While a downturn in economic activity is rarely welcome news in any field, construction may soon have more bandwidth to tackle long-simmering, high-stakes challenges that have plagued the industry for years. A potential slowdown provides an opportune time for every firm to take a hard look at its leadership pipeline.

Much of the industry focus in recent years has been the shortage of construction workers to fill jobs to keep up with construction expansion needs, as 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 management deficits—but without question, leadership needs for the near and long term in construction have not gotten the consideration they deserve.

In 2019, prior to the pandemic, the average quarterly turnover rate in the construction industry as a whole was 17.4%, or about two percentage points higher than the average across all industries, according to U.S. Census Bureau data. This trend has only worsened over the past two-and-a-half years due to the increased pace of early retirements and widespread resignations. So, where is the next generation of superintendents, project and hiring managers and executive leaders coming from?

To a great extent, addressing the leadership pipeline requires bolstering your current hiring, growing and developing leaders from within, retention and promotion practices. The younger generation of workers are more prone to jump from company to company, unlike new hires from previous generations. 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 helps to shore up the pipeline of future leaders. Companies need to look to the long term. They need to focus on developing career paths that engage workers, keep them fulfilled and incentivize them to stay. Retention is just as important as recruiting.

Leadership and managing styles must also take a more flexible approach to cater to the different employee groups that make up your company. Current managers must 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 and every individual. For example, even communication methods have changed, as newer generations encourage curiosity and want their voices and ideas to be heard and respected as opposed to past generations that grew up in a workforce that encouraged following strict instructions and staying quiet with their own suggestions. 

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. And with them goes much experience, knowledge and skills. This creates an opportunity for a new generation of leaders—leaders who must be trained. There’s no better place to look than internally, as it’s cheaper, easier to grow and creates a sense of culture and internal promotion. For this to happen, firms need to beef up 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 critical

Diversity, equity and inclusion is no longer an HR function that operates adjacent to company priorities, and it should be considered and woven into decisions and actions taken by the firm. 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 that are able to create a culture and reputation that embraces diverse populations will have an easier time attracting a more diverse workforce—not just women but all underrepresented minority groups. This is a top-down approach where the culture change must begin with upper management and filter into the associates. It’s integral to have women and minorities in leadership positions, as it creates a unique stream of creativity, culture and critical thinking. You’ll stand out from the crowd by instilling practices that promote DEI in one of the least diverse industries, while also gaining a step on your competitors due to the diverse set of thinking present at all levels of the organization.

TIPS TO STAND OUT

In an ultra-competitive hiring environment, consider encouraging curiosity, showing appreciation and understanding work/life balance, as these steps 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: Solicit and provide feedback in order to develop technical skills, resourcefulness, people skills and leadership capabilities. Embrace organization-wide retention initiatives, and coach and manage using this lens of knowledge. 
• Collaboration: Work with others across departmental functions, teams, jobsites and trades locations/geographies. Expand your community footprint and partnerships to enhance employee opportunities. 
• Core values and goals: Create and execute company core values and goals to 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. 
• Employee well-being: Create and foster an environment on jobsites 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. 
• Leadership programs: Participate in ongoing leadership training to remain relevant and sharp in your role as coach and manager. Provide additional leadership training opportunities for all supervisors and those high potentials on a pathway to leadership. The future of your firm depends on it.

We have witnessed the stressful environment that is created during competitive times, which increases the importance of establishing an edge in the labor pool. The time is now to attract, retain and develop talent, because this talent is the next generation of leaders that will be impacting the bottom line at your company. The future is now.