flexible retirement arrangements and eliminate age bias. Two suggestions are sabbaticals and mentoring or training programs where the experienced individuals can share their knowledge with younger workers. Many mature workers are not ready to retire, but the industry leaves them little choice. Instead of losing these individuals to Home Depot, the industry must find ways to retain them.

The middle group, from 35 to 54, has different challenges. Many of them are bored and can’t wait to retire. The industry must find ways to make the job more interesting to engage this group. The key is more flexible work arrangements that allow adjustment of benefits and a work-life balance. To increase this group’s commitment, their employers must assign them new tasks and/or responsibilities that will allow them to share their expertise.

The youngest group probably poses the biggest challenge because many stakeholders believe they are unreasonable. To recruit and retain this group, they must be incorporated into their organization rapidly; they want independence and the ability to develop their skills. Being in on things motivates this group. Obviously, the industry can’t give them responsibilities they aren’t ready for, but it must give them as much as possible. In fact, this may be necessary because of the dilution of experience through retirements.

Greater flexibility

The industry must become more flexible in its business conduct. It must seek solutions, not justify outdated practices. Greater flexibility is required in the working environment, in the learning process and in compensation. Flexibility is a win-win situation that often pays off for the employer. The authors of Workforce Crisis wrote, “When workers can arrange their schedule to be on the job during their most productive times – and avoid prolonged and unproductive commutes – productivity rises.”

Flexible work environment: A flexible work environment includes flexible time, reduced time and flexible places. These issues may have the largest resistance because of their perceived disruption. While they involve numerous stakeholders and can be complex, these steps should be considered. A few specific changes are outlined below.

• Flexible work hours: For example, why can’t workers work four 10-hour days? This would create three-day weekends for workers who desire greater life balance while still providing a makeup day for bad whether. Saturdays could also be an optional makeup day for those not reaching forty hours of work for the week. Also, if projects had 10-hour days, then other workers could have a range of time when they could show up for work. This would allow people to shift their arrival times to avoid rush hour or allow parents to drop off children at school before work.

• Employment guarantee: One of the major negatives about the construction industry is the off time. For example, during the winter season, many northern contractors lay off their craftspeople. Then in the spring they act surprised that the workforce has shrunk. Combining various options to create a realistic solution can reduce this challenge. For example, a contractor could maintain a core workforce that is sufficient for the majority of its needs. When demands exceed that level, it could bring in part-time workers, use some limited overtime or subcontract some work. During slowdowns, the contractor would have a smaller workforce and less trouble finding work to keep busy. Instead of laying off workers during the winter, contractors could schedule work that could be done inside in preparation for the spring or perform contract work that could be delayed until winter months. Cross training would also help reduce the required workforce. If a worker must be let go during the winter, the worker can be a mature worker who wants fewer hours.

• Leadership: The industry needs to focus on managing through leadership, which appeals to the majority of workers, instead of command and control. Today’s worker wants to be led and assume responsibility for his performance – not bossed around. This requires training him then getting out of his way. Workers no longer accept being hired from the neck down. Equally important, the industry needs today’s workers to use their brains to improve productivity and profitability.

Flexible learning: The industry must invest more in training because the best solution to the labor shortage is to increase productivity. Since the industry’s efficiency is about 40 percent, if the industry doubles its productivity to 80 percent, it would cut the labor demand in half. This isn’t a ridiculous goal; Toyota and other manufacturers actually did double their productivity when they implemented lean production. I will discuss lean construction in the next report.

Greater flexibility is needed in cross training, but it could actually lower the demand for workers. This has often been resisted, but that was when there was a surplus of workers, not a shortage. Young workers want to be engaged sooner, so their training needs to be revised to reflect that requirement. Instead of forcing new workers to go to school at night, the industry should consider paying them to go to class during work hours one day a week. This is necessary because other industries do that. If the construction industry wants to compete, it must adapt.

Flexible compensation: Profit sharing for craftspeople is probably needed. Again, the reason is simple: other industries are offering this incentive. In contrast, if wages are established at peak business times, the contractor has serious problems during slowdowns. If wages are established during slow times, then the worker feels gypped when business takes off. This can negatively impact productivity, causing an artificial wage increase. A better approach is to establish a fair core wage and allow it to be adjusted automatically when profits increase. This gives the worker a stake in productivity whether times are good or bad.

Craft training programs need to better reflect workers’ short-term needs. For example, an apprentice carpenter working for a concrete form contractor doesn’t need to spend four years learning about millwork, drywall or ceiling installations to be a journeyman concrete form carpenter. This approach would engage workers as they want to be engaged. Besides if they can do the job, why not? Of course, the carpenter should be encouraged, possibly through additional compensation, to continue his education and improve his worth through cross training.

There needs to be flexibility in individual compensation. For example, not all craftspeople are equal. There probably should be a minimum wage for a journeyman, but high performers can earn additional wages. The problem is high performers are discouraged by their peers because their peers are afraid they will have to perform at higher levels or they will get fired. All baseball players aren’t paid the same, so why should craftspeople be paid the same? When workers are compensated for high performance, it encourages high performance. When profit sharing exists, all the workers benefit from the high performers, so no one will complain. Further, the lack of job security often leads to job slowdowns to drag out the work. However, if workers were confident they had a place to go, that wouldn’t be necessary.

Finally, the industry needs to develop some kind of health program to cover all its workers at a reasonable rate. Health benefits represent the single largest fear held by today’s workers. If the industry doesn’t find a way to provide this coverage, then it will have trouble attracting quality workers. The construction industry is at a major disadvantage because most companies are small and if they try to obtain their own insurance, they often end up with a poor policy or pay a severe penalty.

The above suggestions are certainly not an exhaustive study of the industry’s labor issues, but the discussion should provide food for thought. Time is of the essence! Unless the industry begins adapting its labor policies immediately, the consequences could be dire. Dr. Patricia Galloway, CEO of the Nielsen-Wurster Group, in her blog on ENR.com titled -What Project Controls Personnel Are Really in Demand? – explained that there is already a critical shortage of – project control – people. Guess what? If you think the industry has a problem attracting college graduates, that problem is nothing compared to the pending crisis of attracting qualified skilled craftspeople.

Ted Garrison, president of Garrison Associates, is a catalyst for change. As a consultant, author and speaker he provides breakthrough strategies for the construction industry by focusing on critical issues in leadership, project management, strategic thinking, strategic alliances and marketing. He can be reached at 800-861-0874 or by email at Growing@TedGarrison.com. For further information see his web page at www.TedGarrison.com.