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5 Strategies for Talent Retention in the Construction Industry That Go Beyond Compensation

January 30, 2024 6 Min Read Article, Construction, Talent Advisory
Mark A. Guillaume, CPA, CCIFP Director, Audit & Accounting, Construction & Real Estate Industry Group Co-Leader

The U.S. construction industry has expanded over the past several years, which has contributed to difficulties in finding skilled construction personnel. In addition, the amount of turnover in construction is higher than in most industries because of the physical demand of the work, lower wage growth than other industries, and age demographics of the workforce. According to the U.S. Bureau of Labor Statistics, the construction industry had 427,000 job openings as of September 2023, a 5.1 percent job opening rate. In other words, for every 100 construction jobs, there are more than five openings. 

Skilled labor shortages could continue, with the expected $1.25 trillion in spending on infrastructure for roads, bridges, broadband, airports, rail, water, and power and energy efficiency over the next five to ten years from the Infrastructure Investment and Jobs Act and the Inflation Reduction Act. The aging workforce, changing demographics, lack of candidates entering the workforce, and expected industry needs present workforce challenges for construction companies.

Offering higher compensation only goes so far, and there are always competitors out there that may offer more. In a lot of cases, compensation increases are not feasible as there are other factors at play that put pricing pressure on the overall cost of construction projects, including higher interest rates and higher material costs (because of inflation and supply shortages). In order to maintain a sustainable recruiting and retention program, it’s a good idea to explore other avenues. 

To be able to recruit and retain employees in today’s environment, it is vital to have a company culture that focuses on employees and their careers.

Here are five potential strategies to create a culture where employees want to work.

Talent Retention Strategy #1: Continually Engage with Employees

  • Onboarding process – After investing time and resources to recruit a new employee, do not fumble it with the onboarding process. New employees are excited to start the job so they can learn and contribute to the organization. If your onboarding process only entails paperwork and does not promote the company’s culture and support the new employee in their role, it can result in lower productivity and potentially higher turnover. You do not want them questioning if they made the right choice early on in their new job.
  • Behavioral assessments – Every employee is different – how they learn, what motivates them, and what they need from their career to feel satisfied. Having employees participate in behavioral assessments like the Predictive Index helps provide insight into employees’ drives, needs, and behaviors. This can help their managers and other employees better support them as they have more insight into behavioral attributes.
  • Employee engagement – Meet with employees throughout the year, rather than only during an annual evaluation, to get their feedback on the company and their role. This can help them feel more engaged with the company as they feel they have a voice and are a valued member of the team.

Talent Retention Strategy #2: Provide Training and Development Programs and Opportunities for Advancement

Employees want to be able to advance in their career and be challenged. By developing programs to encourage continuous learning, you are helping these employees succeed, which in turn creates loyalty. Design a training and development program that includes both internal and external resources. You could also consider tuition reimbursement for some advanced development programs. Not everyone will be able to or want to become a manager, but there should still be opportunities for your employees to advance in their careers.

When designing a training program, a needs assessment should be included so that employees can work on their development in the identified areas. Don’t just train to train as that can be cost prohibitive. It’s best to avoid investing in training to develop skills that either don’t apply or that the employee has already mastered. Training should be intentional and should include an evaluation of where the person is starting from and what you would like them to achieve.

Talent Retention Strategy #3: Provide Safe Working Conditions

Construction is a physically demanding job and there is always risk of injury. Making health and safety a priority shows employees that you care about them and are invested in their wellbeing.

Talent Retention Strategy #4: Develop Employee Benefit Programs That Exceed Expectations

  • Comprehensive benefit and healthcare packages – Compensation and benefits need to be competitive with the market. In addition, you could incorporate wellness or other programs to show your commitment to employees’ overall wellbeing.
  • Flexible work arrangements – With the physical nature of construction, it can be difficult to offer flexible work arrangements like some other industries. However, there may be ways to add some flexibility to the job to help with work-life balance concerns; for example, through shorter workdays or a shorter work week. Work productivity is the key; if productivity will be significantly impacted then it would not be a good option unless there are other plans in place to expand the number of employees, which is normally cost prohibitive.
  • Employee recognition – Rewarding and recognizing employees for their accomplishments can help them feel appreciated. If employees do not feel appreciated, they are more likely to check-out or leave. Providing recognition needs to be consistent, sincere, and should be documented. 
  • Team events or activities – Providing employees time to socialize with other people across the organization and develop a more personal relationship can promote employee engagement. They are not just an employee; they are part of a team.

Talent Retention Strategy #5: Message Continuity

Employees want to know that the company they are working for will exist in the future. Communicate the company’s story and its future direction through regular meetings with leadership and written communication. 

Also, develop the story about what makes your company unique that employees should proud to be part of. Creating a consistent message around your organization’s culture and providing testimonials from your employees helps promote the organization to future candidates and serves as a reminder of why it is a great place to work.

A strong company culture provides the foundation for recruiting and retention. By understanding and communicating your values and opportunities, you can promote a sense of employee belonging and contribute to the future success of the company.

If you have any questions or would like to have a conversation about how your construction company can implement effective talent retention strategies, please contact us or explore our Talent Advisory services.

Contact the Author

Mark A. Guillaume, CPA, CCIFP

Mark A. Guillaume, CPA, CCIFP

Director, Audit & Accounting, Construction & Real Estate Industry Group Co-Leader

Construction Specialist, Real Estate Specialist, Owner Operated Private Companies Specialist, Private Equity-Backed Companies Specialist

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