Contractors who focus on productivity improvements produce bottom line profits exceeding national averages. “Working smarter not harder” will continue to be the motto of contractor success. However, recent trends in productivity improvement programs have tended to focus on improving short-term results. But in the long run, contractors will have to substantially increase productivity to offset what seems an inevitable decline in the growth of the labor market.

As a result of recent demographic trends in the United States, many contractors believe that the single greatest challenge facing the construction industry is a shrinking qualified workforce.

The working population of the United States is aging. One factor driving this trend is the correlated slowing growth rate of the general population. Continuing divergence between the increasing average age in the workforce and a decreasing rate of population growth means the supply of labor will grow at a sub-economic rate. As a result, contractors will no longer achieve accelerated growth by simply hiring more workers. Surplus workers will not exist.

Finding Future Employees

It’s easy to estimate the size of the pool of future construction since nearly all potential members of the native U.S. labor force through the year 2010 have already been born. Estimating the future workforce becomes an exercise in statistical mathematics. While those already born will make up the preponderance of the future workforce, their numbers are not adequate to meet forecasted economic growth.

During the mid-1990s, the U.S. labor shortage was eased by the migration of existing surplus workforces. There is a continuing trend in the location of new work place opportunities away from traditional urban labor sources to suburban and even rural areas. These locales might be called “displaced work areas.” To cite an example, in the period 1992-93, 15 percent of all U.S. jobs were located in 10 large “urban counties.” According to the Census Bureau, these largest of the nation’s job centers did not benefit from the 2 million jobs added to the economy. In the cases of Los Angeles, New York, Orange, San Diego and King counties, there were actual net job losses. Beneficiaries of the newly created, as well as dislocated, job opportunities were small cities and “edge city” suburbs.

Up until now the migration of existing workforces has softened the search for labor. But this trend of development away from traditional labor centers has several negative implications when viewed from the vantage point of the workforce. The trend of migration to “displaced work areas” will decrease as future work opportunities, commonly requiring permanent relocation, become economically disadvantageous for America’s “native migrant work force.”

Competition for skilled, non-skilled, and entry level labor in the construction industry emphasizes the consequences of the age-old tenet of high demand vs. low supply. This trend is not likely to change in the near future. Today’s workforce, especially at the entry-level, is faced with multiple options and opportunities. The labor-competitive construction industry must vie not only internally but also externally with competition from perceptively more desirous opportunities elsewhere in the job market.

Where's The Labor?

It’s easy to estimate the size of the pool of future construction since nearly all potential members of the native U.S. labor force through the year 2010 have already been born. Estimating the future workforce becomes an exercise in statistical mathematics. While those already born will make up the preponderance of the future workforce, their numbers are not adequate to meet forecasted economic growth.

During the mid-1990s, the U.S. labor shortage was eased by the migration of existing surplus workforces. There is a continuing trend in the location of new work place opportunities away from traditional urban labor sources to suburban and even rural areas. These locales might be called “displaced work areas.” To cite an example, in the period 1992-93, 15 percent of all U.S. jobs were located in 10 large “urban counties.” According to the Census Bureau, these largest of the nation’s job centers did not benefit from the 2 million jobs added to the economy. In the cases of Los Angeles, New York, Orange, San Diego and King counties, there were actual net job losses. Beneficiaries of the newly created, as well as dislocated, job opportunities were small cities and “edge city” suburbs.

Up until now the migration of existing workforces has softened the search for labor. But this trend of development away from traditional labor centers has several negative implications when viewed from the vantage point of the workforce. The trend of migration to “displaced work areas” will decrease as future work opportunities, commonly requiring permanent relocation, become economically disadvantageous for America’s “native migrant work force.”

Competition for skilled, non-skilled, and entry level labor in the construction industry emphasizes the consequences of the age-old tenet of high demand vs. low supply. This trend is not likely to change in the near future. Today’s workforce, especially at the entry-level, is faced with multiple options and opportunities. The labor-competitive construction industry must vie not only internally but also externally with competition from perceptively more desirous opportunities elsewhere in the job market.

With the impact of the technology age, high tech positions with high tech descriptions, and resultant high tech perceptions of working conditions, the construction industry finds itself with not one problem but two. The first problem is the ever present current labor shortage; the second problem, which impacts both today and on into the future, is image.

The image of the construction industry is one of hot, hard, often dangerous and not always well-paid opportunities. The bottom line is that this is often more true than we care to think. Today’s young people are more apt to look for perceptively different futures than what the construction industry historically has offered. The challenge to be met is how construction, if not all heavy industry, will portray a new image that envelops the ideals of quality of life, creativity and the reward for the same, recognition, and stability.

Improving Productivity

Purchasers of construction services have come to expect high quality products at the most competitive price. As a result, a contractor’s workforce must be able to maximize profits while simultaneously competing as the low-cost producer. An organization’s optimal production potential will only be achieved when the principles of productivity improvement become an integral part of its strategic planning.

Talk of improving productivity is easy, but what of its implementation? The shrinking rate of growth in the workforce, with as many as one-half of the employment growth candidates projected being born on foreign soil, demands formalizing all productivity improvement processes. Such processes must be managed and measurable, and there must be a concerted effort by all stakeholders to meet predetermined goals.

The following principles are the corner stones that contractors must embrace if they are to successfully realize the significant impact of productivity improvement processes:

Principle No. 1: Included in the process must be a formalized training program. One example of where the construction industry has successfully implemented a formal and managed program is in safety. Safety programs have become a part of virtually all contractors’ strategic goals nationwide.

It is a requisite that each contractor provide current training that gives employees the tools for implementing and managing change. Historically, contractors have promoted training in the technical skills. In today’s work environment of change, training programs will need to include development of leadership and management skills as well as technical skills.

Principle No. 2: Project management processes must be applied in a consistent manner and continuously updated as innovations in project management are identified.

The areas of pre-job planning and project organization have shown to be the areas with the most immediate results. How a contracting firm manages its projects must be identified, analyzed and documented. The process can then be reviewed, evaluated and subsequently improved through comparison with and assimilation of like efforts by others within the industry.

Principle No. 3: Contractors must have a measurement tool for monitoring progress. It has been said that you get what you measure. When attempting to change behavior, reinforce that change, and subsequently validate its progress, the posting of results in a visual format has shown to have had a powerful impact.

Measurement tools are often described as a means of “keeping score.” Keeping score makes it more interesting, fun, and more competitive. Without an adequate measurement tool it is impossible to tell if you are winning or losing.

All construction and technical processes must be continually examined and compared against some yardstick in order to define their positive contributions and continued usefulness in their current forms.

Principle No. 4: Organizational behavior must be directed toward identifying improvements and implementing new processes. In fostering this kind of environment, management will create a culture of openness with free flowing ideas from all levels within the organization.

Challenging, but achievable goals need to be set in such areas as production quotas, percent of profits, or safety, training and administration. Once established, when these goals are met, new goals need to replace them. Goals have in the past been defined, and often limited, by the word “more.” Today, goals need to be set with the idea of benefit — to the worker and to the organization.

As part of the overall implementation process employees must see that they are meaningful members of the “team for change.” Employees at all strata of an organization must view change as a means to improvement. They need to be encouraged and reinforced in the idea that the proposed changes will be of benefit to them individually as well as to the organization as a whole.

Productivity improvement can often increase profitability in the short run through more efficient organizational development at the local level. Long-term business survival, however, is dependent upon commitment from the highest levels of management to develop and maintain a continuous productivity improvement program.