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Commercial Real Estate

CRE Opinion: Fostering Talent in a Tight Job Market

The best approach has historically been to “grow your own” to create a loyal, well-trained team who understands and values the company’s culture. But times have changed.

Three out of four construction firms plan to expand payrolls this year, while 82 percent expect recruitment and retention to remain difficult, according to Expecting Growth to Continue: The 2018 Construction Industry Hiring and Business Outlook from the Associated General Contractors (AGC), the leading association for the construction industry with more than 26,000 member firms.

No doubt about it, we are still in a very tight job market, and, for those in commercial construction in Texas, it is a constant battle to keep people.

There are any number of reasons—including retirement among the trades, poaching by competitors, and incentives galore—for recruiting ambitious young talent.

Historically, the best approach has been to “grow your own” in order to create a loyal, well-trained team who understands and values the company’s culture. But times have changed as the real estate industry is once again full throttle in terms of new construction growth. With that growth, new hires and new leadership must be recruited to manage that growth successfully.

One of the biggest hurdles in retaining talent in a fast-growing region like North Texas is the lure of big pay packages, including sky-high salaries, bonuses, and other lucrative perks. Money talks, but, sometimes, chasing the money can lead to a string of job jumps that may not be as gratifying. So our goal is to create really defined career paths, salaries to match, and opportunities that challenge employees to embrace higher levels of responsibility.

Benchmarking the Industry

To stay competitive, we benchmark industry salaries and give raises based on that benchmarking. As a result, we have been fortunate to keep our top performers in the field, including our project managers.  But it is increasingly difficult to find strong project superintendents because many have retired, and labor shortages in our industry are primarily in the trades. From our perspective, it takes a decade of field experience, at a minimum, for young team members to be ready to manage a construction project on their own.

What Young Recruits Expect

Not long ago, we sat down with some of our recent college recruits to ask what was most important in their careers. The questions central to them: What is my career path? And what am I going to be doing 10 years from now?

In listening, we realized that the best way to carve out a path from office to project engineer involved a combination of education and training, jobsite experience, and industry or community involvement.

We established MYCON University to provide essential training, including working with mentors in the field for a two- to three-year period. We also established training thresholds which would have to be met to achieve that next level of opportunity. For overachievers, we designed paths that enabled them to move into more responsible roles much more quickly.

As those training thresholds were met, we provided opportunities for leadership training, including participating in committees with the Urban Land Institute (ULI) or The Real Estate Council’s (TREC) Young Guns. Volunteering for a leadership position within the commercial real estate industry and the community is something we have always valued and encouraged but we have tied advancement to participation as well.

Retooling the Compensation Program

As part of this effort, we sought to be more creative with the structure of our compensation packages, including its transparency.  We engaged FMI to be our facilitator and to customize a plan for us to attract, recruit and retain good talent.

In his article, “Time to Drain the Pool” by Sal DiFonzo, managing director of FMI compensation, argues there is a significant shift occurring in the engineering and construction industry in how companies are paying bonuses to employees. The trend is to move away from purely discretionary plans and toward structured incentive plans.

According to DiFonzo, the old way is paying a bonus based on the employer’s discretion (which involves a certain degree of trust) while the structured incentive plan charts out ways to achieve a specific performance reward based on the performance of the company, business unit and individual. No more “trust me” plans involved.

The approach we’ve taken is to identify very specific goals for each employee job classification which must be deliverable, measurable, and transparent. Employees understand what they can make by achieving their goals which are designed to stretch them, but when achieved, deliver sizable bonuses. Everybody wins.

What Millennials Value

According to the Bureau of Labor Statistics, millennials now make up 34 percent of the nation’s workforce – a number that’s expected to grow to 50 percent by 2020. They now surpass baby boomers as the nation’s largest living generation.

So what do millennials value most? In addition to having clear advancement opportunities and a competitive paycheck, millennials value transparency, challenge and culture. They want to know how to succeed and in a much shorter timeframe than their Boomer managers. They also want a culture that is flexible, dynamic, exciting and balanced in terms of work-life expectations.

In this respect, the construction industry has been a late adopter to a lot of things. The good news is that millennials are innovators and disruptors for the industry which portends well for our future as we embrace new technologies. Process improvement also helps.

In the AGC’s Outlook, contractors nationwide are most optimistic about the private office market segment, followed by transportation, and retail, warehouse and lodging but they are very worried about workforce shortages.

To help address workforce shortages and tight competition, firms are embracing information technology. Half of firms invest one percent of revenues on information technology, with 43 percent planning to increase those investments because they believe it is a game changer if strategically deployed to increase productivity and to compete for more work, according to the Outlook.

To address cultural fit, construction companies are beginning to utilize personality profile assessments. However, according to an industry study by Brigham Young University, “only 33 percent of construction industry respondents were using personality profile assessments” of which half used them for hiring employees with the remaining balance used for leadership development and promotions.

The Bottom Line  On Talent

We all know that recruitment can be very expensive, so hiring the best people who understand career paths and remain loyal to the company can truly impact the bottom line.  Providing the opportunities and incentives to follow that career path and stay the course will not only benefit your firm’s growth and success, but will also build strong, trustworthy leaders among those whom you recruit.

Young recruits and millennials bring technologies and innovation to the table. Applying those skills to complex construction projects may deliver an exciting, new way of doing things and rejuvenate our aging industry.

No doubt, the competition will continue to be fierce but spelling out the opportunities that you will provide as an employer and following through on those promises can be equally convincing and profitable.

Charles R. Myers is CEO of MYCON General Contractors and co-chairs the Industrial and Office Local Product Council for the North Texas District Council of the ULI. He can be reached at [email protected].

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