In his book Good to Great, Jim Collins noted “The old adage ‘People are your most important asset’ is wrong. People are not your most important asset. The Right people are.” Of course, Collins is right. The end goal is to have a robust organization that sports the right people in the right positions, with a set of systems and a culture that keeps them in those positions and excited to be there.
However, the current reality for the construction industry is the challenge of not only an insufficient quantity of craft workers, supervisors, managers and staff for available positions, but also an industry that may not appear “sexy” enough to attract and retain the younger Millennials or the upcoming Generation Z. A recent article on insulation.org referenced polling high school students on their career choice options. The role “construction worker” ranked 247 out of the 250 options presented. Interesting as well, craft workers were asked if they would encourage their children to follow in their footsteps and become craft workers themselves — surprisingly (or not?), 70% said no.
There is little debate that the construction industry appears to have its challenges as it competes against other industries for new talent. Couple that with the Construction Industry Institute (CII) research findings that “contractors with an employee retention rate of 80% or higher realize increased job profits, complete more projects on time or ahead of schedule, and have better project safety performance” and you have a strong argument for how important retaining employees is for the building and construction industry. Many companies address this issue by treating the symptoms of the turnovers, which often show up as employee complaints, unresolved disputes and the overall malaise that appears before an employee decides to give notice, but it is questionable if they realize the increased employee retention they are looking for.
A common mistake that companies may make when addressing poor employee retention (or high turnover) is viewing it as an isolated issue. Employee retention is a primary element of a bigger goal — a strong and consistent staff. Other primary elements include recruiting and hiring quality employees as well as identifying and developing those employees. This approach to an organization’s human resources increases the probability that you will not only improve your employee retention rate, but that you also have a higher percentage of employees you actually want to retain!
BEGIN AT THE BEGINNING
Jim Collins also refers to getting the “right people on the bus.” Strong employee retention begins at the beginning — with hiring and recruiting.
If your company relies on collecting and sifting through a couple hundred resumes, a screening interview or two and a generic background check as your hiring process, you are in good company. Small, midsize and even some large companies are still using this traditional approach to finding candidates. However, ramping up your recruitment to purposefully include both “push and pull’ recruiting strategies and assessments may improve your chances of initially getting the right people to your front door.
The recruiting process can be active and/or passive; companies can reach out to candidates or sit back and let them come. Push activities (active recruiting) reach out to the target prospects. This includes using recruiters, mailers, targeted high school and college career fairs and referral follow-ups. Building and construction recruiters are beginning to see the value of using social media options (another push activity) when searching for the next generation of employees. A blog post by Todd Yerman on HART’s website discusses the new world of social recruiting for the building and construction industry. He contends Facebook and Twitter are sites to build community by highlighting corporate culture and marketing an ideal working environment, while LinkedIn can be a powerful social recruiting tool, especially when leveraging the business account upgrades. Using traditional pull activities, such as advertising on search engines, the company website and in newspapers and journals — in conjunction with more active push activities — creates a complementary approach to focused recruiting.
“Most managers hire for skills, knowledge and background. Then they fire for behavior,” states Bruce Hubby, founder of PDP, Inc., a company that provides assessments for businesses. Hubby contends that we would be much more successful if we hired for strengths that match the requirements of the position and then train the person in the skills to do the job. Truthfully, doesn’t that align with the reality in the industry? How many times do we terminate an employee because he/she does not know how to do the job? More often we terminate for some behavior — tardiness, laziness, lack of attention to the job, poor work ethic. If that is the case in your organization, spending additional time on the front end of the process and a shift in the profile that you are hiring could positively impact your ability to retain the best employees.
WHAT KEEPS ‘EM (THE RIGHT PEOPLE) GOING?
Hiring and getting the right employees on board is an essential first step to creating a strong workforce. Retaining that workforce requires keeping this talent by using a variety of strategies, including onboarding and training, opportunities for increased work challenges, purposeful engagement and appropriate compensation.
Most organizations understand the need for onboarding and training for new employees, even though arguably most would admit that they could do a better job. What often is overlooked is training for those who are hired for, or promoted to, management positions. Poor or no management training can affect how employees view their bosses, positions and roles in your company, which can negatively affect retention rates. Moreover, recruitment also can be negatively affected if employees who are unhappy with the work environment speak with potential hires. The proper training for managers on both leadership skills and employee expectations creates an essential framework for your workforce.
Being valued at work rates the same as, or higher than, compensation in many surveys. Employers agree that there is value in promoting from within and that they are looking for their employees to take on more challenging work or higher-level positions as they grow and learn. What most employers do not do well is to purposefully communicate these thoughts or provide any insight to employees on how to work through the processes for more challenging or advanced positions. By communicating with employees regularly on their performance and providing a clear path for advancement and more responsibility, you increase the probability of keeping employees engaged and invested in both their own professional growth and the company.
There is truth to the adage that “employees do what they are compensated for.” Compensation needs to be in line with the position and the expectations for that position. The balance between a rewarding salary and industry-competitive compensation is on the mind of most new hires and current employees If employers want to retain their employees, it should be on their minds as well.
WHERE IS THE VALUE?
A Cornell University study estimates the cost of losing a single employee to turnover is 30% of an hourly employee’s yearly salary and 150% of a manager’s salary. The total cost of terminating an employee includes a number of administrative separation costs, the cost of replacing the employee, onboarding and training costs for the new employee and, specifically challenging for the construction industry, the time costs of having open positions (downtime) during a project or a number of projects. It only makes sense then to focus our efforts and resources on retaining, rather than constantly replacing, our employee workforce.
Shirley Ramos is a training consultant with FMI Corporation. She can be reached at 303.398.7213 or via email at email@example.com.