Copyright © 2020 by the Construction Financial Management Association (CFMA). All rights reserved. This article first appeared in CFMA Building Profits (a member-only benefit) and is reprinted Employee with permission.

BeyondRetention Bonuses: Five Considerations By Dan Schwartz & Kelly Postlewaite Gone are the days when an employee would retire comfortably from the company that they worked for most of their (if not their entire) . In recent years, instead of focusing on growing within a single organization, the increasing trend is to continually seek newer and more exciting opportunities. Much like the market for mobile phones and televisions, employees know there is an upgrade right around the corner, making employee retention a top issue for many organizations.

Why Is Today’s Competitive Labor Market Leading to More Voluntary ? While rates are at an all-time low, career options are also at an all-time high. Employees can choose a career in vir- tually any industry, and with available online , it’s easier than ever to gain the necessary skills to make a transition at any point in their .

This transformation in our economy has led to unprecedented levels of voluntary turnover. According to the Bureau of Labor Statistics, 3.5 million people voluntarily left their employer in November 2019,1 which is an increase from two million in November 2009.2

With the inclusion of new roles, marketing tactics, and upgraded total rewards packages, companies continue to find ways to attract new talent and provide rewarding career oppor- tunities, thus creating increased competition in the marketplace.

Reason 1: Growth Remains High The Washington Post recently reported that 266,000 were added in November 2019 and the unemployment rate was at 3.5%, a 50-year low.3 Specifically for the construction industry, job growth is expected to rise 11% by 2028, which is much faster than the average for all occupations, according to the U.S. Bureau of Labor Statistics.4

Employers are constantly looking for ways to expand and inno- vate, which has led to the creation of new departments and roles as the economy has grown. Not only do job seekers have endless opportunities at their A specific benefit on the rise in the construction industry is fingertips, but employers also are competing for top talent, an apparel allowance where contractors provide employees often seeking already-employed individuals who are experi- with funds to purchase high-quality boots and apparel for encing career success. protection and comfort on the jobsite.

Simply put, it’s a candidate’s market where employees leave Companies are continuously evaluating their competition and for better opportunities elsewhere – even if they’re engaged upgrading their own total rewards packages to stay competi- and happy in their current roles. tive. This trend is also influencing employees and encouraging them to regularly evaluate their current benefits package Reason 2: Consumer Marketing to Job Seekers against the potential of another company. The rise of social media and networking sites (such as LinkedIn) makes it easy for employers to target prospective Why Are Employees Leaving? talent, as candidates have increased visibility. Organizations are taking advantage of these tools to proactively reach out We’ve established that the competitive job market has sev- and nurture relationships, which often leads to job oppor- eral contributing factors leading to voluntary turnover. But tunities. The combination of these trends and the rising what specifically causes an employee to be dissatisfied and number of career options available has caused companies start looking for opportunities elsewhere? Based on a survey, to step up their recruitment marketing tactics. Instead of the top drivers of workplace dissatisfaction in 2018 were: simply posting a job and waiting for candidates to apply, • Future career opportunities organizations are employing marketing strategies similar to Compensation those aimed at increasing sales or bringing in new business. • • People management Applicant tracking systems have evolved to function like cus- • Development opportunities5 tomer relationship management (CRM) systems, where com- panies can send targeted e-mails and job recommendations as Future Career Opportunities well as customize a candidate’s experience to help prospective While not everyone wants to be a CEO, many employees talent buy into the organization’s employee value proposition. desire to advance in their careers and have increased respon- In addition, larger companies are employing entire recruit- sibilities. Employees want to know that there’s a future for ment marketing teams dedicated to ensuring that the com- them at the company and that management will support them pany’s brand is effectively communicated to the along their journey. Companies that do not possess a clear right audience at the right time to attract new talent. path upward for their talent will often cause their employees Reason 3: Total Rewards Package Upgrades to feel “stuck” and limited in their growth opportunities. Historically, the primary components of a standard total In addition, employees may decide to change their interests rewards package have consisted of cash compensation (sal- within a career track. The absence of options for these types ary), , , and a plan. of workers leads to low levels of engagement and, as a result, However, as the workforce has modernized, human resource (HR) leaders have recognized that today’s employees value a desire to leave the company for another organization with benefits differently. Companies are spending more time more opportunities. understanding their ideal candidate and developing benefit Compensation packages that are more closely targeted toward a specific tal- There are many factors involved in determining compensa- ent segment. As a result of these changes, the array of benefit choices are expanded for new employees. tion, which can be a challenge for businesses, especially those located in multiple geographic markets. While HR depart- In the age of customization, employees can often pick and ments are aware of this, employees likely don’t see all of the choose the benefits they need most for their own situations. decisions made behind the scenes and just want to be com- In addition to the basics, employers are offering benefits like pensated fairly, equitably, and on par with competing busi- profit-sharing, policies, nesses. In addition, more companies are offering innovative reimbursements, financial planning services, and student compensation methods such as bonus programs and health loan repayment programs. incentives.

CFMA Building Profits March/April 2020 Employee Retention

To start developing employee engagement strategies, it’s important to understand how your people are feeling and what makes them excited to come to work.

If companies do not embrace these growing trends or change talent and investing in their people. Investing in employees their compensation packages, then their employees may be can result in higher performance and an increased return on more likely to become dissatisfied and seek opportunities investment (ROI). elsewhere. So, what can you do to improve your retention rate? Here are People Management five considerations. People want to feel valued and appreciated by their manager, Consideration 1: Create Future Career regardless of the role or industry. Since each person has their Opportunities own preference for how he or she wants to be managed, man- aging people can be one of the hardest parts of leadership. When employees have defined paths to advancement and Those who are under the influence of good management are opportunities to grow into more challenging roles, then their more likely to perform better and remain engaged. However, engagement and performance increases. micromanagement, high criticism, and unrealistic deadlines However, in the construction industry – especially when are common practices that can cause stress and dissatisfac- it comes to roles in the field such as carpenters, installers, tion in the workplace. electricians, and roofers – it may not always be easy to cre-

Development Opportunities ate future career paths. In addition, certain employees may not have a desire to move up or change roles. Even in these People who enjoy their work generally have a desire to cases, if an employer is visibly working to create options for improve, become more efficient, and move into higher-level its people, then employees will recognize and appreciate the roles. Employees want the opportunity to improve their skills effort, which can lead to increased morale. and the resources to help them do so. Furthermore, it has been widely proven that participants in development programs who So how can an organization create future career opportu- feel as though the content was customized for their particular nities even in situations where there might not be a clear needs tend to experience higher levels of growth and develop- advancement path? One strategy might be to separate a ment. And, those who are exposed to development opportuni- job family into multiple levels of experience and create an ties experience higher levels of engagement, which ultimately advancement ladder, which would give more experienced leads to better business results. workers a chance to coach entry-level professionals.

However, if employees feel as though the organization For example, consider a carpenter. Apprentice carpenters doesn’t care about their development and doesn’t offer generally learn by working with more experienced cowork- learning opportunities, then they often become dissatis- ers, adapting such skills as carpentry basics, blueprint read- fied and choose to seek out an employer that has a culture ing, building code requirements, etc. After completing their focused on development. , they are ready to complete jobs on their own with supervision. While a company might informally assign these Five Considerations for Employee Retention roles to team members, an opportunity exists to create a The competitiveness of the labor market combined with formal progression system with defined experience, training, factors of employee dissatisfaction provides a prime oppor- and performance requirements, culminating with a leadership tunity for employers to refocus their efforts on retaining or supervisory position.

March/April 2020 CFMA Building Profits By creating a clear progression path, organizations can provide Carving out time for training can be challenging, especially opportunities for and leadership, further developing in the construction industry where time away from a jobsite the skill sets of their workforce. Additionally, if increased can lead to delayed project completion and potential lost rev- compensation is tied to each level, performance is incentivized enue. While this may be the case, regular training can have and can lead to higher-quality work and an increased sense of significant effects on the quality of work produced, as well as pride among employees as they grow through the ranks. the number of safety incidents and violations.

Consideration 2: Implement a Flextime Policy So how can you create a strategy to invest in employee devel- According to Gallup’s State of the American Workplace opment while reducing time away from revenue-producing Report, 51% of employees surveyed indicated they would activities? As a first step, leaders need to buy in to the value change jobs for a flextime policy, while 44% of employees said of continual training. This starts with proving the ROI as well their company offered this benefit.6 More organizations are as the potential effects on safety and quality. Then, leaders implementing flextime policies to allow their people to choose should influence the rest of the organization on why training when and, in many cases, where they work. is important. According to many adult learning studies on the success of training, employees need to internalize how learn- While this is easier to apply in an office setting where team ing activities will improve their job capabilities. Once these members work varied hours, it’s still possible to implement in two ideas are firmly established, learning programs and strate- an industry where projects must be completed within a spe- gies based on specific job roles can be created. cific time frame and appointments must be kept. If managed well, flextime could benefit both clients and employees. While items like safety and compliance training may need to be done in an online or classroom setting, many skills For example, Shawmut Design and Construction, a construc- development programs can be implemented on the jobsite. tion management firm out of Dayton, OH, advertises a flex One way to accomplish this is to create a mentoring pro- policy on its website at www.shawmut.com/flex. Employees gram in which a more experienced worker is paired with an (field and office) are offered options such as compressed entry-level employee to help them develop skills. Referring workweeks and shifting work hours. They can even choose to our previously mentioned carpenter example, there’s an to work full-time during the busiest part of the year and have opportunity to combine programs with on- time off or work part-time for the remainder of the year. In the-job mentoring programs where employees are required addition, field employees have options such as a relief pool, to complete certain tasks and spend a minimum number of where a field team partners with a group of trained employ- hours performing a specific skill. ees to cover and call-outs. Consideration 4: Re-Engineer Your Recruiting In taking this example a step further, consider the effect of a Processes compressed workweek on clients and employees. If employ- It used to be that an employer would post a job on its career ees are given the option to work four 10-hour days instead site and wait for applicants to show interest. However, with of five 8-hour days, both clients and workers can experience the competitiveness of today’s job market, it’s more impor- benefits. Projects can be completed sooner, and employees tant than ever to proactively recruit talent. can get extra time with their families. In addition, the ability In addition, a labor shortage in the construction industry to adjust the of a workday to cover an employee on a presents a second challenge when recruiting workers. The different shift fosters a team environment in which employees Associated General Contractors of America (AGC) reported support one another. in August 2019 that 80% of companies are “having a hard Consideration 3: Invest in People Development time filling hourly craft positions that represent the bulk of the construction workforce.”8 In a 2018 survey conducted by LinkedIn, “94% of respon- dents indicated they would stay at a company longer if it Here are some tips to help re-engineer your recruiting pro- invested in their career development.”7 However, the top cesses and attract the best talent for your organization. reason employees feel held back from learning is because they don’t have the time to learn the skills they need. These Think Industry First & Company Second results show that development opportunities are valued by To actively recruit talent in a market with a labor shortage, employees and could potentially reduce turnover. many companies are promoting the industry first and then

CFMA Building Profits March/April 2020 Employee Retention focusing on the specific company benefits to candidates as ily discoverable through a company-wide survey that can be they build relationships with trade associations, organiza- conducted internally or through a third-party organization. tions, and universities. During visits to these groups, oppor- tunities are available to present information to members and Once you identify the gaps that exist in your organization, students about the industry and the specific company. you can then develop action plans and strategies to engage all employees. However, once you identify action plans, it is Consider how you attract clients and where you might target critically important that employees see visible progress and the most prospects. Reframing your mindset like a marketer follow-through. can help attract talent. To further support marketing the industry, many companies are opting to collaborate and hold Consider forming task forces and committees to make sug- seminars and networking functions to increase awareness. gested changes and provide regular updates to your work- force on how the improvements will affect their experience Clearly Communicate Your Brand at your company. There are countless ways you can build The organizations that succeed in the recruiting process are engagement, but here are two considerations that can help those that clearly communicate and effectively market their to immediately boost morale. culture and brand to the right audience. A successful com- Executive Site Visits pany also establishes how it invests in people, defines its core cultural values and employee value propositions, and delivers Often around project kick-off, executives are present for this message to potential candidates in a variety of formats. groundbreaking ceremonies and to conduct business on the jobsite before work begins. But in many cases, workers don’t Reach Younger Audiences get the opportunity to interact with senior executives on the To build industry interest and awareness, many companies jobsite once the project starts. are now reaching out to high schools and providing summer for students.9 This strategy provides opportu- By inviting an executive to come and spend time with the nities for younger audiences to be exposed to and learn employees in their “office,” the message is communicated lifelong skills in the labor industry. In addition, companies that senior leadership cares about and appreciates all of its should consider ramping up their social media exposure to people. This also provides employees with an opportunity reach younger audiences. to voice their opinions to senior leadership about suggested improvement opportunities. While the advice may be unso- Before even posting a job, there are many actions that can licited, if leaders listen to the feedback and act upon it, then help your recruitment marketing strategy attract the right employee engagement can increase, often yielding lower talent and build industry awareness more effectively. turnover rates.

Consideration 5: Develop Employee Engagement Organize Office Events with Families Strategies A great way to engage your employees is to organize an event One of the most challenging components to retaining employ- where both office and field employees are invited to a “fam- ees is engagement. As of August 2018, Gallup reported that ily day” with activities for both adults and children. In the only 34% of U.S. workers are “engaged,” meaning they’re construction world, the opportunities are endless, as kids are involved in, enthusiastic about, and committed to their work fascinated by dump trucks and bulldozers – especially when and workplace.10 they get a chance to sit in one. Also, local professional sports In construction, engaging employees can be especially teams often provide group discounts to attend games. By challenging with the combination of office and field workers. inviting employees and their families to these events, you can When companies only focus on implementing engagement create opportunities for coworkers to build relationships with strategies in corporate offices, their field employees feel one another. disengaged. Engagement is an important component of any organization, To start developing employee engagement strategies, it’s and the construction industry is no exception. Work with important to understand how your people are feeling and your HR team to define specific action plans to get your what makes them excited to come to work. This is most eas- employees energized about contributing to your mission.

March/April 2020 CFMA Building Profits Employee Retention

Conclusion It’s no secret that employee retention is a challenge for every DAN SCHWARTZ is HR Communications Manager with organization. The more information you can gather about BKD CPAs & Advisors located in Kansas City, MO. His role is focused on executing internal and external people what your people want and what motivates them to stay, communication initiatives for BKD to support the firm’s the more equipped you are to create employee engagement culture. Dan has eight years of progressive experience in strategies that can lead to long-term employment success at learning and development, recruiting, and organizational your organization. n development. He has led and influenced HR change ini- tiatives within organizations related to training, employee Endnotes experience, and HR operations.

1. “Job Openings and Labor Turnover Survey Highlights.” U.S. Bureau of Labor In addition to his experience, Dan has published articles Statistics. November 2019. www.bls.gov/web/jolts/jlt_labstatgraphs.pdf. and books with the Association for Talent Development 2. “Hires and separation rates, November 2009.” TED: The Economics (ATD). He holds certifications in Recruitment Marketing and Daily. January 15, 2010. www.bls.gov/opub/ted/2010/ted_20100115.htm. Learning and Development, and he received his bachelor’s degree in HR Management from Kansas State University. 3. Siegel, Rachel; Long, Heather; & Olorunnipa, Toluse. “Labor market picked up steam in November as U.S. economy added 266,000 jobs Phone: 816-221-6300 and jobless rate fell to 3.5 percent.” Washington Post. December E-Mail: [email protected] 6, 2019. www.washingtonpost.com/business/2019/12/06/labor-market- Twitter: @danschwartzkc remained-strong-november-us-economy-added-jobs-jobless-rate-fell- percent.

4. “Construction and Helpers.” U.S. Bureau of Labor Statistics. KELLY POSTLEWAITE is Office Industry Leader for BKD September 4, 2019. www.bls.gov/ooh/construction-and-extraction/ National Construction & Real Estate Group located construction-laborers-and-helpers.htm#tab-6. in Cincinnati, OH. Kelly has more than 15 years of 5. Human Resources Research Team. “Employee Turnover Trends for experience assisting clients with tax compliance and 2019.” Gartner. 2020. planning, and she has spent a significant amount of time specializing in the areas of partnership and S corpora- 6. “State of the American Workplace.” Gallup. 2017. www.gallup.com/ tion taxation. workplace/238085/state-american-workplace-report-2017.aspx.

7. Spar, Benjamin; Dye, Colleen; Lefkowitz, Rachel; & Pate, Deanna. “2018 Kelly has created a powerful base of knowledge about Workplace Learning Report: The Rise and Responsibility of Talent basic tax return compliance and consulting, expanding it to Development in the New Labor Market.” LinkedIn Learning. 2018. include the more in-depth consulting necessary in both the learning..com/content/dam/me/learning/en-us/pdfs/linkedin- formation and operating stages of complex pass-through learning-workplace-learning-report-2018.pdf. business ventures. Her experience includes Section 704(c) allocations, Section 1031 exchanges, and multistate tax 8. “Eighty Percent of Contractors Report Difficulty Finding Qualified Craft preparation and planning. She is responsible for the super- Workers to Hire as Firms Give Low Marks to Quality of New Worker vision of the preparation of returns for several of the largest Pipeline.” AGC. August 27, 2019. www.agc.org/news/2019/08/27/eighty- clients in BKD’s Cincinnati office. percent-contractors-report-difficulty-finding-qualified-craft-workers- hire-0. Phone: 513-621-8300 E-Mail: [email protected] 9. Hoover, Sabine; Wilson, Ken; & Powers, Tim. “Talent Development in the Website: www.bkd.com Construction Industry.” FMI. 2015. www.cirt.org/resources/Documents/ TalentDevelopmentSurveyFINAL_ForWEB.pdf.

10. Harter, Jim. “Employee Engagement on the Rise in the U.S.” Gallup. August 26, 2018. news.gallup.com/poll/241649/employee-engagement- rise.aspx.

CFMA Building Profits March/April 2020