The Talent Challenge for Ontario’s Construction Industry
Talent is a critical business challenge facing the construction sector. A recent study by StatsCan suggests that trade and professional unemployment in the construction sector is as low as 1.5% in Ontario.
It suggests that close to 300,000 new hires will be made in construction in the next decade.
Even with storm clouds on the horizon for the global economy, the last recession saw record spend and investment into infrastructure. With massive infrastructure projects still to break ground in all of Canada’s major economic centres, there seems good evidence that the construction sector will be less impacted, or at least benefit from a delayed softening of demand. It is expected there will be a plateauing in 2021 however 22% of the current workforce is closing in on retirement putting further pressure on hiring and retention of employees.
The realities of a tight talent market are affecting the sector. As resource costs skyrocket, it is putting increased pressure on margins and delivery schedules. The average salary for an intermediate Project Manager in Ontario was $72,000 in 2015, it is expected to exceed $85,000 in 2020. These compensation gains are representative of all professional, non-trade roles and it won’t be long until the unions who are starved for good talent aggressively begin renegotiating rates for their members.
With talent scarce and expensive, they are the ones in control of where they want to work so it is imperative for construction firms to be flexible and open minded to solve their talent needs. A commitment to apprenticeship programs and continuing professional development can be a key enabler in onboarding and retaining emerging talent from the school, college or university system. In addition, newcomers make up 20% of the construction workforce but with Asia providing the highest number of skilled migrants to Canada, the diversity of the workforce must improve to ensure these talented individuals are integrated into the construction industry.
These initiatives must be supported by a strong performance management platform that clearly articulates progression parameters and development goals for each individual employee. This increased burden on the Human Resources (HR) side of operations has seen even smaller, more traditional construction firms secure professional HR support through a fulltime hire, or virtual HR provider. Despite a broader HR remit; talent management, recruitment and performance management form the central focus.
The rise of outsourcing recruitment
The use of third-party recruiters and headhunters is growing, and numerous speciality firms focused on the construction industry have emerged. While there is a price premium, a firm with strong marketing skills, proactive outreach and onboarding support services can be of great value and save time and money in the hiring process. Often, they are able to better target niche skill sets needed within the sector. Search and recruitment firms use strategies to cherry pick key talent from competing firms in the local market that already have established relationships with both potential customers and trades.
One key tactic being utilized by recruitment firms when the local market isn’t enough is targeting talent in economic areas that continue to be soft in comparison to their own. Professionals in Calgary, Edmonton and the Prairies are being actively pursued and encouraged to move to cities like Ottawa. A city like Ottawa can provide attractive opportunities such as salary premiums, strong social programs, a low cost of living and good quality of life, particularly for those with young families. With construction unemployment in Alberta at 7.8% there is nearly 5 times as many jobseekers in that region for an employer to target. A typical relocation package for a new employee will equate to 5-10% of their first year compensation and can include reimbursement for their first 3 months of rent, moving costs and return travel to their hometown during the initial transition period.
The impact of Integrated Project Delivery (IPD)
One of the most exciting changes to the construction industry is the onset of integrated project delivery. With consistent examples of expedited design, engineering and execution combined with improved client experience, IPD is set to be the norm for major projects in the next 10 years.
Firms are already shifting the profile required to participate in these opportunities. For the majority of senior level project roles (Principal Engineers, Architects, Project Managers, etc.) it is becoming critical to have technical client service skills. These senior employees are being asked to present compelling arguments, debate and help drive engagement in the firm’s priorities and approaches at the ‘Big Table’. It is often the difference between optimal and average project success. In a room full of experts, the ability to hold focus and attention while being a key contributor in the room is a skill very few will ever truly master. It is however a key tenant of most profile requests for leadership and business-critical hires for construction companies. While on-site experience is invaluable, many talented professionals will fail to reach their career potential unless they can develop client management skills. Add to this the increasing complexity of projects and focus on ‘construction management’ approaches, the future of management within construction is destined to be led by more commercially-driven business management mindset individuals.
Retention & Performance
It is clear the talent challenges are going to put further pressure on construction firms. With the challenge of finding talent, retention and performance becomes even more critical. Any upfront investments made to secure talent should be backed by rigorous and structured onboarding and performance management. People are driven by two things at work – doing something that matters and knowing someone gives a damn. Care and attention for employees is more critical than ever. Either pay them the attention they are due, or someone else will. At the same time, employees need to be held accountable. Clearly articulating expectations and how they can achieve them is a key foundation for any employee’s success.
Summary & Recommendation
As you consider your talent challenges, we suggest you look at 3 key aspects of your talent strategy
1. Identify future leaders who combine the technical knowledge with the potential client management skills and experience to represent you in client management or IPD circumstances.
2. Implement and manage an effective performance management program that provides individual coaching and guidance to maximize performance in what may be shorter average tenures from employees.
3. Develop key talent partnerships with the post-secondary institutions, search firms and HR consulting service providers. These relationships will ensure you have a pipeline of people at your disposal to react to sudden and planned changes in your business.
Success within your firm is likely directly correlated to the quality and engagement of your people. It is critical that you make the necessary investments in these people to sustain and build on your success to date.