Replacing Workers Who Walk NowIs a Bigger Drain on the Bottom Line
| MWH's Uhler sees a growing lack of professional courtesy in firms' recruiting. "Before, we used to call each other," he says. "Now, no one even blinks." Recruiting and turnover excesses are perhaps nowhere more acute than in the red-hot Las Vegas construction market. Employee poaching is widespread and aggressive recruiting tactics include everything from signing bonuses and moving expenses to flex hours and matching 401(k) contributions. Construction now is the second-fastest growing employer in southern Nevada, trailing only the hospitality industry, says the Nevada Dept. of Employment, Training and Rehabilitation. Construction employed 106,800 people in the state at the end of 2005, a 12.2% gain over 2004. There are now between $24 and 26 billion worth of resort expansions planned through 2009, the Las Vegas Convention Visitors Authority reports. The ambitious program will use over 7,000 workers at peak activity, or about 1/3 of southern Nevada's total building trade work force, says Richard Rizzo, chairman of Perini Building Co., a unit of Perini Corp., Framingham, Mass. It has been importing workers from out of state, paying 10% to 15% over scale, plus moving expenses. Perini offers flexible work days and hours, enabling employees to start and finish when they want, Rizzo says. Employees all have basic health benefits, although the firm froze pensions a year or two ago due to spiraling costs and increased liabilities. But it also offers matching 401(k) contributions, life insurance coverage, 100% tuition related to career development, and signing bonuses to college grads. "There is a premium for talent coming into our construction industry," Rizzo says. Perini maintains "a gentleman's agreement" when recruiting people from other local firms by notifying their employers, "although that doesn't always work," Rizzo admits. The firm now recruits nationally rather than in western states alone to "find more people outside the market that we need to come in," he says. Frank Martin, president and CEO of locally-based Martin-Harris Construction, uses headhunters and national ads to secure new management talent, but keeps locals off-limits. He finds poaching a "disturbing" practice that has strained relations with subcontractors. Busy firms are hand-picking jobs and pre-qualifying owners to avoid risking subs' availability if the project is not real, Martin says. |
Strategic Imperative
The industry's growing people crisis has firms across the U.S. scrambling to shore up the work force with new incentives and treat employee development as the new strategic imperative, elevated to the same corporate priority as finding new markets and making money.
| Pay Strategies Vary with Employee Goals | |||
| Compensation Element | Attract? | Retain? | Motivate? |
| Base pay | High | High | Low |
| Short-term incentives and bonuses | Low | Medium to High | High |
| Long-term qualified deferred compensation | Low to Medium | Medium to High | Low |
| Long-term non-qualified deferred compensation | Low | Medium to High | Medium to High |
| Perquisites | Medium | Low | Medium |
| Benefits | Medium | Medium | Low |
| Source: FMI | |||
Edwards and Kelcey this year pushed ownership deeper into the organization. "We're making it easier to become an owner earlier in your career," McMahon says, although the perk "still depends on performance." He says turnover is "virtually zero" among employee owners.
Stock ownership can be an effective retention tool "by raising the ante of leaving," says one executive. But firms must walk a fine line in designing "golden handcuffs" that are not onerous to potential new hires. After conducting a comprehensive compensation evaluation "to make sure we're in the market," Kleinfelder, San Diego, is adjusting pay inequities and has set a company goal of annual reviews for all employees to get a better "temperature check of where people are in their career paths," says CEO Gerry Salontai. "In our new strategic plan, we are putting more focus on developing staff."
New corporate job titles reflect the rethinking. "We used to have employment managers, now they're managers of talent," says PB's Ryan. McKim and Creed's chief administrative officer, who manages the firm's human resouces, accounting and facilities areas, now is its "chief people officer," says CEO Creed. "If we believe people are our most important asset, we needed someone with the right title and clout," he says.
Among the most prized of those assets could be the industry's aging baby boomers and growing crop of retirees over the next decade. Washington Group's Myers says the firm is experimenting with ways to keep them more engaged. "They don't want to work full time, but they don't want to sit around and do nothing for the next 15 years either," he says. "They are redefining retirement."
| PB certainly has found enough for 70-something Lou Silano to do. The senior vice president and technical director of major structures is starting his 55th year with the firm. "I've always been involved in interesting projects," says the veteran of Boston's Central Artery/Tunnel project and New York City's 63rd Street subway tunnel, among others. He and three other PB employees recently were honored for 199 years of combined service. "If you're happy and content, you don't look for other avenues," says Silano. |