Making Margins Matter in People Management
Large or small, firms across the construction industry are constantly seeking to minimize overhead and maximize profits.
Margins matter—yet, what if the most successful architectural, engineering and construction (AEC) firms continue changing the way they view certain internal departments, many of which have been historically deemed purely an expense?
Human Resources (HR) is one department or function that is getting much attention in today’s job market. The lack of an adequate workforce causes missed opportunities, resulting in missed revenue—and, ultimately, missed profits.
HR is traditionally the catchment for compliance with rules, regulations and benefits. Thumbs up!
Operations covers the acquisition, development and delivery of the chargeable work, be it design, engineering, or construction. Thumbs up, again!
But when it comes to targeting, recruiting, retaining and training the workforce, those two thumbs too often thumb wrestle or even fingerpoint for responsibility, funding and blame.
Operations is client-facing and also positioned near easily identifiable revenue. This often allows a false narrative and can challenge even the most skillful human resources team. So what’s to be done?
Having the right people in the right roles to perform the work is crucial. Having a laser focus on workforce projections, recruitment and retention is paramount.
Here are five things the most successful AEC industry firms are doing:
Fundamentals are key. Fix any perception issues: a solid company reputation and competitive compensation/ benefits are required, otherwise issues will repel ideal candidates. Your compensation strategy matters.
Reach out to your industry-specific CPA, recruiter or others with a vested interest in your company’s success; they should provide needed feedback and offer strategies for improvement. Or, find ones who will.
What gets measured gets done. Every hire (good or bad) has costs, including time interviewing; networking/referrals; researching online sources such as Indeed, LinkedIn, and job boards; and use of internal and external recruiters.
All are useful. but knowing which are best, and when to use them, will maximize your return.
What did the 10 best and worst hires cost, and what were the sources? Find the patterns to make the best data-driven decisions. While one interesting trend has been to hire an internal recruiter, who can be a good addition, we have found there is still a strong financial incentive to use industry-specific external recruiters for particularly demanding searches and also to attract ideal "passive" candidates otherwise unwilling to engage with internal contacts.
A seemingly hefty external recruitment firm invoice to find and secure the next All-Star can quickly become an insignificant expense relative to the revenue growth that could be achieved.
Recruit attributes. Scrutinize position description requirement sections. Is the degree, years of experience, or other designations overly limiting the talent pool?
Interestingly, some groups have found that good accountants can make great estimators; former military personnel can become amazing project managers and superintendents.
Thinking outside the box can build a pipeline of talent pulling from more candidate-rich sources (unlike the candidate-scarce AEC sector). There may be some lemons floating around, but “A+” to “C-” type candidates are broadly in high demand and are able to be selective in their job options.
Succession Planning. No longer reserved for the upper echelon, particularly successful firms have built succession planning concepts throughout their organizational chart. Recruiting and training one’s replacement is now a frequently shared function of all roles, added to position descriptions and requiring action. This also furthers critical career discussions and allows for identifying a "climbing wall" of pathways beyond the limiting linear routes more typically followed.
Doug Snyder, CFO of the fast growing design firm LS3P, outlines that “we align to desires” to help hire and keep the best. If company performers can see their career paths proceeding upward, their route of exit becomes less likely.
So forget "exit interviews;" implement "stay interviews" to help identify why top performers would consider leaving before they do, while you can still affect change.
Streamline and track the process. Are operations managers "too busy" to interview that ideal candidate? Are you missing out on candidates with multiple offers? It is not uncommon for us to hear of large firm key leaders shifting schedules to offer VIP candidates feedback and contact within 48 hours of an initial show of interest. Going to notable lengths to meet candidates at their locations and accommodating their schedules better illustrates the culture of the interested firm more than a mission statement ever could.
When HR and operations work in lockstep, the thumb-wrestling ends as both discover these highly identifiable sources of profits in becoming "destination employers." As experienced by MWH Constructors President Blair Lavoie: “with these two groups working hand-in-hand, we’re much more effective at getting our story out with good results.”
This becomes easier when HR is viewed correctly—as a driving force for exceptional bottom-line results.
Mark DeVerges is Senior Manager in the construction and real estate executive search group of DHG Search, part of Dixon Hughes Goodman LLP – a Top 20 CPA firm providing assurance, tax, and advisory services. He can be reached at email@example.com