A 2021 skills shortage report compiled by recruitment consultancy Search shows that a whopping 83% of construction businesses are feeling the strain of the labour shortage.
Many are tackling this recruitment headache by offering higher wages and more benefits. Here we delve into how another aspect – tech – can overcome the labour shortages in construction.
The consequences of the labour shortage are far reaching
Brexit and the pandemic have taken their toll. The construction industry has been hit from all sides.
Businesses cite supply chain issues, a lack of availability of materials, and labour shortages as fundamental challenges for them right now.
We’re going to look at the shortage of skilled labour and how it affects businesses.
Increased risk of employees being overworked
A lack of qualified labour puts a strain on existing staff and can lead to overworking.
A report on mental health in the construction industry by recruitment company Randstad shows how being overworked has a negative impact on peoples’ mental health.
In 2019, the Office for National Statistics (ONS) reported that the rate of suicide for males working in low-skilled trades (particularly within construction) was three times the national average (ONS, 2017).
Since then, the mental health of people working in construction has worsened. This is due, in part, to the shortage of skilled labour.
Health and safety can be overlooked with disastrous results
The construction industry has the highest average fatalities of any sector in the UK. This makes construction one of the most dangerous industries to work in.
And yet, labour shortages mean there are fewer eyes and ears on site to identify and address safety issues. This can create barriers to keeping up with health and safety protocols.
According to one of the UK’s leading trade associations, NFRC, the volume of construction output here in the UK is forecast to rise by 2.8% in 2022 and 2.2% in 2023.
While this looks like good news, the increased pressure of demand often negatively affects health and safety. With less labour and more demand, it can be hard for employers to find the time to upskill employees and ensure new hires are properly trained.
Project delays happen without enough resources
Project delays are multifactorial. Supply chain issues due to Brexit and the pandemic are big contributors. However, a shortage of skilled labour is also an important factor.
Over 50% of UK businesses with labour shortages said they were unable to meet demands. According to a survey by leading recruiter Randstad, vacancies in the construction industry have risen by 39% in the first half of 2021.
Meanwhile, the Federation of Master Builders found that 60% of building firms have had to pause projects due to a lack of skilled tradespeople and that 42% of firms can’t get hold of general labourers.
A staggering 89% of builders have faced delays due to either materials or skills shortages.
Using tech to help overcome labour shortages in construction
When it comes to overcoming labour shortages in construction, people analytics is a great place for HR teams to start.
People Analytics is the process of gathering data about employees. But it’s more than just a database. It’s the analysing of that data that’s important.
There are many use cases for people analytics, and the reason it’s become so widespread is that it can help businesses identify and solve issues, as well as pre-empt problems arising in the future.
Let’s identify some of the ways people analytics can help address the labour shortage.
Increase employee retention to overcome labour shortages
With a lack of skilled workers, retention of existing employees becomes critical. If a business has a high turnover, then it isn’t operating effectively.
People analytics can help leaders understand why this turnover is happening and how it can be corrected.
The data collected may point to low levels of wellbeing, lack of career progression, or insufficient training. Perhaps current workers feel overworked?
There are solutions to all these problems, but businesses cannot put strategies in place unless they know what those issues are.
Achieve success with employee engagement strategies
According to Gallup high employee engagement leads to a 41% decrease in absenteeism and 17% increase in productivity. So engaging employees makes a big difference to organisations’ bottom lines.
Yet, employee engagement is complex, and the reasons for disengaged employees are multi-faceted. That means that measuring employee engagement requires a scaled approach, as the Utrecht Work Engagement Scale suggests.
People analytics can tell you not just whether employees are disengaged, but how and why. This data enables employers to tackle the issues at the heart of their employees and reap the benefits of a more engaged workforce.
Use professional development opportunities to overcome labour shortages
With the labour shortage, upskilling existing employees so they have a broader skill set becomes doubly important. Data from HR analytics can help identify which training courses deliver the best value for money.
Additionally, this data can identify skills gaps within a workforce or ones which are important to develop.
Upgrading your HR tech stack can help tackle the labour shortage
Many employers are turning to AI to help overcome the impact of labour shortages. IBM, who created the Watson Candidate Assistant for recruitment, says that AI has saved their own company $1 billion in recruitment costs.
Using tech not only streamlines processes to reduce cost, it can also accelerate the hiring process and reduce dependency on labour.
Here are two tools that digitise certain tasks and help HR professionals better manage their workloads.
1. HR bots streamline recruitment processes
These virtual assistants simulate human dialogue with candidates. They can help tackle the labour shortage in construction by making the recruitment process more efficient and streamlined.
This means that greater numbers of candidates can be screened and interviewed because they’re more automated and require less human intervention.
In addition, automating these processes allows HR teams to promote creative solutions to the labour shortage from within the organisation.
An example would be upskilling existing employees and focusing on the retention and wellbeing of the current workforce.
2. Applicant Tracking System
An Applicant Tracking System or ATS acquires data that goes beyond an applicant’s CV.
By looking at publicly available social media profiles and past work experience, an ATS can delve deeper into a candidate’s background. This saves HR considerable time and helps identify the most suitable talent for a position.
Even if AI doesn’t uncover talent for a particular role, you may find that the process reveals certain existing employees who have much-needed skills that have gone unnoticed.
Digital communication can help keep construction employees engaged
According to Mckinsey, the number one reason workers leave a company is because of uncaring leaders. So putting measures in place to tackle this issue can help overcome the labour shortages the construction industry is facing by reducing turnover.
Using digital communication tools such as instant messaging, employee perk platforms, and video conferencing can help employees feel more engaged.
Integrating person-led communications tools into your organisation can help workers feel appreciated and more connected to their team and managers. Even if they don’t see them face to face regularly.
This is especially useful for younger generations who are used to being kept up to date via their mobile phones.
Using tech has long-term people benefits for business
As well as helping to tackle the labour crisis by reducing dependency on labour, upgrading your tech stack can positively impact your bottom line in other ways. This includes:
- Streamlining and digitising HR functions
- Helping leaders make decisions backed by data
- Providing insights on how to target problem areas like employee retention and training
- Delivering savings on training and recruitment costs
Technology-driven benefits can reduce turnover
Often operating from project-to-project, construction workers can’t always rely on a set and stable work schedule.
Some construction companies are increasingly relying on incentive compensation to attract talent and encourage existing employees to perform at peak levels.
In fact, the labour shortage in construction has driven wages up by 6% according to a Government report.
Overcome the construction labour shortage without increasing wages
When trying to overcome labour shortages in construction, it can be easy to believe that increasing financial rewards is the answer. Yet not every employer can afford to increase wages right now due to rising business costs.
That’s why it’s important to look at other ways to attract and retain skilled labour that doesn’t include salaries.
Upgrading your benefits package is a good option for construction companies to consider. That’s because a carefully created benefits package can significantly raise levels of employee physical, mental, and financial wellbeing.
The average staff turnover rate in the UK is 15% while in the construction industry it’s significantly higher (21.4%).
Part of the explanation for this high turnover is low levels of wellbeing and a lack of focus on mental health. Worryingly, the construction industry has the highest rates of suicide in any sector.
According to the CIPD’s Health and Wellbeing at Work 2021 survey report, a focus on health and wellbeing at work plays a strategic role in reducing employee turnover.
By listening to workers and tailoring your benefits package, companies can help reduce turnover by increasing employee wellbeing.
Financial wellbeing benefits can give your organisation the edge
While benefits such as healthcare and pensions increase workers’ sense of security and wellbeing, it’s worth considering benefits that go above and beyond the standard (and predictable) format.
An area of employee wellbeing that’s often overlooked is financial wellbeing. Stress caused by finances can have a devastating impact on an employee’s life.
So it makes sense that companies offering financial wellbeing support to employees are more likely to retain staff.
That’s why here at Openwage, we built a platform that allows employers to easily and securely roll out earned wage access to employees. Through our app, your employees can benefit from on demand access to the money they’ve earned before their scheduled payday.
Learn more about the benefits of this employee perk for both your company and your people.