Aggressive recruiting tactics have become commonplace in response to skilled trade shortages, and even small organizations and specialty contractors are hiring dedicated recruiters to get bodies through the door and into the field at a frantic pace.
Since urgency often precedes innovation, dramatic recruiting measures can be effective in the short term, but a more strategic approach to human-resource management could be the true panacea to long-term staffing woes and improved business performance.
Boomers are retiring, new apprentices are just beginning to trickle in, wages are skyrocketing and employee poaching is a regular occurrence. What to do in this market when the entire industry is struggling with the same issue?
Employees can be your most valuable competitive advantage, and implementing proactive human-resource strategies aligned to your business goals will benefit the entire organization. Barring the discovery of a secret cache of journeymen, the only realistic solution is to engage and retain the workers you already have.
Proactive efforts to reduce turnover, in lieu of reactive recruitment methods, can seem like a counterintuitive response to the current pace of industry growth. However, taking the time to align human-resource strategies with the organization’s business objectives will result in turnover reduction and improved employee engagement while boosting productivity and the bottom line.
Addressing turnover and understanding its related costs is crucial. The Bureau of Labor Statistics currently reports the median annual wage of plumbers, pipefitters and steamfitters to be $52,590. Using readily available financial data on separation, recruitment, hiring and onboarding expenses, we know turnover costs in this wage bracket to be at least 50% of an employee’s annual salary, or more than $26,000 to replace one skilled plumber.
Understandably, this calculation is subject to individual factors and markets, but with voluntary turnover rates in the construction industry surpassing 21% annually, dollars lost to turnover multiply quickly. Additionally, empirical support of dedicated retention and engagement efforts to reduce turnover comes from recent Gallup studies in which companies with high employee engagement have lower turnover, improved performance, fewer accidents, better per-share earnings and 21% higher profitability compared to low-engagement organizations.
Keeping Employees Happy
Adopting this proactive perspective during a period of labor shortages and work aplenty requires stepping back from urgency for an honest appraisal of the human-resource function in the organization to determine whether efforts are strategic or merely compliance driven. Like other human-resource initiatives, recruiting is an important and practical solution to a common problem but best utilized within the framework of a greater strategy.
Implementing a well-developed strategy can provide the foundation for both retention and recruiting, even in tight markets. In doing so, you will best protect your employees from passive recruiting tactics and become an obvious choice for active candidates seeking an environment where they feel valued and engaged. Leaders who make employee retention and engagement a priority have always been successful, and as Douglas Conant, former president and CEO of Campbell Soup Co., tweeted in 2015, “To win in the marketplace you must first win in the workplace.”
When recruiting is carried out in a shotgun approach, it might fill your employee roster quickly but will result long-term in artificially elevated salaries, lack of metrics for accountability, higher turnover rates and lower overall employee engagement. In welding terms, recruiting without an aligned strategy could provide you a tack when you really need a permanent weld.
Employee engagement is described as the passion, commitment and emotional connection that employees have for their organization and work. In the pursuit of turnover reduction, it’s important to develop an understanding of the most common components aligned with engagement: leadership, work environment, job design, learning and performance management.
Each element is individually valuable and can be strategically aligned and measured for success or modification as necessary. Assuming an organization has already met basic employee needs through competitive compensation and benefit practices and a safe working environment, these areas of focus can support an enriched environment for your employees to thrive and exert positive discretionary effort on behalf of the organization.
On a final note, an often overlooked opportunity to improve productivity is in institutional knowledge management, which often defaults to basic management of workplace data. The influx of new on-site technologies like building information modeling, artificial intelligence and virtual reality, combined with the potential loss of tacit industry knowledge through retirement attrition, elicits a prime opportunity to manage the internal sharing and transfer of knowledge among tradespeople.
Apprenticeships and on-the-job training were often sufficient in the past, but reciprocal-mentoring programs can become a viable option where demographic labor changes require a fresh response to mastering the learning curve. By pairing new and experienced tradespeople as intergenerational learning partners, institutional knowledge transfer is expedited, benefiting both the organization and the industry as a whole.
Regular evaluation of human-resource practices is crucial to knowing what is effective versus imprudent. Random efforts to focus on recruitment at all costs seem reckless when considering the financial benefits of reducing turnover rates through strategic human-resource plans and improved employee-engagement efforts.
Appreciating the employees of an organization as its internal stakeholders while maximizing each employee’s potential to improve the bottom line is just good business practice. Organizations that appreciate this perspective and effectively utilize these strategies stand to improve their competitive advantage and create lasting value over their competition.