"Sansdemic” is a term coined by EMSI, a leading provider of labor market data. The term means “without people” or “without enough people.” The sansdemic is a growing demographic drought, projected to continue worsening throughout this century. To put it simply, there are more open jobs than there are people to fill them—or people who are willing to fill them. And that impacts all sorts of industries, including construction and engineering. This Article highlights some of the most common complaints seen in the construction and design labor markets to date and potential ways employers can address this growing crisis, based on a recent Ankura survey.
The Importance of Labor
Labor is typically the largest controllable cost in a business, and its optimization pushes performance, reduces waste, and maximizes margins and profits. In construction, once a project has been “bought out”, except for unanticipated escalation costs, labor remains the key variable impacting a project’s bottom line. Too much or too little labor affects crew efficiency and a firm’s ability to complete the work on time. In a world where the labor participation shortage is real and not going away, companies are looking for measurable ways to drive productivity, performance, and retention of talent. Just paying employees more is not driving major improvements and may not be sustainable over time. What can be done?
The first step is to understand what modern employees view as currencies. This is not just cash and time off, but a range of other categories where they identify value. A partial list includes:
- The ability to make a difference every day
- Feeling valued
- Structured mentoring
- Fringe benefits
- Being on a winning team
- Supporting the production of socially responsible brands
- Being a part of a diverse team
- Earned wage access
- Flexible shift schedules
- Alternative shifts from classic 8s
- Being told “Thank You” when earned
- The right amount of overtime
The list goes on. Everyone is different and people value compensation categories differently, which can require a wide range of compensation categories to be satisfied. Companies focused singularly on cash will find that there is not an amount of money that they can rationally pay employees to create satisfaction. Frankly, high paying companies often have poor cultures where employees are treated terribly because they cannot measure up to the performance expectations matching the pay. This creates a severe culture crisis.
So, what can we do? If we dig into the list above and work on a few of the alternative forms of compensation, employees get a broader range of “thank yous” from their employer. Not having a singular focus on cash creates a more complete level of satisfaction. Management teams know their employees better than anyone (although there are always some blind spots). Starting with an anonymous survey is always a good idea, especially if you plan to take action. Top “currencies” from the Ankura survey in the last 24 months have been shift schedule improvements, better communication, and increased overtime levels.
Shift Schedule Improvements
The shift schedule improvement is often the largest challenge of all the categories, but may drive the biggest positive results. The right shift schedules can significantly improve morale while also driving performance by having the right people in the right place at the right time. They often do not cost more when implemented properly, but can be very costly when the right work and pay policies are overlooked. However, they directly impact days off and work hours and so are an emotional topic. We know from experience that employees working a schedule they love will not leave for an additional dollar an hour of pay. Their lifestyles would be too disrupted, and they would not receive the same compensation based on the quality of life they would need to forfeit.
If an operation is currently running five days a week with two eight-hour shifts each day, it is running for a total of 80 hours, or utilizing approximately 48% of the 168 hours available in a week. One way an operation with this schedule could expand is to add a third shift at night. This would give a 50% increase in capital utilization without adding equipment for a total of 120 hours of operation each week. However, this assumes that the additional labor to sufficiently staff the third shift can be found.
If the eight-hour shift is so terrible, what is a better solution? Twelve-hour shifts, as an example, provide a dramatic increase in days off and increase weekend time off by 50%. Figure 2 provides an example of a 12-hour shift with the same exact staffing and coverage as the eight-hour shift in Figure 1, but the distribution of hours provides a different experience for the employees. In this option, employees get every other weekend off instead of every fourth weekend off. All of their weekends off are three- day weekends. They get 87 more days off than the eight- hour shifts and work 182 days a year and get 182 days off. Also, they never work more than three days in a row in their base schedule. Other iterations of 12-hour shifts can provide up to 17 additional weeks off each year without any loss of pay. Why must management teams continue to assume that everyone wants to work the same five-day schedule? Although it is right for some people, it certainly is not uniformly right for everyone. To attract and keep the best talent, companies must work to offer better options to shift workers. This not only helps attract the best talent but helps to keep them once they have arrived.
In construction, particularly on projects, shift scheduling improvements can be tricky in that there will be salaried project management staff working in conjunction with hourly craft trades, and if the trades are union members, then any shift schedule modifications will have to be in alignment with the union agreements, which is not necessarily impossible, just difficult. With the growing demand for alternatives, unions are beginning to more actively listen to their workforces’ preferences to remain relevant.
Improved Communication with Management
Only 33% of employees who took the Ankura survey felt that the management team communicated well. This is a huge blind spot for management teams, and it ties into other currencies. Employees need to understand how what their actions impact the organization and creates value. Communication is a currency that ties to many other topics like feeling valued and making a difference every day. Without communication, employees are often unaware of how the work they do translates into important outcomes. Leadership teams often respond when we share this information with comments like, “Will saying thank you really make a difference?” Employees are telling us that this is absolutely the case, and that leadership is largely missing from the day to day work, and rarely sharing information. Starving employees of this feedback will cause your best workers to leave and the company will be left with employees who do not care about making an impact – a terrifying thought.
Overtime
Overtime is also a major topic as it directly translates into pay. This topic will remain sensitive as a target of cost-cutting and waste. Unfortunately, for high-growth businesses, overtime is an incredibly effective tool. Employees get extra pay, and employers can satisfy customer demand. To overgeneralize, we are seeing two groups emerge in the workforce today. The older population is looking for a lot of overtime and the 20–40-year-old group is looking for something close to 40 hours. Companies that can create two different systems inside one organization are achieving a competitive advantage with the ability to please a broader range of workers. This is harder to manage, but when done right to leverage the right technologies for governance, performance and engagement improve dramatically.
In conclusion, companies need to look at a broad range of currencies when approaching the modern workforce. It is not acceptable to assume we know what all employees want or to use past practices to try and satisfy them. The key is to engage the workforce in a real and meaningful way, understand their wants and needs, and work hard to satisfy them where possible. This may mean increasing staffing to reduce overtime – or not increasing staffing to protect it. It may mean alternative shift schedules to give employees more days off or communicating in new and different ways to finally be effective. In the end, successful companies are the ones who are able to listen. Companies with employees who say that their management teams communicate effectively are great at listening. They know that talking less and listening more translates into great communication. The question is — are you listening to your people?