Despite reported upticks in employment applications, as well as increased responsiveness from subcontractors and other vendors, hiring and staff management can be difficult in a down economy.
Leading construction executives indicate various regional and trade-related differences, but the greatest overall challenge has little to do with managing the line of applicants at the door; rather, it involves matching the pipeline with the workforce. Contractors want to satisfy increasingly demanding customers while keeping the most skilled and versatile workers busy.
John Wallace, senior project manager for Seattle-based Edifice Construction Company, says it can be hard to address this challenge when the future is so unclear. "No one knows if this is going to be a V-shaped or U-shaped recession. Some projects are on back burners, but many clients continue to give us work, and we’re lucky because we didn’t over-hire after the last cycle," he says.
Careful hiring during a boom cycle means avoiding painful layoffs in a weak economy.
To go beyond a reactive survival mode, which can signal desperation, smart construction companies adapt their workforce development strategies to proactively address six risks and opportunities.
- Avoid overstaffing. In a lower margin or less predictable environment, it’s unwise to sustain high bench costs. When a company bids work in low single-digit margins, how much excess staff overhead can be afforded?
- Balance the workforce. Try to keep the right mix of superintendents, journeymen and apprentices busy—and reward diversity of skill sets. Self-performing more work can keep a company’s best employees busy. Then, when things pick up, it can go back to subbing out more work.
- Involve human resources professionals in operational planning sessions.
- Don’t scrimp on safety or personal communication. Heightening customer communications is crucial to success.
- Hire selectively. Take the time to find the best fit possible. Also, consider using temporary employees. Careerbuilder.comreports 28 percent of employers anticipate hiring freelancers or contractors to support their business as they wait for the economy to bounce back.
- Consider niche strategies to lock out more generalized competitors. For example, consider shifting from big-box store construction to smaller commercial opportunities.
Diane Keithly, CFO of Seattle-based Keithly Electric, sees the current economy as an employer’s market. "If you can hire, take the time to find the right fit. There are plenty of people looking," she says.
During this time, contractors must work smarter and more openly.
“The customer and employee relationships both require a lot of touches. A contractor can avoid surprises by pairing operations with human resources to really look down the pike. HR has to be in the production meetings,” says Maureen Underwood, senior vice president of the People Department at TDIndustries, Dallas. “Second, a contractor today has to engage the whole employee: communicate, communicate, communicate. As an employee-owned company, we want our partners to stay engaged and productive so we reach beyond the jobsite.”
The business of construction is about building relationships. That’s what makes a recession feel so personal; it affects valued customers, trusted suppliers and long-time craftworkers.
Contractors don’t want to over commit and then have to lay off employees. By acting with caution and discipline now, contractors will be more ready for the recovery later.