2019—The Year of Talent: A Reflection on the Major Trends Affecting the Construction Industry for 2019 and Beyond

December 2018

 

by Gregg Schoppman, FMI

With a certain level of redundancy, the industry is still pondering the labor issues that continually wreak havoc on construction projects across the nation. In the face of amazing opportunity, the universal “governor’s switch” for the growth engine remains the war for talent. Talent at all levels seems to be the common denominator. The words “We can’t seem to find good people” remain an ever-present lamentation. However, this phrase is not new and continues to rear its ugly head, dating back to the 1980s. Yes, the 1980s. Scroll through various news releases and thought leadership over the last 40 years and the commonality of construction labor shortages seem to dominate the headlines. So, is it time to cut the charade and realize that this is an inevitable aspect of a challenging industry or proactively manage component of the business?

The “Year of Talent” appears to be an appropriate rallying cry for the New Year. In addition to its impact on a firm’s long-term ability to execute work, no one is getting any younger. Businesses are continually wrestling with succession depth for owners and simply business leaders in all facets of the organization. Best-of-class firms have managed to use this industry challenge as a opportunity to develop a strong, competitive yet collaborative, culture that accomplishes many things—soft/hard skill enhancement, business management education, improved communications (internal and external), morale improvement and ultimately leadership growth.

Talent is but one trend that is on the horizon for the New Year. While there is always a pall of a potential economic slowdown or market correction, businesses remain focused on developing a fact-based strategy to drive success. The key theme is not simply riding the wave of the market highs but in fact driving the wave and being in control of any uncertainly the market will bring.

The Year of Talent

This is not simply about training and education but a full, comprehensive program that examines the full complement of “people-focused” strategies. These include:

  • The Brand—What does an employee-driven market think about your firm? Why would they choose you in a sea of great organizations?
  • Recruiting—Where are you “fishing?” There is no “secret location” but how and where firms fish for talent has to be deliberate, consistent and disciplined.
  • Hiring—How many levels does you hiring process have? How do you evaluate a candidate? What screening tools are available for ALL positions within your firm?
  • On-Boarding—What does the first day, week, month, year look like? Is there structure and discipline to how new associates are brought on board?
  • Training and Education—How are new associates trained? What about mid- and senior-leaders—is their training and education stunted?
  • Performance Compensation—How do you reward star talent? How do you retain star talent long-term?

The knee-jerk reaction for many is that these elements are not easy nor are they done on nights and weekends. More firms are evolving to a leadership position that is dedicated to full-time talent growth and development. While there is a cost impact, the cost of doing nothing in the New Year to cultivate and grow associates may be far greater.

Innovation

It seems silly to mention the role of technology as being a critical trend. Every year, technological improvements move at an exponential rate in terms of innovation and growth. The best question to ponder is how your firm is keeping in lockstep with these changes. There is a fine line between fascination with technology (the bright shiny object) and true innovation (leveraging technology to enhance all aspects of performance). Whether it be the continued push toward prefabrication and modularization, enhancements in autonomous vehicles and equipment, utilization of Lean/agile/six sigma principles and systems or simply using the storehouse of data firms sit on to proactively drive business decisions, technology needs to become an action point within every firm’s business plan.

Risk Management

As projects get larger or more complicated or timeline compressed or some combination of all of these, there needs to be a refocused commitment to firmwide risk management. With the rise of tools that serve as “profit centers for risk,” such as captive insurance programs and trade partner default vehicles, contractors will be required to comprehensively think of risk. Coupled with increased life safety requirements from customers and agencies and the ever-increasing cost of healthcare costs, risk management requires a trained professional to integrate all of these elements across business units and projects. It is not simply enough to view this as an “annual renewal” process. Rather, it will require integration into areas such as:

  • Go/No Go Project Selectivity—True risk registers for project or client targeting.
  • Preconstruction Risk Planning—Balanced life safety and productivity planning.
  • Post Construction Reviews—Incorporation of best practices and lessons learned.
  • Quality Assurance and Quality Control—Limiting long-term potential sources of liability.
  • Employee Health and Wellness—Healthy employees correlate to lower health costs.

Risk is an aspect of construction that must be measured, but it is not enough to compartmentalize this within the office of the CFO or Controller. Risk management in the future requires careful, proactive installation in all corners of the firm.

Acute Infrastructure Needs

Channeling Dean Vernon Wermor from the 1978 comedy Animal House, “0.0.” Well, it isn’t quite that bad but according to the American Society of Civil Engineers, the infrastructure within the United States received a grade of D+. Anchored by D scores in the aviation, energy, schools and transit categories, the nation is grossly negligent across all the areas that serve as the backbone. While there are many questions as to the federal, state and local responses to these needs from a budgetary perspective, it is apparent that something must be done. Consider the simple fact that Americans spend an average of 43 hours in traffic annually—what a way to spend a week vacation! What is the impact to logistical needs within the firm and employee health before you even consider the impact to the marketplace should the $4 trillion in spending be funded? The opportunity is vast even if only a fraction of that funding comes to pass but more importantly, there remains opportunity for ancillary businesses. For instance, even if a contractor does not build in the water, wastewater, transportation, aviation, etc., sectors, it is important to consider the industries that complement them or simply the growth that will positively impact a geography.

Ramifications

There is no shortage of scenarios that may positively or negatively impact the construction industry. When leaders apply optics to these trends, they can easily provide roadblocks to growth or engines fueling opportunities. Whether the economy wanes or continues to thrive, the critical questions to ask are:

  • If our best customer went away, what would our business do?
  • If our niche or sector(s) went away, what would our business do?
  • If our best people left the organization, what would our business do?
  • What aspects of the organization not only require the most continuous improvement but also what impact would that have on our long-term health?
  • What should the leadership team in our organization do now to develop both craftspeople and management to run the business in the future?
  • If we mined the data our organization has, what would it yield about the firm’s current performance?
  • What data should the organization use to make future business decisions?

Best-of-class performance should not be left to luck. The rising tide that raises ships is wonderful when times are good, but the high performer today may not be the same firms of tomorrow. Winning strategies and tactics require discipline, dedication and ultimately talent to make the next year just the beginning of a dynasty.

As a principal with FMI, Tampa, Fla., Gregg Schoppman specializes in the areas of productivity and project management. He also leads FMI’s project management consulting practice. Prior to joining FMI, Schoppman served as a senior project manager for a general contracting firm in central Florida. He has completed complex and sophisticated construction projects in the medical, pharmaceutical, office, heavy civil, industrial, manufacturing, and multi-family markets. He has also worked as a construction manager and managed direct labor. Furthermore, Schoppman has expertise in numerous contract delivery methods as well as knowledge of many geographical markets. He can be reached at (813) 636-1259 or gschoppman@fminet.com.

 

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