Originally published for ABC Construction Executive – June 2015
One of the biggest costs in construction is a company’s workforce. The combination of the recent economic downturn and worker shortages made construction companies leaner and more efficient, so minimizing unnecessary workforce expenses is key to profitability.
Turnover costs construction companies millions of dollars annually. Looking for the next person takes time and money, but isn’t the biggest resulting expense. Turnover hits companies’ pocketbooks because for 12 or more weeks, they have an inept employee. A few weeks before the original employee leaves, that person is not fully committed and is not working at 100 percent. This period is followed by a void where the crew is down a person.
Once new workers are hired, they must go through an orientation and be brought up to speed, which usually takes more time from HR and the crews. Many construction companies have a mentor system that lasts more than 180 days, which means some of the best employees are not working on their own tasks. Mentoring offsets the new employee’s lack of abilities and potentially unsafe work, but results in multiple people not working at 100 percent of their capabilities. Now multiply this by the 10, 20 or 50 employee transitions some companies goes through annually and a 10 percent to 15 percent decrease in turnover can sizably affect the bottom line.
Increasing retention means much more than just paying employees; studies have shown that people forget about pay raises within four months. What matters is their work environment, the company culture, their immediate supervisor and their crew.
Focus on determining the company’s culture and sharing the message companywide. Sharing the culture does two things: It sets expectations and weeds out the employees who are a bad fit. Yes, it will lead to more turnover immediately, but those employees usually cause bigger issues if allowed to fester. Without sharing the culture, those bad fits will drive away the best employees that truly fit the company’s mold. A conflict in culture does not mean an employee is a bad person; he or she is just not the right fit.
During a recent company rebrand, a client was warned that a few people likely would quit on their own following the new brand’s launch. This departure was expected because the company’s new brand focused on its 24/7 availability and staying late whenever needed to get the job done ahead of schedule. This personality was always within the company’s culture, but it was never prominent. The firm wanted to make that message prominent to clients and prospective clients because it was a huge market differentiator.
This change in message meant the single mother who had to pick up her kids from day care by 5:30 every evening couldn’t stay late and another employee that coached his children’s athletic teams after work were not ideal employees any more. (HR reassigned each of them instead of letting them go.)
Share your company message from the top down using internal communications, otherwise known as internal marketing. (External marketing focuses on attracting clients.) This communication may include company newsletters, online employee sections, Facebook groups, paycheck stuffers, bulletin boards, signage, company picnics and even toolbox talks.
Take this even further and promote things beyond culture. Drive home safety, worker efficiency, punctuality and quality. Each of these aspects saves time and makes the company more profitable. Some companies that make a 5 percent increase in work productivity increase profits by more than a million dollars a year.