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The Critical Importance of Onboarding in Today’s Construction Labor Market

BY JUSTIN WILKINS
KIMMEL & ASSOCIATES

Employees are a construction company’s most valuable assets. The retention of key employees has always been vital to the long-term success of any contractor. Recent changes in the construction labor market have made it even more important to implement a robust retention strategy. The recession led to a decline in the construction workforce and there are not enough new recruits entering the market to replace those who left the industry or are retiring. This shortage of construction talent can be seen at all levels, from professional employees to workers in the skilled labor trades.


As reported by AGC of America and Constructor magazine, the construction industry is emerging from a severe downturn that began more than seven years ago. Many firms report having a hard time finding enough skilled workers to fill key positions. That is why AGC of America has identified an array of measures that federal, state and local officials should adopt to expand secondary-school career and technical education and post-secondary training opportunities so more people can enter into a growing number of high-paying construction job. Those measures are outlined in “Preparing the Next Generation of Skilled Workers: A Workforce Development Plan for the 21st Century.”


When your company attracts and hires new workers, it is in your best interest to do everything possible to retain them. Any successful retention strategy must begin the moment a new employee is hired. It is estimated that one out of every five employees will quit within their first year of employment. Nearly 20 percent of those who resign will leave during their first 45 days. Developing an onboarding program is one of the simplest and smartest strategies a construction employer can use to successfully limit loss and build long-term loyalty among employees.

ONBOARDING BUILDS A SOLID FOUNDATION
At the start of every basketball season, the legendary UCLA Basketball Coach John Wooden taught his players the right way to put on their socks and shoes. Everyone on the team had to master that basic skill before they were allowed to participate in any drills. Coach Wooden told his players, “blisters are going to make you lose playing time, and if you’re good enough, your loss of playing time might get the coach fired.”

Coach Wooden knew that the level of success his players achieved on the court was directly tied to his own success as a coach. His training methods gave players a solid foundation upon which successful college basketball careers could be built. He understood the importance of onboarding long before that term was used in the business world.

Onboarding, otherwise known as organizational socialization, is a structured process of welcoming new employees to a company. An onboarding plan should provide more than simple job orientation and training. The process should also offer mentoring, support, and information about the company culture and organizational structure. Today’s construction firms should design onboarding programs that teach all the foundational basics a person needs to know in order to achieve success with their new employer.

ONBOARDING PROGRAMS SAVE EMPLOYERS TIME AND MONEY
Implementing an onboarding program does not have to be expensive or time consuming. In fact, the process can save time and money in the long run. The costs of recruiting, interviewing, hiring, and training new employees are some of the biggest investments that a contracting firm must make. A properly designed and executed onboarding process can increase the return you get on those investments.

Effective onboarding programs can also decrease employee turnover rates. Turnover is thought to be one of the most expensive costs contractors bear as it leads to wasted time and resources as well as lower rates of productivity. Reducing your turnover rate can also help boost your company’s success in recruiting candidates. A firm with a high retention rate is more likely to be perceived as a desirable employer, whereas a firm with a high turnover rate may develop a negative reputation in the marketplace. In this tight labor market, anything you can do to attract candidates will be beneficial.

Though the construction labor market is tight, there are many skilled and talented candidates seeking the kinds of job opportunities your firm has to offer. Research shows that 25 percent of the working population undertakes a career transition every year. An onboarding program encourages new hires to stay with your company by easing the stress of transition. On the Holmes and Rahe Stress Scale, a psychiatric tool that ranks life’s most stressful events, changing jobs ranks behind the death of a close friend. By creating a comprehensive onboarding process, you will make new employees feel less stress and more loyalty while cultivating their talents.

HOW TO IMPLEMENT AN ONBOARDING PROGRAM
Onboarding should start during the recruiting phase. Be prepared to answer any questions that your prospective new hires might have throughout the interview process. Keep candidates informed every step of the way. This demonstrates that your company is well organized and supportive. When an individual accepts a position, maintain communication with that person right up until his or her start date. This will help new employees feel welcomed and better prepared when they arrive for their first day of work.

On an employee’s first day on the job, he should begin a comprehensive orientation program that goes beyond employee handbook basics. As part of this program, new hires should also receive:

  • A clear statement expressing your company’s mission, goals, and values
  • An in-depth job description that includes objectives and responsibilities
  • Organizational charts with names and titles that show the chain of command
  • A career development plan with short- and long-term goals

Most importantly, an effective orientation program should provide job-specific training that demonstrates a long-term commitment toward employee development. Establish a mentorship/coaching program that integrates seasoned professionals with new hires. You may want to consider creating a leadership rotation for new college graduates.

ONBOARDING CAN IMPACT YOUR BOTTOM LINE
Having an onboarding process in place will minimize the amount of time it takes for new employees to reach their full potential, while maximizing their loyalty to the company. This can have a big impact on your bottom line. Contractors and construction firms are currently already experiencing shortages of workers serious enough to affect project costs and schedule performance. Companies that are being proactive and implementing strategies designed to increase retention are already achieving more success than their competitors.

Don’t wait for market forces to correct the labor gap. In fact, the shortage of candidates is expected to grow. According to the Bureau of Labor Statistics’ Occupational Outlook Handbook, the construction industry will require 1.7 million workers by 2020. And, in a recent survey conducted by AGC of America, 83 percent of responding firms are having a hard time filling craft worker jobs and 61 percent are having a hard time filling professional positions.There are not enough students currently enrolled in construction educational and training programs to meet projected demand. Employee retention is going to become even more critical to the success of your firm in the future. If your company does not already have an onboarding program in place, begin crafting one now.

Just as Coach Wooden recognized that teaching his players to put on their socks and shoes made him a more successful coach, your company can achieve more success by teaching your new team members all the foundational basics. Onboarding can be a valuable part of a retention strategy that allows companies to deliver complex building projects on shorter timelines and with fewer backlogs, ultimately paying large dividends in cost, time and quality.


Kimmel & Associates is an executive search firm and has been working within the construction industry for more than 30 years. It serves hundreds of client companies and have successfully completed more than 10,000 placements during the past 15 years alone.