Talent is the backbone of every organization. This is especially true in construction, where as a services-heavy industry, your people represent one of your biggest cost centers and drive a huge component of your company’s financial output.
With projects growing in complexity and operating with the constraints of widespread industry workforce shortages, there’s an opportunity to shine a spotlight on Human Resources (HR) as a strategic function. That said, many such departments in the industry today look much the same as in previous decades. Pioneering organizations in construction are already evaluating how their HR function can set them apart from the pack. There’s good reason to believe this strategy is a winner.
You’re likely well-aware that your talent represents a big part of the reason you secure a fresh bid or repeat client work. Further, project A-teams often subsidize the margin-losing projects both through their own masterful orchestration of work, and their ability to attract strong collaborators in procurement. Losing key team members can mean wasted years of training & development, costly re-hiring, and potentially the loss of client business.
More broadly, research shows professional-services companies (such as those in construction) can build a financial advantage by investing in talent. McKinsey surveyed 800 companies globally, and found that “healthy” companies generated total returns 3x higher than their “unhealthy” counterparts. Healthy services companies specifically did so by developing a high-quality talent & knowledge base, where talent is attracted, nurtured and motivated, resulting in highly-skilled individual performers.
While these insights may not be new to all readers, getting started can be daunting. Day-to-day work leaves little time to initiate big organizational change, and off-the-shelf HRIS tools can be insufficient for the industry. When it comes to HR innovation, growth-minded construction companies are encouraged to adopt the following measures where possible.
Companies should aim for frictionless information-sharing between HR and its critical collaborators, such as marketing, business development, and pre-construction. We find that while these communications do take place, in many cases it’s on an ad hoc basis, and rarely are back-end data systems used across departments. This tees up a scenario of costly time delays and the “broken telephone” effect. By improving accessibility to workforce data, your HR team will begin seeing an impact in the following ways:
According to Gallup, organizations with higher employee engagement see 21% higher profitability than their less-engaged peers. This is due to improved productivity, retention, and reduced accidents. Conversely, lost productivity arising from time spent unengaged equates to 18% of employees’ annual salaries.
Engagement is crucial for improving employee retention. According to the Corporate Leadership Council, highly engaged workers are 87% less likely to leave their current company. The same study also revealed that the top companies to work at had an average voluntary turnover rate of 13% compared to 29% of other businesses in the same industry.
Further, hiring to replace lost talent is resource-intensive: it costs North American employers over $4,000 and 42 days to hire and train new employees. The ongoing labor supply constraints in the construction industry, exacerbated by short-notice hiring requests, place renewed emphasis on retaining your in-demand professionals.
Over 50% of North American companies have invested in improving their DE&I practices and hiring. It was made clear during Bridgit’s visit to the 2021 C-suite Construction Industry Round Table, and from the inaugural Construction Inclusion Week’s 1,100 contractor participants, that DE&I is a primary concern for the industry. In an industry with ethnic, racial, and gender representation far skewed from national averages, this is a tall order. But some are stepping up to the task. For example, many large general contractors have assembled dedicated DE&I committees with the goal of improving employee engagement, building a stronger brand, and enhancing their ability to acquire strong talent.
DE&I is not a fluffy marketing topic. A 2020 National Institute of Building Sciences study found that 60% of built world employees experience discrimination and/or prejudice at work. Research from the University of Houston shows that 65% of those who experience such exclusionary behaviours would leave or consider leaving their organizations, and that it costs an employer 21% of the employee’s salary upon their departure. Reducing the above figures would have a clear financial impact on both industry and company levels.
Diverse hiring can directly address labor shortages. Carrie Freestone, an economist at RBC, says that the gap between women's and men's participation in the labor force costs the Canadian economy CAD $100 billion (USD $79 billion) each year. Canada’s maritime province of Newfoundland & Labrador aimed to directly address this through funding of the Office to Advance Women Apprentices, which helped connect contractors with tradeswomen and mandated the hiring of underrepresented populations on major projects. What was the result? Within six years, the proportion of tradeswomen working in the region was 4x the national average.
Performance is likely to improve among more diverse workforces, too. McKinsey’s Diversity Matters report states that companies in the top quartile of racial and gender diversity are 25% more likely to have financial returns above national industry medians. In an industry where each project is uniquely complex, this is invaluable. Fresh perspectives bring new solutions to old problems.
Industry Rehabilitation Plan, a staggering 83% of construction workers have experienced moderate to severe mental health issues. The CDC has also reported that construction has the highest suicide rate of all industries. This is four times the national average and five times greater than all other construction fatalities combined.
Helping your team manage stress, anxiety, and burnout keeps them engaged in their work, which reduces workplace accidents and helps retain top performers.
We recommend keeping an eye on your workforce utilization rates and check in on your employees’ well-being periodically. If a team member is spread too thin across multiple projects, try to have an open conversation about their workload and how it’s impacting them. Conversely, if a team member is being underutilized, try to find meaningful work to keep them engaged and reduce your bench costs.
Construction-specific software can help track relevant workforce data, provide insight into availability, utilization rates, hiring & training needs, and foster meaningful collaboration through improved data accessibility.
Reimagining HR as a strategic function won’t happen overnight, but with the right resources, planning, and technology, it is ripe for disruption. A greater focus on HR will equip construction companies to better connect the function to organizational outcomes, predict financial performance, create distance from the competition, and level up teams to create a stronger foundation for success.
If this topic interests you or you’d like to learn more about Bridgit, contact me at katheryn@gobridgit.com
About Bridgit: Bridgit’s mission is to help the construction industry maximize financial returns and reduce risk by centering around one of its most critical assets: human capital. The company’s flagship solution, Bridgit Bench, is a digital, cloud-based platform that helps general contractors plan and grow their workforce, leverage project data to improve bidding and staffing decisions, and forecast project pipelines to increase productivity and profitability.
