Construction is amid interesting times, with big industry growth in some sectors, the IIJA (Infrastructure Investment and Jobs) act, supply-chain disruptions, and the rise of digital, just to name a few. One of the biggest challenges—or opportunities, depending on how you want to look at it—is labor attraction, retention, and productivity.
McKinsey suggests today’s labor mismatches are likely to persist because of structural shifts in the labor market, meaning the relationship between job openings and unemployment has departed from historical trends. In January 2022—two years from the start of the pandemic—the U.S. unemployment rate was at 4%, close to its prepandemic level of 3.5%. Yet job openings remained exceptionally high, with 10.9 million unfilled positions as of the end of December 2021, compared with 5.9 million in December 2019.
There are a lot of reasons that have caused this mismatch in labor talent, and it is impacting construction projects in different ways. The good news is there are a lot of solutions to address it. McKinsey suggests construction companies need to revisit what employees want beyond wages and consider a new approach to talent attraction, development, and retention. One example is by creating partnerships with educational institutions or considering nontraditional sources such as veteran-transition programs, as one example.
Certainly, there isn’t one way to approach labor attraction and retention. Deloitte suggests if we want to address this, we must support integrated training models, change narratives, promote more agile credentialing models, improve visibility into jobs and career pathways, shift corporate values, address needs of SMEs, consider the social determinants of work, and promote cross-sector collaboration.
While labor retention and attraction are one side of the coin, the other is labor productivity. Modular construction and best practices can certainly improve productivity in construction, but there is a bigger picture than just labor to consider.
A CMU (Carnegie Mellon University) study suggests labor is only one component of productivity. Rather labor productivity is a measure of the overall effectiveness of an operating system in utilizing labor, equipment, and capital to convert labor efforts into useful output, and is not a measure of the capabilities of labor alone. This study gives the example of investing in a piece of new equipment to perform certain tasks in construction. The output may be increased for the same number of labor hours, thus resulting in higher labor productivity.
This is exactly the conversation Peggy Smedley recently had with Erik Mikysa, senior vice president of marketing, Hilti, on a recent episode of The Peggy Smedley Show. They discussed the reason there is so much interest in Nuron, which is the company’s new platform that reinvents how construction professionals work daily on jobsites, is because it directly impacts labor. Nuron addresses health and safety challenges, as well, while also giving contractors the data needed to manage their business more effectively.
“Sure, you can save $10,000 that is great, but the real cost of the tools is not in the upfront acquisition, it is in the repair, the replacement, and especially the usage—the labor,” he says. “If you can equip your team members with systems that make them more productive, then this upfront cost is one element of the total cost. Construction companies that work with us, what they experience with us is they make more money by investing in our solutions and it is the total cost of ownership, total cost of installation, whatever you want to call it, that effects their bottomline.”
This will certainly be an underlying factor in the quest for better labor attraction, retention, and productivity. Digitization can help increase productivity across the board. Will you take advantage of it?
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