4 Ways Construction Companies Can Bounce Back After COVID-19
In the last few weeks, COVID-19 has completely disrupted our way of life and how each of us run our businesses. According to the World Health Organization (WHO), the pandemic has spread to over 200 countries affecting individuals, governments, healthcare organizations across the globe.
Governments, corporations, and numerous other organizations are working collectively to battle the spread of the pandemic head-on; while at the same time ensuring the recovery of those affected and the safety of the public at large.
However, if history has taught us anything, things will improve (and they always do). There have been 47 recessions in the history of the modern world. Every downturn (minor or significant) often follows periods of major economic expansion.
The Construction Industry was hit the hardest in the Great Recession, but ever since has made a strong comeback with a significant rise in new projects and record job openings towards the end of 2019.
Even amid the COVID-19 pandemic, the demand for construction workers is higher than ever. According to a March 2020 LinkedIn report, construction is one of the most in-demand categories for workers right now.
For construction companies and contractors —this is the time to make sure you are well-prepared for the things to come. View this time as an opportune moment to revamp your labor pool and technology so that when projects pick up again — you will be better-equipped, more profitable, and safer as a company.
In this article, we will discuss a few key areas to focus on and invest your resources to build a stronger employee network, experience an increase in cost-savings, and become more profitable as a construction company.
Here are some of the ideas we will discuss in this article:
- Screening job applicants thoroughly.
- Hiring workers from similar industries more deeply affected by COVID-19.
- Building partnerships with Property Owners & Managers.
- Training and upskilling your employees.
So, let's get started.
- Screen Job Applicants Thoroughly
Hiring and training new employees is an expensive proposition for most companies. According to the Society of Human Resources (SHRM), it costs companies, on average, about $4,129 and 42 days to hire a new employee. The numbers are even higher if you are replacing someone and then filling the position. SHRM found that companies spend up to 50%-60% of an employee's salary to find a new replacement.
The average salary of a skilled construction worker in the US is around $35,800. So, construction companies can expect to spend, on average, about $17,900 to $21,480 to replace a skilled-worker in their companies.
In a competitive market, candidates have more choices, and this often causes delays in your hiring process. A skilled construction worker can afford the luxury to wait out multiple offers before he/she chooses the right one.
As an employer, all this makes it difficult for you to hire them without paying competitive or above-average wages.
So how can you, as a construction company, stay competitive in attracting talent and hiring the right candidates (without spending a lot on recruitment costs)?
One proven method is to conduct reference checks.
Though it is a norm with large companies, reference checks are often overlooked by smaller companies. The small investment in time far outweighs any costs.
According to a benchmark report by HireRight, 67% of companies found that their quality of new hires improved because of proper screening. Screening allows you to uncover the information you might miss or overlook during the rest of your hiring process. 42% of survey respondents also found that it helped them to increase workplace safety and security.
It’s also important that you set the right expectations when recruiting and hiring new talent.
Throughout your hiring process, make sure to fully disclose all the details of the job — onboarding, training, work culture, workplace safety, expectations, duties, responsibilities, compensation, etc.
Being transparent ensures that the new hires have a clear understanding of what it looks like working at your construction company. It also helps screen out candidates that might not have been a good fit.
- Hire from Industries Affected by COVID-19
Unfortunately, most industries are not seeing an increase in demand. Some are experiencing significant losses in revenue and massive layoffs — travel, hospitality, food services, transportation, oil & gas, live entertainment, etc.
The oil & gas sector is one of the hardest hit due to the recent economic downturn in the global markets. The ongoing oil-price war and the significant drop in oil prices is adding further strain to an already affected industry. Furthermore, the continuous debate on climate change and the shift to sustainable energy will continue to cause more declines in the energy industry.
The COVID-19 crisis has accelerated a decline in global demand for oil. Countries and states that are heavily reliant on oil & gas will be hit the hardest. In US states such as Texas, the layoffs are in the thousands.
Many of the workers in oil & gas have similar skills that are required in the construction industry — rig operators, project managers, safety managers, field supervisors, drone operators, etc.
For construction companies — this is an opportunity to hire experienced and skilled workers from the oil & gas sector; these are workers who will require relatively low training and will be able to quickly ramp up in your teams.
The labor shortage in the construction industry is a challenge for all construction companies in the US. Recruiting and hiring talent from the oil and gas industry will help you fix that gap. The short time to upskill and train these laid-off oil workers will reduce your overall hiring costs.
However, we encourage you to act fast if you are going to pursue this path. Once the word gets out, more and more construction companies in your market will want to go after these candidates and will recruit them actively.
Increased competition and more options for these laid-off oil workers will make it difficult for you to hire and retain them. One sure way to stay ahead of the competition is to start early in your recruitment efforts, and also proactively offer these employees an above-market wage.
- Build Partnerships with Property Owners & Managers
Your suppliers, vendors, sub-contractors, and customers are an integral part (often an extension) of your construction company. The current situation is an excellent opportunity to build and strengthen these relationships.
Your engagement with your customers (building owners and property managers) shouldn't end as your construction project is complete. Over the next few months and years, they will need assistance with repairs, maintenance, and renovations to maintain and upkeep their properties.
When a need arises — they will shop around through their networks or through relevant websites to find contractors for their construction projects. Wouldn't you like your construction company to be their first choice whenever this happens?
But, if you wait for them to contact you — you risk entering a bidding war with other competitors in the marketplace. You'll be forced to bid significantly lower to win these projects.
Contact them NOW to build and maintain those relationships. They're all at home right now (most businesses and people are); they will be willing to have a conversation with you.
Encourage them to discuss with you even if there are no current renovation projects. Ask them for an opportunity to showcase your portfolio and build some trust.
Once things change for them or when they are ready to approve a project — they will consider you as an approved contractor.
- Train and Upskill Your Employees
Hiring the right skilled workers is just half the battle.
Your organization also needs to be proactive and ensure that you are continually training & upskilling both all your employees (both new hires and veteran workers).
According to LinkedIn's 2020 Workplace Learning Report, about 94% of employees mentioned that they would stay with a company longer if there's an active investment in learning & development.
A study by Go2HR found that 40% of employees will leave their roles in the first year if their employer doesn’t provide training and advancement opportunities.
Investing in your employees is one of the most effective ways to retain your employees and increase their tenure at your company. Continuous investment in training programs has also proven to have a positive effect on your bottom line. The ROI benefits of employee training far outweigh any associated costs.
According to the American Society of Training and Development (ASTD)'s survey of over 2500 companies - employers who invested in comprehensive training programs noticed a 218% higher income per employee.
Here are a few areas where you can invest in upskilling your employees:
- Workplace Safety:
Often mandated in many countries and regions, ensure that everyone in your company is up-to-date with the latest Workplace Safety Standards.
Programs such as the Occupational Safety and Health Administration (OSHA) and the National Safety Council (NSC) Training are great investments to ensure that everyone in your company understands and complies with safety standards.
- Certification Programs:
Some states require each workgroup or profession to complete and maintain their certifications. A Professional Association or an Industry Trade group often sets the educational and training requirements.
In some cases, both the employer and the individual employees are required to maintain the certification. Such certifications are very common in the Construction Industry.
Read more about a list of construction industry-specific certifications.
- Mentorship Programs:
Internships and Apprenticeship programs are often reserved for new and young employees in the construction industry. It gives newcomers the essential guidance to start and thrive in the industry.
We think mentorship shouldn't just stop when someone enters the industry. Your company can create a structured mentorship program to foster guidance and collaboration between veteran employees and newcomers.
It creates a culture of continuous learning, increases job satisfaction, and reduces turnover. Best of all, these programs are relatively low-cost (or no cost). It will only require your veteran employees to invest some time to help and mentor young workers.
- Vendor-led Training Programs:
About 50%-70% of total projects in construction are non-labor related — supplies, building materials, technology, professional services, etc.
Most construction projects involve dozens of vendors, suppliers, manufacturers. Most or all of them have established best practices, guidelines, standards, etc.
Your team can benefit if you can persuade your vendors to provide training on their products. Since they are the subject-matter-experts of their products, they are often in the best position to train.
A massive benefit for your company is that this removes your need to train your employees; it provides potential savings in time and resources.
There's no clear prediction on when the current COVID-19 situation will be over, and life can go back to normal. Unfortunately, this pandemic will continue to affect businesses across the globe, and many companies will probably face their worst times ahead.
However, that doesn't have to be the case for your company. During times of uncertainty, it's often the companies that are most adaptable and flexible that will weather the storm, thrive, and come out stronger on the other side.
Use this opportunity to re-evaluate how you operate your construction company. Implement the ideas and strategies we have discussed in the article so far. It's an excellent time to put the people and systems in place that will help your business become more profitable, safe, and efficient in the future.
To summarize, construction companies can thrive despite the COVID-19 situation by:
- Screening your candidates thoroughly.
- Hiring from parallel industries (oil & gas) that are most affected by COVID-19.
- Building partnerships with building owners and property managers.
- Continually training and upskilling all your employees.