5 Challenges of Human Resource Management in the Construction Industry

Conor Quinn
February 10, 2022

The demand for construction services is already high and it’s only growing. The Infrastructure Investment and Jobs Act of 2021 is projected to pump an infusion of cash flow totaling $550 billion to public works, driving further demand for construction services. But will the challenges of human resource management in the construction industry prevent construction firms from pursuing high-value projects?

Adapting to disruption in the industry by hiring and retaining talent to meet evolving needs is key to construction business success. But none of these problems have quick, easy solutions. The current challenges of human resource management in the construction industry require refined, long-term solutions to keep construction firms on track to meet incoming project deadlines.

In a competitive market, effective human capital management could be the difference between successful construction firms and those that get left behind. To become one of the success stories, you need to know the talent management challenges faced by the industry so you can develop strategies for overcoming them.

Here are five of the biggest challenges confronting construction industry human resource management departments today.

Forecasting Employment Needs

Predicting talent needs in construction is extremely complex and often relies on contingent planning processes. Firms can win contracts with little notice, making it difficult to project how many workers you’ll need at any given time, or what skills your existing workforce must develop between projects.

But HR can help foster peace of mind by engaging with business leaders in scenario planning exercises that can help predict talent needs. This process informs your larger talent strategy. Start by looking at the types and sizes of projects you expect to bid on in the coming six, nine, and twelve months.

For example, if leaders anticipate winning several large contracts in the coming months, HR needs to look at the talent and skills needed for the best-case and worst-case scenarios along with everything in-between.

As you look at your project pipeline, consider these questions:

●    What human resources will you need if your firm lands all the business it has bid on?

●    Do you already have those resources or the ability to train for skills you need?

●    If not, do you have a pipeline or partnerships to realistically find the talent you need externally?

Consider the worst-case scenario, too:

●    If you don’t get the business you need, how will that impact your bottom line?

●    Will a lack of business in the pipeline force layoffs and, if so, who will you let go?

●    Would you trim highly-skilled workers who are harder to find but command larger paychecks or newer, less-skilled workers?

Run through similar exercises for different circumstances your business may encounter, including external factors like potential economic disruption, additional investments in public infrastructure, or another COVID-19 spike.

Looking at the business pipeline and planning for every possible scenario allows you to prepare to meet your business needs, no matter what happens.

Developing a Functional Talent Strategy

Given the complexity of the industry, construction talent strategies are difficult to conceptualize. It takes a lot of planning and agility to both anticipate and prepare for potential outcomes. To overcome this challenge, create a flexible action plan. Look at each possible scenario and identify actions you can take to meet its talent needs.

Return to your scenario planning exercises to predict the company’s trajectory. Talk to leaders about where they want to go and consider how the composition of your workforce must change to meet those goals. Construction typically relies on a mix of independent contractors and full-time employees, but finding the right blend often depends on the details of each scenario.

Contract labor is more affordable and allows you to be more flexible. You can bring in highly specialized workers for specific projects without committing them to full-time employment. But this can be risky since the contractors you need may not be available when you need them—especially when their skills are in such high demand.

Any full-time employees you hire should bring a flexible skillset to the job site. They need to be able to work on a variety of contracts and job types. Full-time employees (if you work hard to retain them) can also minimize the risks associated with finding talent to fulfill new contracts.

Find the right blend between specialization and multi-purpose talent to fulfill the business in the pipeline. Once you’ve determined the ideal composition of your workforce, assess the talent you have on-staff and available in your contractor pipeline. If that talent isn’t readily available, you’ll need to develop plans for finding it externally or upskilling your current workforce.

Work with talent acquisition along with learning and development leaders to define plans for acquiring and upskilling the talent you need. In firms with smaller HR teams, these plans will likely fall under the HR solutions umbrella. Prioritize how you deploy your HR team resources to put developing your talent strategy first.

Develop a contingent strategy for each scenario and test each strategy’s strengths, weaknesses, opportunities and threats. Your talent strategy must be flexible enough to react quickly as circumstances change. Quick pivots are possible if you’ve built a sufficient number of contingencies into your talent management strategy.

Revising Roles and Responsibilities

As the construction industry evolves, HR will need to revise traditional employee roles and responsibilities. As technology continues to advance, several functions may become condensed or be completely overtaken by automation. The workers in those roles will need to be reskilled to work alongside new technology, manage new tools, or serve other functions on the job site.

For example, the popularity of 3D-printedhomes continues to grow. But to adopt that technology at scale, construction firms will need to hire or train workers who can master 3D modeling software as well as operate and service the physical equipment.

Your scenario planning exercises and talent strategy provide blueprints for revising roles and responsibilities at your firm. Job descriptions should evolve to reflect the current state of the industry and the true responsibilities of each role.

An accurate (but flexible) job description is also a key marketing document when you’re looking to hire new talent. When the job posting clearly lays out expectations for the role, you’ll attract better candidates during the application process. To keep these documents up-to-date, revisit them during your annual scenario planning exercises.

Identifying and Closing Gaps in Skills

The constant changes in the marketplace, from the rise in automation to new trends in construction, require HR to continually upskill employees to help them remain functional. Start by reviewing your projected changes in roles and responsibilities. Identify the skills workers need to continue working effectively in those roles.

From there, HR needs to regularly assess the workforce to determine if those skills are already present. If not, then HR needs to develop and promote programs to fill the gaps.

Use the skills data you collect to create career paths customized to each role. As different roles evolve, the skillsets workers have honed can be applied to new positions or at other points in your business where these skills are lacking.

Since market needs and tools are constantly changing, identifying and closing skill gaps must be an ongoing process. New software tools like Building Information Modeling, Digital Twin and augmented and virtual reality are changing the way construction managers collaborate with project managers and developers to bring projects to life. Construction managers will also need new skills and training to make the most of these technologies.

If your firm has a learning and development officer, HR can collaborate with them to create the programs needed to close gaps in skills.

Attracting and Retaining Qualified Workers

The need for construction workers is reaching a crisis point. Most firms have opportunities to land huge contracts but can’t find the talent needed to move them forward. In fact, respondents to a recent Workforce Survey from the Associated General Contractors of America and Autodesk attributed 61% of project delays to labor shortages.

To tackle the issue head-on, HR and talent acquisition leaders must develop strategies for attracting and retaining qualified construction workers.

Begin by revisiting your total rewards package. Survey your current workforce to find out what benefits, opportunities, and experiences resonate the most. Consider conducting market research to find out what you could add to make your offerings more attractive. Review how your construction company is perceived on the market, job sites and social media. This includes how you present as a diverse organization, the learning and development opportunities your company offers, and options for career mobility.

Safety is a huge piece of the retention puzzle. Without an effective safety training program and positive track record, turnover rates will increase as workers leave to find employment in safer work environments.

To retain the talent you already have within your company, survey your workforce to find out what they need to remain invested and engaged. Conduct stay interviews to learn what you’re doing right already along with what you could be doing better.

Overcoming the Challenges of Human Resource Management in Construction

Although construction HR is primarily associated with maintaining compliance with labor laws, its function must take on a more strategic role to address the current challenges of human resource management in the construction industry.

By working directly with leadership to understand and fill business needs, construction HR leaders can develop the strategies, action plans, and talent resources needed to keep their workforce healthy and thriving.

Conor Quinn
Partner Success Manager
HCM Software Specialist focused on client and partner success.

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