How to Build a Construction Labor Strategy
Finding labor is going to be harder in 2022 than any time in over a decade. The numbers are clear. The trends are clear. A labor shortage is on the horizon.
The good news is you have time to get ahead of the trend. But it’s time to start now. Smart companies are planning for the upcoming shortage.
This guide will walk step by step through how forward-thinking companies are building and executing construction labor strategies that work. When the time comes, these companies will find skilled trades people with relative ease when they need them and keeping their projects on track.
The most important step is starting early. The best labor strategies are built and executed over a period of weeks and months. If you need help with any step along the way, please reach out to us at email@example.com and will set up a free evaluation of your labor strategy.
What are the indicators telling us about upcoming labor shortages?
As of the fall of 2021, the overall construction industry is not experiencing a labor shortage, though this won’t last. The labor market is tightening quickly. Some areas of the industry are feeling more labor constraints than others. Overall, though, the industry has enough employees to fill the open positions. We’ve discussed how we get to this conclusion in a previous post.
The trend is clear, however, that the industry is heading for a labor shortage. This coming shortage has the possibility of being severe and will impact many companies’ ability to complete projects for
What we’re watching five (5) leading indicators in the labor market:
- Associated Builders and Contractors (ABC) Backlog Indicator. This metric measures backlog (in months) from its member contractors. ABC provides a data set going back to the Q2 of 2009 which helps contextualize the information. The headline number on the backlog indicator reflects all the submissions from the ABC member construction companies. However, if you get into the data the backlog information on large (>$100M) construction companies is at an all-time high of 16 months. The previous all-time high was 14.6 months so this is a significant increase. These large companies executing large projects will be a major driver on the labor market – and with a strong backlog these companies are going to be looking for talent now.
- Total Available Construction Labor (TACL). This metric, developed by Road Dog Jobs compares the construction job openings with the total unemployed construction workers to measure whether there are enough available workers to fill the open positions. There have been times where there are more open jobs than unemployed construction workers. These times are data confirmed labor shortages. At RDJ we view any time TACL drops below 100,000 represents a labor shortage. The industry in the middle of a labor shortage from the summer of 2018 through the spring of 2020 until the impacts from COVID-19 hit the industry. A significant number of projects were cancelled, and people were laid off in large numbers. While bad news for many people and families, these layoffs eliminated the labor shortage. Based on the data, the shortage is on its way back and we expect it to hit during the summer of 2022.
- Construction Unemployment Rate. This is data provided by the BLS monthly. Since the spring of 2020 this rate has dropped consistently and currently stands around 6%, the lowest rate since February 2020 just before COVID.
- Non-Residential Spending. Non-Residential construction spending hit a peak, on a seasonally adjusted annual basis, in January 2020 at approximately $886 billion dollars. As of July 2021, non-residential spending is still over 11% off the January 2020 peak. As this spending picks up and begins its recovery to pre-COVID levels, one impact will be a further tightening of the labor market.
- ENR Top 400. Engineering News Record puts this list out every year to show the top contractors in the United States. Each year ENR compiles the overall revenue number for the top 400 list. This is a macro view of the construction market, but it represents a meaningful ($400B) size of the market. Comparing the growth in revenue of this data set against the growth in employment in the construction industry tells an interesting story. Over the past five (5) years, the ENR Top 400 revenue has grown at a rate of 4.6% per year, compounded. Construction employment, however, has only grown at 2.3% per year. Revenue growth that outpaces employment is unsustainable in the construction industry. This is indicative of an industry stretching its teams and at some point, that rubber band will break.
These indicators point in the same direction. The construction labor market is tightening and it’s happening fast.
When will the next shortage in the construction labor market?
The leading indicator metrics above help us identify the trend. To help with timing of our labor shortage forecasts we look at the Total Available Construction Labor (TACL) chart. This chart suggests that the shortage will hit in the summer of 2022. The coming construction labor shortage could also accelerate and be pulled earlier into 2022. Generally, construction employment hits a peak in the summer as the weather is most favorable for construction projects across most of the country. This reinforces the likely timing of the next labor shortage.
How early do we need to develop a construction labor strategy?
It’s never too early to put a construction labor strategy into play. The ideal timing to put a labor strategy plan into place is six (6) months ahead of your needs. Depending on the quality of your construction labor funnel, this six-month number can be longer or shorter. The better your funnel the less time you need and vice versa.
The best practice of top performing construction companies is a year-round focus. The three (3) phases of the construction labor funnel work together and reinforce each other so over time the results will accelerate.
What are the characteristics of best-in-class construction recruiting?
Not many construction companies get this right. Construction labor recruiting is something everybody in the company will agree is very important and is also something that will not be given enough budget money. When companies are honest about their own efforts and commitment to building good labor plans, most will say they fall short of where they’d like to be.
However, some companies do get this right. And those companies are rewarded by a willing and committed labor pool. The key elements of what separates these companies from the rest is:
- They set budgets for their recruiting team. Recruiting effectively requires time from operations, human resources, and marketing. These efforts will require advertising and a continuous effort. This will take some money to do well.
- They engage real marketing people in their recruiting. Few construction executives are naturally inclined to anything marketing related. The best recruiting construction companies understand that recruiting and marketing have a lot of overlap. These companies engage their in-house marketing teams or look to external resources for help.
- They understand the power of social media and online platforms. For years construction executives brushed off the notion of online and social platforms having value. That should no longer be the case. Social media is an effective way to reach the people that you’re looking for to come to work for you. These platforms can help in all three phases of the recruiting funnel and are a powerful tool at your disposal.
- The don’t always think conventionally. Most companies are going to do one or two of the same things. The best companies try new things. Try something that may get attention. The better you can differentiate your company and your brand; the more people will remember your company. As we discuss later in the article, creating awareness of your company is the very first step toward building an effective recruiting strategy.
Where do I find construction skilled trades people to recruit?
This is not a simple answer because the group of people you’re trying to reach are in many different places. Some are looking for jobs online. Some are reaching out through their own network. Some are making phone calls to companies and recruiting offices. Some are making in person visits to job sites and recruiting offices. Some are new to the industry and not sure where to even look. The best labor strategies get your message in front of all these people.
The best labor strategies utilize tools to reach participants where they are. One of the first things to consider when building your construction recruiting strategy is how will you get your message into both online and offline platforms?
- Offline Platforms. Many of the best networks in construction are not online. These networks are developed through phone calls, text messages, and back yard bar-b-ques.
- Phone calls & text messages. Most of the best construction hands find their work through phone calls and text messages. The best construction labor strategy will find a way to tap into these networks.
- Physical recruiting centers. Many companies operate physical recruiting centers. This can be a good way to see potential employees face to face and can help in evaluating potential employees.
- High schools and trade schools. Plenty of potential skilled trade workers are currently in schools and either looking – or not yet aware – of the opportunities your company has.
- Online Platforms. As industry demographics change, more and more people are looking to online resources to find jobs.
- Job boards and apps. There are several job boards and apps that aggregate jobs, resumes and profiles to help match jobs and people.
- Social networks. Several of the social networks have their own job posting capabilities. Facebook, for example, has groups which can be an effective place to post construction jobs.
- Direct messaging. Sending emails and messages through online platforms can be an effective way to get job information in front of prospective employees.
What is a construction labor funnel?
Understanding the construction labor funnel is critical to building a successful labor strategy. This concept is explored in more detail later in this article, but this is an introduction. The construction labor funnel is a model for building recruiting plans. Building the funnel is not the entire labor strategy, but it is the biggest component.
It’s called a funnel because of the mental picture it gives of a wide opening (lots of people) at the top of the funnel and a narrow opening (few people) at the bottom. The idea is strategically and efficiently move candidates through your funnel. This means that you have enough people that are aware, interested, and ready to act when your jobs become available.
Think about your construction labor funnel in three (3) phases. Each phase requires different tools and approaches. Each phase has its own goals and objectives. And yet these phases work hand in hand to deliver candidates to your company reliably when you need them.
- Construction Labor Funnel Phase 1: Creating Awareness
- Construction Labor Funnel Phase 2: Building Interest
- Construction Labor Funnel Phase 3: Sparking Action
How do we build a construction labor strategy?
Your construction labor strategy should be built both on planning ahead and having contingencies in place to address potential problems that arise. There are five (5) steps to developing your construction labor strategy.
- Step 1. Evaluate your needs
- Step 2. Clarify your message.
- Step 3. Build your construction labor funnel
- Step 4. Develop contingency plans
- Step 5. Measure, evaluate and modify
Construction labor strategy. Step 1: Evaluate your needs.
This step is about identifying what your goals and needs are. This is critical because your needs will determine the tools and actions you’ll need to take. With a sharp focus on your needs, you’ll be able to deliver better messaging and a more compelling value proposition.
- What are the specific trades you’re looking for?
- How many total people of each trade are you expecting to recruit?
- Where is the project or location(s) that you want to target?
- Will you need local labor or traveling construction labor?
- What are the dates that you expect to need people the most?
- What pay rates, per diem and travel are you offering?
It helps to start with an understanding of the challenge ahead. With this information together, you can put together a simple spreadsheet showing the needs of each project by location including the dates. As the needs of your projects are laid out, you’ll be to identify critical timing, expected pinch points and craft that are most in need.
Construction labor strategy. Step 2: Clarify your message.
With your needs understood it’s time to clarify your message. What are you offering a prospective employee? In other words, what’s the angle that you can communicate to potential employees that they’ll find most attractive? This sounds simple but it’s important. Most construction companies don’t communicate a message. They communicate, essentially, “hey, we’re hiring!” While that can work – especially for well-known companies – this is not going to work most of the time.
This step is about developing a message that will resonate at each step of the construction labor funnel. Your messaging should be grounded in the values of your company. Your company most likely has a mission, motto, or value statement that resonates with your employees – and this is great place to start with crafting your message.
Your goal is to build a message that differentiates your company. You want prospective employees to see your logo, recognize it and to have a sense of what your company is about.
This doesn’t have to be complicated. People choose jobs for all sorts of reasons from simply the job is hiring and I need a job, to the location, duration, pay rates etc. Our article on how to get more traveling welders talks about the eleven (11) key points that candidates are looking for – and you can build a message that “sells” how your projects excel at one or more of these points. The eleven pieces of critical information are:
- Trade name. Explain, simply, what trade you’re looking for. Avoid listing several trades in the same job. One job ad should be targeting one trade at a time. For example, if you’re looking to fill per diem welder jobs, put exactly that phrase in the job title. Make it specific. Looking for local welders? Use that phrase. Looking for per diem electricians? That’s the phrase you’ll want to use.
- Job location. Where is the job happening? If you can’t or won’t disclose the town, even stating the state is helpful. We see jobs list “nationwide” as a location and we can assure you this not very effective.
- Pay rate. If there’s one piece of critical information this is it! The per diem construction skilled trades people are looking for high wages. The main reason anybody is in the business of traveling for construction are the higher wages. So be up front about what you’re paying. Put it out there and make it easy for people to decide whether they’re willing to work for the wages you’re paying. That will save everybody time.
- Per diem rate. This is another critical piece of information. This rate can be a way to attract a lot attention. We’ve seen high per diem rates generate a ton of applications even when the pay rate isn’t as high.
- Per diem days paid per week. How many days a week are you paying per diem? Some jobs pay per diem for days worked and others will pay seven days a week. This information helps per diem welders make the calculation on what they can earn.
- Work hours per week. How much overtime is the job working? Per diem welders are looking to maximize their earnings, working more hours can be very attractive.
- Project duration. Longer projects provide certainty and can, at times, be attractive even with lower wages or per diem.
- Project start date. When is the job starting? This information can help people who are looking to find the next job or who are looking to work back-to-back projects.
- Signing bonus. In a competitive labor environment, some companies are paying sign on bonuses to attract people. Sometimes these bonuses are paid in phases as people stay for certain periods of time, for example, after six months.
- Travel pay. Some projects will pay for travel. This can be an hourly rate, mileage reimbursement per the IRS guidelines or a lump sum payment. This payment can also be split between the beginning of the project when a per diem welder arrives and the end of the project when the welder is laid off.
- Expense reimbursement. This is another way that companies will pay for the expenses of a per diem welder. Some companies will reimburse for hotel and meal expenses. Others will secure lodging directly and provide it to the per diem welders for free.
If your jobs stand out in one of these areas – for example you have long duration projects – this is a good message to build around. Skilled trades people are looking for jobs for a variety of reasons, so each one of these eleven items can be used in your messaging.
Construction labor strategy. Step 3: Build your construction labor funnel.
At this point you understand your labor needs. You know how many people you’ll be recruiting, when you need them, where the projects are located. You also know your message and how you’re going to pitch potential candidates your projects. It’s time to build our construction labor funnel.
Building a construction labor funnel is done in three (3) phases. Each phase has its own goals, steps, tools, and metrics. These phases work together to put your company in a position to recruit effectively.
- Construction Labor Funnel Phase 1: Creating Awareness. This is the very top of the funnel. This phase of recruiting is about two-way awareness. You’re looking to gain an understanding of the available labor market and you want potential employees to know who you are. The two goals of this phase of the funnel are:
- Increasing your company’s name recognition. When people hear your name and see your logo, do they know who your company is?
- Building your candidate contact list. You’re looking to build a list of potential employees, their craft, a resume, and contact info, including emails! This list will make many of the tools used in future recruiting steps much easier.
What are the actions you can take for creating awareness?
- Organic social media. Your company likely has existing social channels (Facebook, LinkedIn, etc.). These are a great place to start building awareness. Your goal is put content out that helps get and keep your company’s name on the minds of potential employees. Your goal is a broad list of potential employees. You’re not trying to vet anybody at this stage. Not yet. If your company doesn’t have social channels, don’t worry. It’s never too late to start. Start with a Facebook business page. This is free and since Facebook has a built-in network including lots of skilled trades people and groups, this is the place to start. While you can eventually spend money on the social sites, to start they’re free and can delivery a great return on your time invested.
- Write industry articles. Look for industry newsletters, websites, magazines, conferences, job fairs etc. to participate in. This can be tough because it involves creating content in some cases, but you can reach a lot of people and payoff can be significant. You can post these on your own company blog, or your company’s LinkedIn page. This is another free option and other than time spent shouldn’t cost you a dime.
- Advertise in industry publications. If writing articles doesn’t interest you, then look to spend some of your marketing budget on advertising. Industry trade groups such the Associated General Contractors, Associated Builders and Contractors are good places to start along with local chapters of these organizations. Advertising will cost money and this is where an established budget can be a help.
- Introduce your company to local trade schools. Search in the location that you’re expecting to need people and talk with the administration at the trade schools. These schools are always looking to get their graduates to work, and this can be a good short term and long-term option. Another free option, this one takes time to get in the door and hold meetings.
- Establish a brick and mortar recruiting center. Several industrial construction companies use this strategy. Companies rent a storefront or some other physical location and staff the location with recruiters who interview and vet potential employees who come in the door. This is one of the most expensive options. It can be attractive for companies that do a lot of work in a particular geographic location
- Send direct mail. Everybody loves getting mail. Even sending a post card can get attention and keep your company on potential employees’ minds.
- Construction Labor Funnel Phase 2: Building Interest. This is the middle of the construction labor funnel where urgency begins to increase for both companies and job seekers. Now that people know who your company is, why should they care? Do they engage with your social accounts?
This is your opportunity to capitalize on awareness from phase 1 and drive a deeper understanding of your company. Doing so creates interest from the candidates in working from you in the future. The goal of this phase is driving engagement. You want to have people commenting on posts, returning surveys, talking on the phone, participating in your giveaways and overall being on the minds of potential employees.
What are the actions you can take to build interest?
- Use your social channels. Many construction companies have existing social channels, typically Facebook or Instagram. Most of these companies don’t have a good strategy for how to use them. Well, here it is. Your goal with the social channels should be primarily focused on generating interest from potential employees. Get creative, put out polls, ask questions, post pictures. The more people engage with your posts the better. Each engagement will increase the recognition and understanding of your company – and this is a key differentiator in recruiting.
- Set up routine communications. These communications can be via email, direct mail, or social posts. They can be a newsletter about the latest news of your company, updates on big project wins, or even surveys about the preferences of your workforce. The better the content the more engaged potential skilled trades people will be. The idea is that you’re building avenues to get your messages out into the world and getting more people involved with your company.
- Put interesting content out. Interesting content is important. This can be done quickly and easily by reposting content that others have created. Reposting memes, articles or blog posts is a way to drive interest.
- Encourage employee social media. Your employees present a big opportunity. Even encouraging your employees to like, comment or share your company’s posts can go a long way. Make this a priority.
- Do giveaways. This is a relatively inexpensive way to build interest. People love giveaways and when done right they can be very effective.
- Sponsor local youth sports. This is a local approach to building interest. It can really work. This is especially effective in locations where you have upcoming projects or where there’s a labor pool you’re looking to get into.
- Volunteer in the local community. Like sponsoring youth athletics this can drive brand recognition and brand reputation in important locations.
- Set up screening calls. These are calls to review a potential candidates resume and their understanding of the work they do. These calls have multiple benefits. First, they’re low pressure since you’re probably not yet ready to hire. Second, they build credibility of your company with skilled trades people. You’re taking time to reach out and talk about their skill set and experience. This genuine interest from you can go a long way in differentiating your company. Third, you’re vetting the candidates. This makes your candidate list more valuable for the times when you’re ready to hire.
- Construction Labor Funnel Phase 3: Sparking Action. This is the very bottom of the funnel where the rubber hits the road. When you have an open job, how quickly are people applying? If you’ve handled your business in steps 1 and 2, and by adding a few strategies now you’ll have no trouble finding candidate when the time is right. You want to communicate clearly about the job and in this article, we break down the eleven (11) key elements of a traveling welder job description. The goal of this part of the funnel is to fill jobs with quality candidates.
What actions can you take to spark action and get your jobs filled?
- Local advertising. Old school? Yes. It can still work. Local websites (news stations, newspapers), local blogs even local Facebook pages can be good place to look to put your ads.
- Job boards. You have lots of options here from your own company’s board to the large national jobs, or more industry targeted job boards like Road Dog Jobs. These boards can be very different, and each can play a role in your recruiting strategy.
- Hold an in-person job fair. Find a local venue, advertise the job fair, set up some giveaways – swag works – and invite people to show up.
- Hold on online job fair. This is a relatively new idea that has a lot of promise. Especially for per diem construction jobs, folks that are willing to travel will find this convenient.
- Premium job ads. Most job boards have a way to boost your job ads, so they get more attention. These can be very effective and give multiple times the applications as non-premium jobs.
- Organic social media. This is a standard post on a social media site. Whether you’re posing on your own site or an industry group, these posts can drive attention to your job ads.
- Paid social media. This is where you pay the social media sites to run paid advertising on the site. Paid social media can be very effective in driving attention.
- Direct messaging. Instead of waiting for people to reach out to you, use your candidate list from the top of funnel activities are proactively contact them regarding upcoming opportunities.
- Phone calls and text messages. Direct outreach to people that have worked for you before or that you’ve collected on your contact lists can be very effective.
- Referral bonuses. Mobilize your network and advertise a referral bonus program.
Construction labor strategy. Step 4: Develop contingency plans.
The labor market is fickle, and even the best construction labor strategies have risk. The primary labor risks deal with urgent labor needs:
- Having an urgent need for people that you can’t fill.
- Having sufficient people but not the level of quality or skill you need.
- Not being able to find enough travelers to fill your per diem jobs.
These situations can arise in a moment’s notice. Whether that’s a project that needs to get back on track, crews that didn’t show up to a project or a new project award that you weren’t expecting.
When you have a construction labor problem today, what do you do? Probably a lot of the actions listed in the Sparking Action section above. The key is to get ahead of these eventualities. Beginning a few weeks ahead of your most pressing needs
- Third party labor services. Typically, either subcontractors or staffing companies, these companies can offer manpower in a pinch. There are lots of construction staffing companies so spending some time up to evaluate prospective companies well before any need can go a long way.
- Think outside the box on incentives you can offer your project teams. Whether those be completion bonuses or referral bonuses, sometimes the right incentives can refocus a group that is understaffed.
- Talk to the competition. Not ideal, we know. Having relationships with your competition can be valuable in these situations. A best practice here is reaching out proactively ahead of time and establishing good communication channels.
Construction labor strategy. Step 5: Measure, evaluate and modify.
All plans need to be measured. On you on track or off track? Are you ahead of schedule or behind? Are your investments working or not? This is no different.
The metrics should inform you on how well the construction labor strategy is working. We break down the metrics according to the three (3) phases of the construction labor funnel. These are examples of metrics that can work, though the right metrics for you will depend on the tools and strategy that you put together.
A word of caution here. There are several metrics below that many (non-marketing) construction types are going to scoff at. There are metrics around social channels and online activity. The construction industry is not up to date on how to use social channels and websites to improve their operations. We encourage everybody to take these seriously. Driving activity and engagement on your sites can be a powerful way to differentiate your company as compared to the 860,000 other construction companies in the United States.
- Phase 1: Creating Awareness Metrics
- Total candidate list (#, by trade). This is the top metric to watch. The more robust this list the better position you’re in to be proactive with your recruiting needs.
- Social channel total followers (#). This demonstrates that potential employees are hearing about your company.
- Site traffic (#, week). This demonstrates that your outreach via articles and advertising is working.
- Phase 2: Building Interest Metrics
- Social post reach (#). This is important because it’s measure engagement. If you’re putting out content that people want to engage with (like, comment, share etc.) then more and more people will see the content. This behavior will help you phase 1 goal for creating awareness as well as your phase 2 goal of building interest.
- Phase 3: Sparking Action Metrics
- Time to fill jobs (# of days) How long after you post jobs are you able to fill them?
- Applications per job post (# per post) How well are you able to convert interested people into applications.
How do I recruit for per diem welder jobs?
Whether you’re looking to fill per diem welder jobs or per diem electrician jobs or any other per diem skilled trade jobs, building a construction labor funnel will work. Per diem welder jobs can be difficult to fill because of scarce resources, which means that the messaging needs to be good (always start with pay rates!) and you should use multiple channels to get your message in front of the right people. Especially as the construction labor market continues to tighten, filling traveling per diem jobs will become increasingly difficult.
Conclusion on building a construction labor strategy
Building and executing a construction labor strategy takes work. Whether you’re looking to fill local jobs or traveling per diem jobs, putting together your strategy is important. Trying to fill per welder jobs? You need to build a construction labor strategy. Trying to fill per diem electrician jobs? You need to build a construction labor strategy for these jobs too. Any type of construction per diem jobs could use these strategies.
It takes skill sets that don’t come naturally most construction companies. It takes attention to detail with an eye toward building strong messaging and meeting the potential applicants where they are.
If you’re looking for help with building a construction labor strategy that works, don’t hesitate to reach out to us at firstname.lastname@example.org and we’ll set you up with a free consultation.
Best of luck to you in your recruiting efforts.