The demand for management talent among contractors is nearly universal. Turnover rates are rising as contractors rob people from one another. That is forcing contractors to pay higher salaries and also sell themselves to candidates as well as existing staff.
Contractors anticipate giving average salary increases of 4.17% for staff in 2007, according to a survey by PAS Inc., a Saline, Mich.-based compensation consulting firm. “But operations and technical support staff, like superintendents, estimators and schedulers, can expect almost double the average,” says Jeffrey M. Robinson, president of PAS. This is causing salary compression, where senior operational staff salaries are closing in on the levels paid to the executives who manage them, Robinson says.

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Turnover also is on the rise. Turnover rates at the end of the last boom were 15%, dropping to 13% during the early 2000s, says Robinson. “Last August, our survey showed turnover up to 16%,” he says, adding that the trend will continue during 2007. “That’s one out of six employees,” he notes.

A Fine Romance

Recruiting people is getting tougher. “Years ago, contractors used to throw money on the table and see who’d pick it up,” says Frank Bruckner, executive vice president of Kimmel & Associates Inc., an Asheville, N.C.-based executive search firm. “Contractors are discovering that recruiting someone is a romancing process. You have to make them feel welcome and comfortable.”

Money is not always enough to recruit quality people in this market, says Gary Warner, president of Warner & Co., a Charlotte, Vt.-based construction-industry management consultant. “You have to learn how to sell yourself job to applicants, just like you would sell an owner on a project.”

As for benefits, bonuses are once again on the rise. “In the past few years, the dollar amounts of bonuses were basically flat, even with rising salaries,” Robinson says. But bonuses are up 25% in the past two years, he says.

Recruiting a new employee is just the first step. The fight to retain people starts on their first day. It may be something as simple as making sure the receptionist knows their name and is expecting them, and there is an orientation program in place. More importantly, employees must feel challenged and have opportunities for training and clear paths for advancement, Warner says.

Keeping current employees happy also is cost-effective. “Firms have to consider the cost of keeping people as opposed to the cost of replacing them,” says William Peel, COO of Marshall Erdman & Associates, a Madison, Wis. construction firm. It may take a new person 12 months to get up to speed. That’s a lot of lost time and productivity, he says.

Some firms are looking to nontraditional means to retain people. “We try to keep people engaged by helping them learn and advance quickly,” says Greg Nook, executive vice president of J.E. Dunn Construction, Kansas City. Mo. But he says a firm’s physical work space can make a difference, too. He says Dunn is building a new office for its St. Louis branch. “It’s designed to be employee-friendly, with lots of light, workout space, and open meeting areas. We are trying to improve our people’s work lives to keep them happy,” he says.