The Skilled Workforce Delusion

What if you hire all the right people and your company still breaks? What if you think you’ve finally solved your skilled workforce shortage only to find out that you somehow made things worse? If you want to win the war for talent, you need a full understanding of three underlying root problems that are sabotaging your efforts to grow your business and retain good employees.

1. The Dam

Imagine finding out your local water company plans to triple your monthly bill. You attend the public hearing, where you learn of their proposed plan to spend millions of dollars to raise the dam on the local reservoir, creating more capacity—a capacity needed because half the water is being lost through leaky pipes, inefficiencies and defects in the system.    

Would you support the plan to raise the dam? Would you vote in favor of spending millions of dollars to create more capacity for a system with that many problems? Would you vote to fix the underlying root causes or to throw money at the symptoms?

I recommend you ask the same questions about your workforce, because a skilled labor shortage may not be the problem. For many, it’s a symptom of an underlying employee retention problem. According to the United States Bureau of Labor Statistics, the construction industry suffered from a 60.1 percent separation rate in 2017. That means 6 out of 10 construction employees quit, were fired or were laid off last year. The industry’s separation rate is 17 percent above average, and it’s been rising since 2015.

As such, before you hire another employee, you need to make sure you have the best chance of keeping them around for a long time. Here are a few strategies to boost retention:

• Grow your leadership skills—They say people don’t quit companies; people quit bosses. The quality of your leadership has a significant impact on employee engagement and retention.
• Empower your people—Stop micromanaging and delegate instead. When you trust your people and give them some autonomy, you’ll be surprised by the positive effect it has on engagement, motivation and productivity.
• Focus on culture—Whether you are aware of it or not, your company has a culture. As the leader, you have the opportunity to create a team environment that will make the right people want to spend the majority of (or entirety of) their career with you.

2. The Extra Load

According to a 2017 McKinsey report, the construction industry has an “intractable” productivity problem. That is to say, over the past two decades, the rest of the world economy’s productivity has grown three times as fast as the construction industry’s.

“We’re handcuffing our people by forcing them to use processes that haven’t changed in decades,” said Gerard McCaughey, chief executive officer of Entekra LLC, a design, engineering and manufacturing company that provides off-site solutions for both residential and commercial construction. “We need to address our process and productivity, not just find more skilled labor.”

Construction is not the only industry struggling with a skilled labor shortage. The health care industry has been grappling with a shortage of physicians for years. However, health care experts realized that the medical system was rife with inefficiency and complexity. So, in addition to their efforts to attract more youth to the discipline, they are improving the productivity of the physicians they currently have.

They’re changing the process to allow physicians to focus more of their time and energy on managing the complex medical issues only they are trained to deal with. Nurse practitioners, physician assistants and nurses are being empowered to handle many of the tasks that required a physician’s completion under the old processes. This change leverages physicians’ time and skills and magnifies their impact on the health of their patients.

“Load shedding” is an electrical term that refers to the purposeful diverting of the load in part of a system to prevent failure when the demand strains the system’s capacity. The demand on physicians is straining the capacity of the health care system. To prevent failure of the entire system, process changes are being made to allow workloads to be redistributed from doctors to less expensive, more readily available team members. The industry is, in effect, load shedding. Shed your extra load by:

• Investigating—Survey your key team members to find out the tasks they are consistently spending time on that don’t require their skill level or is below their pay grade.
• Eliminating—If your people are spending time on something doesn’t need to be done, then simply stop doing it.
• Automating—If your investigation reveals repetitive, time consuming tasks, there is likely technology available to automate or streamline it.
• Delegating—For the duties you can’t eliminate or automate, bundle them, create a job description and hire a support person to be responsible for them. This person will likely be easier to find and less expensive than a superintendent, foreman or skilled tradesman.

3. The Design

Recently, a hacker infected my website, and after spending a lot of time and money to undo their evil antics, my problems continued. I finally realized they had installed hidden malware, which is software code designed to cause websites to fail.

Similarly, you may have organizational malware that is designed, though unintentionally, to make new hires fail. In other words: Are there unwritten rules in your company that make it difficult or impossible for new hires to succeed?

John Morris, president of the Ohio Valley chapter of the Associated Builders and Contractors, summarized one of the ways companies are designed to fail.

“Most companies say they would hire 20 guys tomorrow. It would probably be a mistake; you [the contractor] would probably fail them; and it could break the company. We have this huge disconnect between management and a field labor force that’s held to a standard of productivity that cannot be achieved with a new, less-skilled worker added to the mix,” Morris said. “When I come in as an apprentice plumber, the journeyman plumber has to slow down to properly show me how to do the job. If he does that, the productivity on the site will take a short-term hit and be immediately recognized on the job profit and labor budget reports. And the folks in the operations wing will come down hard on the superintendent. That’s when the superintendent will come back and say, ‘Those new guys are no good. We need to fire them,’ because it’s a lot easier for a superintendent to blame a lack of workers than it is to say, ‘I’m not a very good trainer, and I don’t know how to adapt to this new help.’”

You should examine your company for any hidden organizational malware that is designed to make new hires fail. A good place to start is an audit of reporting metrics and compensation plans, looking for anything that somehow penalizes field leaders for training and integrating new hires.

We absolutely need more people in the construction industry, but don’t be deluded into thinking that hiring more people is going to end your troubles. The root problems related to retention, productivity and organizational design are messy.

There are no silver bullets. However, when you solve the underlying problems behind your labor crisis, you’ll attract and retain high performers who will deliver great results. And in the end, you will win the war for talent.