Top HR Challenges in the Construction Industry

By Jenny Barnes on Jun 20, 2023
5 min read 0 comment(s)

Share this:

HR-Challenges-in-Construction (1)

As the construction sector continues to evolve, driven by technological advancements, changing workforce demographics and the demand for sustainable practices, small business owners in the industry have been confronted with a host of complex HR challenges.

These challenges in the construction industry can significantly impact the ability of your business to deliver projects on time and within budget, which is especially problematic for an industry where efficiency and productivity are paramount to success. 

It's crucial to identify and address these HR challenges effectively so that you can begin to build a solid foundation for business success, attract top talent and remain competitive in a rapidly evolving landscape.

Challenge 1: Skilled Labor Shortage

The skilled labor shortage is critically plaguing the construction sector. With an aging workforce and fewer young people opting for construction as a career, the industry grapples with recruiting and retaining skilled workers. 

In fact, in a 2023 press release, Associated Builders and Contractors said the construction industry will need to attract an estimated 546,000 additional workers on top of its normal pace of hiring to meet the demand for labor this year.

While labor shortages have been found in many sectors, they have hit hourly craft positions especially hard, including in the construction industry. Many of these positions were previously filled by Baby Boomers, who are now retiring en masse. 

Without enough young people entering the construction industry to replace these retiring workers, the skilled labor shortage problem will be exacerbated. 

The reasons for a lack of younger generations seeking construction careers are multifaceted, but they include the perception of construction work as physically demanding and dangerous, and a societal push towards four-year degrees and white-collar jobs.

To overcome this, firms need to embrace modern recruiting strategies, such as using social media, to reach younger demographics. Implementing apprenticeship programs, investing in technology that can increase productivity, offering competitive wages and showcasing the potential for career growth within the industry can also work to attract more workers. 

Employee Recruitment Strategies for Today's Tight Labor Market

Challenge 2: Training & Development

The dynamic nature of the construction industry mandates that business owners invest in continuous employee training and development. Advancements in construction technologies like Building Information Modeling (BIM) and 3D printing are just two examples that have created a constant need. 

To overcome this challenge, companies should design effective training programs that are in tune with technological trends and regulatory changes. Engaging in partnerships with vocational institutions can provide continuous learning opportunities for employees.

Challenge 3: Workforce Diversity

Construction has long been perceived as a male-dominated industry. This lack of diversity hinders the industry’s ability to draw from a wide talent pool. 

Businesses need to prioritize diversity and inclusion in their hiring processes and create a culture that welcomes individuals from all backgrounds. This not only enhances the industry's image but also stimulates innovation and productivity. Here are eight additional benefits of diversity in the workplace >>

diversity equity and inclusion changes to make in your workplace

Challenge 4: The Expectation of Wage Increases

Many workers are requesting pay raises to offset the current inflation rate and increased cost of living. If your workers don’t receive a pay increase, they may start to look for work at a company that will pay them more to offset the added expenses. 

To overcome this challenge, employers in the construction industry will need to evaluate their budgets to accommodate the additional wages. If you can afford to give raises at your company, that will help set your organization apart from competitors. Wage growth in the construction industry in 2023 is expected to decline by 2.3%

Additionally, reviewing your benefits packages and adding those that are frequently requested by employees can also help ensure your organization remains attractive to its current employees and potential candidates. Added benefits may include better health, dental and vision plans, 401k, gym memberships, additional breaks and an Employee Assistance Program (EAP). Using HR tech that allows employees to manage their benefits, schedules and PTO is another highly sought-after offering.   

RELATED: Is Your Employee Compensation Plan Competitive? >>

Challenge 5: Safety Compliance

With construction being one of the most hazardous industries, ensuring safety compliance is a daunting task for HR professionals. According to one study, most working Americans (89%) said workplace safety is more important than ever before; and almost all employees (97%) said feeling safe is an important factor in deciding where to work. Unfortunately, only about half of employees reported feeling safe in their workplace. 

When construction companies like yours put safety first, your workers will experience fewer incidents and you’ll see an increased retention rate and more recruitment wins. If you’re unsure where to start, a comprehensive risk assessment and subsequent tailored safety plan, like those offered by the risk management team and safety and health consultants at Axcet HR Solutions, is a good place. 

Additionally, developing a strong safety culture, including regular safety training sessions, stringent enforcement of safety standards and cultivating a safety-first mindset can help mitigate this challenge. Using technology to monitor and report safety incidents can also improve compliance.

RELATED: How PEOs Build Effective Risk Management Processes >>

Challenge 6: Employee Engagement & Retention

Even with high wages in skilled positions, the construction industry faces high employee turnover. This is often due to the lack of engagement and career development opportunities. Implementing engagement strategies, like recognizing good work, providing feedback and creating clear career paths, can enhance job satisfaction and, consequently, retention.

RELATED: Prepare for the Retirement Boom to Avoid Business Bust >>

Challenge 7: Labor Law Compliance

Federal and state health and safety regulations exist to keep employees, contract workers and worksite visitors safe from harm. Nearly all private employers are subject to these laws, which aim to eliminate workplace accidents and illnesses. 

Managing labor law compliance, especially in an industry with a diverse and often transient workforce, can be intricate. 

Having a comprehensive understanding of labor laws and regulations is critical. HR professionals should stay updated on any changes to labor laws and enforce them rigorously. These are health and safety laws all businesses must follow >>

health and safety laws all businesses must follow

Moving Forward

The role of HR in the construction industry is more critical than ever. To address the challenges in the construction industry, HR professionals, like the experienced team at Axcet HR Solutions, must take the lead in adopting innovative strategies to attract, retain and develop talent. Leveraging technology for recruitment, training, safety compliance and labor law compliance can be transformative.

Furthermore, strategic partnerships with educational institutions and industry bodies can help in continuous employee development and enhance the industry's image. A more inclusive and diverse construction industry can tap into a wider talent pool, which is vital for addressing the skills shortage.

New call-to-action

Written by Jenny Barnes

Get HR Updates

Table of Contents

EEO-1 Reporting Deadline 2023

EEO-1 Reporting deadline 2023
Ask the HR Expert: Long Bathroom Breaks

Ask the HR Expert: Long Bathroom Breaks - An Employer's Guide

Let us know what you think...