Lower Your Construction and Skilled Employee Turnover

Jennifer Reid | March 20, 2017

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In the past year, the construction industry has created, on average, 28,000 jobs a month. This is about 8% of the overall employment increase for the country. With all these new jobs being created, why are construction retention notoriously low?

If you think you can live with that turnover rate, think again. A CAP study found average costs to replace an employee are:

  • For workers earning less than $50,000 annually, the average cost of replacement is 20 percent of their annual salary.
  • For employees earning $30,000 or less, the typical cost of turnover is 16 percent of their annual salary.
  • Jobs that are very complex and that require higher levels of education and specialized training like electricians and engineers tend to have even higher turnover costs.

Additional Employee Turnover Costs

Your turnover rate costs you money in unexpected ways:

  • Separation costs such as exit interviews, severance pay, and higher unemployment taxes.
  • Vacancy costs such as overtime for other staff or temporary staffing.
  • Replacement costs such as advertising, search and agency fees, screening applicants, including physicals or drug testing, interviewing and selecting candidates, background verification, employment testing, hiring bonuses, and applicant travel and relocation costs.
  • Training costs such as orientation, certifications, on-the-job training, and safety equipment.
  • Additional costs incurred as your new employee learns his or her job, including reduced quality, errors, and material waste.

Causes of Employee Turnover

Have you ever thought about the causes of your employee turnover rate? Here are a few of the most common reasons:

  • Poor Management - your employees may feel a lack of appreciation or support from their supervisors.
  • Failure to Meet Expectations - the pay, work, benefits or company culture may fall short of a new employee’s expectations, causing them to voluntarily exit.
  • Bad Fit - maybe your employee was great at interviewing, but not great when it came to doing the job expected of them.

How to Improve Construction Turnover

Now that you know the most likely reasons why an employee leaves a company, you can change your company culture to increase construction retention. A 2010 study released by the Harvard Business Review listed a few reasons employees stay with companies:

  • Pride in the company
  • Salaries and benefits that are competitive
  • Opportunities for growth and development
  • Meaningful work
  • Supervisors who show respect for the employee
  • Appreciation and recognition
  • Offer Competitive Benefits

Make sure you are offering your employees a salary that is above most of your competitors. When a higher salary isn’t available, you can offer other benefits, like healthcare, vacation days, and flexible schedules.

Build Team Unity

Get your teams engaging together under different circumstances. Organize situations for them to interact outside of work, like holidays, lunches or retreats.

Get them the Right Tools

Your employees may be fighting with out of date equipment everyday they are on the job. This can frustrate anyone with enough time. Make sure you get them the best equipment to do their jobs. Equipment isn’t limited to excavators and hammers, it can include software to make their day easier. Isaac Barlow, CEO of busybusy, talks in depth about employee retention.

Empower Your Employees

Regularly get input from your employees on how to improve their work conditions. Keep communication open between all levels of your company. You don’t need to share every shred of corporate information with your employees, but share news with them about company goals. For example, if a build was finished under budget. It’s important to share goals that have been achieved as well as missed goals, this gives your employees an accounting of their work performance.

Reward Hard Work

Make your best employees the example. Regularly show appreciation for all your workers, but make a spectacle of someone who goes the extra mile. Rewarding them with a $100 Amazon gift card is cheaper than replacing an employee. Sometimes pure recognition is more valuable than money. Sending a personal note of appreciation or thanking them for their work in front of their peers will go a long way.

Encourage your managers to communicate often with your employees and take immediate action if they notice someone showing signs of becoming disengaged. Keep your team together by heading toward a more profitable future, you can increase job satisfaction and improve construction turnover.