Seventy-three percent of construction firms plan to expand their staff in 2017 according to the Associated General Contractors of America (AGC) and Sage Construction & Real Estate’s 2017 Construction Survey and Business Outlook. Contractors are not alone as architecture and engineering firms are also enhancing their internal talent in response to current activity and anticipated growth in both the public and private markets. Considering the industry’s limited pool of talent, mass retirements of baby boomers, pressure from owners, and difficulties in attracting millennials, it’s not surprising that Architecture / Engineering / Construction (A/E/C) companies are stepping up their recruitment and talent management practices.
Tom Helbling, President of Helbling & Associates, has been a search consultant in the A/E/C and real estate development sectors for nearly 40 years. Recently, he and some of his senior consultants sat down to discuss the changes occurring in the industry, and how companies of all sizes are adapting their recruitment and talent management.
Tom Helbling has seen the A/E/C industry transform itself many times over due to recessions and other economic impacts. He says, “As organizations of all sizes dealt with the ebb and flow of activity, recruitment was most always reactive. Companies would hire professionals simply due to attrition, when they were awarded projects, or when there was a retirement. Recruitment was a response rather than a plan. That has all changed since the last recession. It’s a different scenario now because firms are facing so many diverse issues.”
“We all know the amount of experienced professionals retiring from the industry. We understand the skills gap and how it occurred, and the difficulties the sector faces in attracting and retaining millennials. All of these factors, along with advanced technologies, new delivery methods, and complex projects are prompting organizations to diversify and refine their recruitment processes and talent management. Companies realize that they must have the right talent to grow and expand their capabilities, and achieve their objectives. By ‘right’ talent, I am referring to talented individuals with strong technical and management skills and who fit in with a company’s culture.”
“Another major factor impacting recruitment is coming from owners – the industry’s customers and end-users,” says Helbling. “Owners are much more sophisticated in how they plan their capital programs and projects. And, some of these projects and developments are larger and more complex than we have ever seen before.
Owners are well educated in terms of design concepts, construction processes, and delivery methods. They want to be highly engaged in the construction process, and many have their own internal design and construction teams who understand costs, schedules, and constructability issues. They understand the skills and expertise that are required for their projects, and they carefully consider an A/E/C firm’s talent and capabilities. They have high expectations, and the quality of a team is often the differentiating factor in award selection.”
“These issues, all of which are significant, put pressure on A/E/C firms in terms of performance and profitability and both of these rely directly on internal talent.”
Talent acquisition and management are considered top priorities among A/E/C organizations. As a result, they are performing recruitment in a more proactive manner, enhancing their non-core talent, conducting succession planning, offering extended benefits and professional development, and implementing strategies to attract millennials.
“As executive search consultants, we hear about the limited talent pool every day, and we live it,” says Jim Lord, Managing Director. “As Tom (Helbling) said, firms have learned that, if they want to be strategic with which projects they pursue, they have to be proactive and strategic with their recruitment as well. If companies don’t have the right talent to build projects, they’re not going to get the contracts. So the more progressive organizations want exceptional professionals on staff sooner rather than later. They realize the need to keep their talent pipelines filled.”
“Organizations are also becoming adept at identifying employees who are under performing and those who are unengaged. These employees will most likely leave within a short time-frame. It’s important to stay a step ahead and acquire talent for when they do leave. When a company has more time to recruit an ideal professional, there is less pressure. The reality is that it’s no longer feasible to wait until you have an actual talent need, then post an employment ad, and expect a qualified candidate to apply.”
“Having the right leaders in non-core functions, such as business development, human resources, estimating, safety, and security, is critical to help support the operations and execution of projects,” says Helbling. "The stronger the non-core talent is and the more innovation and value these professionals can provide, the stronger the operations side can be.”
Tom Dunn, Senior Managing Consultant, notes, “Non-core talent can come from outside the industry so consideration is being given to non-traditional candidates provided they have applicable experiences and backgrounds. A/E/C hiring managers are more open-minded to these professionals due to the strong competition for talent. Furthermore, they want to see a cross section of talent who can bring different perspectives and ways of doing business. Quite simply, companies desire to do things differently than they have in the past. If they want that, they have to look beyond the direct competition and obvious venues.”
“Progressive firms are also conducting formal succession planning,” says Dunn. “It’s understandable that some companies do not prioritize succession planning because it takes a lot of consideration, time, and effort away from competing priorities,” says Dunn. “There’s never a good time to focus on it. But, businesses, especially those that are family-owned, are realizing they have to do it proactively if they want their organizations to exist for another generation.”
He says, “FMI Chairman Hank Harris recently said in a Construction Business Owner article that it takes 10 years to properly stage and develop a succession plan. As search consultants, we are asked to solve this type of issue in three to six months with a search. That can be difficult, and at its core, it is somewhat unrealistic. But, if a firm begins talking to us early on in the succession planning process and we understand the type of talent and skills they are going to need both today and several years from now, the search can still be challenging, but we have a clearer path regarding how we can add value. If an organization thinks they will have to replace a key executive in the next two to five years, they need to start thinking about it now. It takes time to prepare a team and organization for a shift in leadership.”
In a recent study, the AGC found that 52% of survey participants were planning to increase base pay rates, and make investments in training and development. A good percentage were also increasing their investments in technology, and providing incentive and bonus compensation. All of these are being done to recruit and retained qualified staff. Dunn says, “The limited talent at all levels in the industry and the competition for quality professionals is prompting organizations to analyze compensation structures, benefits, and professional development programs. They want to retain their people, and they also want to attract new talent. They’re investing in their employees and they’re communicating regularly with them. That’s one of the reasons why strong leadership on the human resources side is extremely critical. Human resources professionals are often the ones who are running point for these types of initiatives.”
“Offering professional development opportunities is critical for strengthening and growing a business,” says Dunn. “Every candidate I work with wants to see and hear about potential career progression when taking a new position, and they want to join a company that provides development opportunities for all levels of employees.”
Educating young individuals on the progressive aspects of the A/E/C industry and what it can offer in terms of an exciting career is important for the sector to continue moving forward. “In terms of drawing people to the industry, it’s awareness,” Dunn says. “I don’t think most people outside of the industry understand what goes into construction or real estate development and what is entailed in these huge programs and projects that are being built. The ‘good ole days’ of construction have given way to organizations utilizing 3D printing, building information modeling, iPads/tablets in the field, innovative alternative delivery methods, and multiple other new technologies. Progressive firms of all sizes are leveraging these technologies in attracting younger professionals to the industry. It will take time, but promoting these advancements and articulating the why to the prospective talent pool will continue to attract the next generation of talent into an evolving industry.”
As the industry continues to adapt to owner demands, advanced technologies, and the shift in workforce generations, we will see A/E/C firms adjust their recruitment and talent management practices to sustain success. We have already seen a positive transformation, and it will be exciting to see how the industry as a whole progresses into the future.