While a downturn in economic activity is rarely welcome news in any field, the construction industry may soon have more bandwidth to tackle a long-simmering, high-stakes challenge with the potential to stymie future growth and profitability. A potential slowdown provides an opportune time for every firm to take a hard look at their leadership pipeline.
Much of the industry focus in recent years has been the dearth of construction workers to fill jobs to keep up with construction expansion needs (the Home Builders Institute estimated a shortfall of 2.2 million workers between now and 2024.) That problem still needs attention and hardly exists in a vacuum from the management deficits — but without question, leadership needs for the near- and long-term in construction have not gotten the consideration they deserve.
In 2019, well before the start of the pandemic, the average quarterly turnover rate in the construction industry as a whole — defined as the ratio of separations to total employment — was 17.4%, or about two percentage points higher than the average across all industries, according to U.S. Census Bureau data. The trend has worsened since given the increased pace of early retirements and other resignations over the past two and a half years.
So where is the next generation of superintendents, project and hiring managers, and executive team leadership coming from?
To a great extent, addressing the leadership “backlog,” requires bolstering your current hiring, retention and promotion practices. Younger workers today typically do not join a company expecting or hoping to stay there for decades, unlike new hires from previous generations. Yet, your strategic goal should include training and professional development opportunities that would alter that trend.
Leadership pipeline
Besides meeting current needs, improving retention at construction firms at all levels simultaneously helps to shore up the pipeline of future leaders. Companies need to focus on developing career paths that engage workers, keeps them fulfilled and incentivizes them to stay.
It’s important for current managers to keep in mind how their own actions affect employees of different generations. The command-and-control style of management familiar to most baby boomers is likely to turn off (and push out) younger workers who expect and thrive in more collaborative experiences with coworkers and bosses. And while plenty of individual characteristics exist, it’s important for managers to understand broadly how to influence and engage every generation.
Construction superintendents struggle if they get stuck in old-school ways of communicating. Some expect the people they manage should simply follow instructions and stay quiet with their own suggestions. Newer generations want their voices and ideas to be heard and respected.
Putting the spotlight on leadership development can’t come soon enough. Wipfli’s 2021 construction transition planning report revealed that nearly 90% of construction leaders said they plan to start transitioning out of their companies in the next decade. Owners have been retiring and exiting the business in waves, taking a wealth of knowledge and skills with them.
It’s generally preferable and easier to grow and develop talent from within a firm than go searching for outside individuals to fill leadership holes in an organization. Firms would be smart to beef up their internal training that emphasizes both the personal and professional development of team members.
When workers see that their employers want to help them meet career aspirations, they are much more likely to stay — and grow into leadership roles along the way.
DEI is everything
Diversity, equity, and inclusion is no longer an HR function that operates adjacent to company priorities. It should be part of every decision and action taken by a firm and should be woven into all aspects of the firm. Outreach to women and underrepresented minorities is the right thing to do and can be key for addressing shortages in both rank-and-file workers and the leadership pipeline.
One impossible-to-miss, underdeveloped opportunity involves tackling the gender gap. While strides have been made in this area, there is still room for improvement to change the longstanding industry culture that traditionally has not been welcoming to women.
Firms able to transform their culture and its reputation will have an easier time attracting a more diverse workforce, and not just for women workers but all under-represented minority groups. Improving those hiring trends also speaks volumes about your company values and positions your firm for a strong future. You’ll stand out from the crowd by instilling practices that promote DEI in one of the least diverse industries.
Tips for becoming an employer of choice
In today’s ultra-competitive hiring environment and beyond, consider these steps that can help you become and remain an employer of choice for members of every generation and background. And in the process, you’ll set up a leadership pathway that keeps you on solid footing and enables your firm to pursue ambitious plans for the future.
- Invest in employees by soliciting and providing feedback in order to develop technical skills, resourcefulness, people skills and leadership capabilities. Be aware of and embrace organization-wide retention initiatives, and coach and manage using this lens of knowledge.
- Collaborate with others across departmental functions, teams, job sites and trades locations/geographies. Encourage community partnerships to enhance employee opportunities as well as enhance understanding of the organization.
- Support the creation and execution of company core values and goals that will empower employees to stretch and develop knowledge, skills and abilities that contribute to the success of the organization and to the success of those served.
- Create and foster an environment on job sites and in other settings that welcomes diverse populations and respects the physical and emotional well-being of all workers. Mental health challenges run high in construction, which has a suicide rate four times higher than the national average. Programs supporting the integration of life and work are essential.
- Consistently seek, process and communicate information and knowledge to help employees serve their co-workers and customers to perform better and achieve their goals.
- Participate in on-going leadership training to remain relevant and sharp in your role as coach and manager. Provide additional leadership training opportunities for all supervisors. The future of your firm depends on it.
How Wipfli can help
Construction firms need an edge during these competitive times to attract candidates who are excited by your company’s vision and values. A steady exodus of leaders and other employees means you need to pay extra attention to developing the next generation of leaders. Wipfli advisors can help you identify and implement a comprehensive workforce strategy that factors in generational shifts and expands the diversity of your team to keep your business growing.
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