Building a Sustainable Competitive Advantage Through a “People-First” Culture
Companies can gain a competitive strategic advantage by building a human-centric culture. A human capital risk management strategy helps companies consider the risks versus rewards of making such investment. The business case for investing in a “people-first” culture is clear.
The construction industry continues to face shortages of more than half a million vacant skilled and unskilled jobs. In January 2024, the Associated Builders and Contractors (ABC) reported the lingering worker shortage in construction exceeded 501,000. ABC estimated the shortage will require an additional 445,000 new workers for 2025.
Demand for construction continues to grow despite worker shortages. An August 2024 Workforce Survey by the Associated General Contractors of America (AGC) showed 94% of firms are struggling to find workers. According to the AGC survey, 54% of contractors reported experiencing scheduling delays due to the worker shortage. Delays due to increasing workforce pressures can result in both scheduled and unscheduled overtime which impacts both worker well-being and company profitability.
Throughout the history of modern construction, it was often said that “cash is king.” In the post-pandemic world, as workplace culture continues to grow in importance, human capital has seized the throne. The scarcity of human capital threatens the stability of the construction industry and its interdependent companies.
Human Capital Management
Traditionally, successful human capital management focused on the major steps in the human resource lifecycle. There are many competing models though most generally consist of the steps outlined below:
- Talent recruitment and selection,
- Orientation and on-boarding
- Learning and development,
- Retention through employee experience and engagement efforts,
- Performance assessment, compensation and total rewards, and
- Career development.
Workforce Scarcity and the War on Talent
The construction industry is engaged in a war on talent between other industries and economic sectors. Collectively, the industry is emphasizing collaborative workforce development initiatives to recruit, train, and retain workers. There is merit in the collective industry approaches to workforce development, especially those undertaken by industry associations. This “rising tides lifts all boats” approach is yielding success.
The war on talent is also playing on a battlefield between competing companies. Most employers recognize the importance of people as their most important asset. However, not all employers equally focus on investing in human capital like it truly is their most important asset. The companies that invest more in human capital understand this increased investment is helping to build a competitive strategic advantage. This can be measured by tangible metrics and intangible anecdotal evidence, including the following:
- Fewer unfilled positions or vacant positions being filled faster,
- Higher engagement scores and improved morale,
- Reduced tardiness and absenteeism leading to increased productivity,
- Improved safety and quality metrics, and
- Lower voluntary turnover.
Shift to Human Capital Risk Management
These leading companies are moving beyond human capital management to human capital risk management. Human capital risk management is the conservation of an organization’s human and financial resources. Leaders in these companies recognize that it is an imperative for businesses to focus on the health and well-being of both the business and the workforce.
These companies have instituted a mindset focused on connecting with prospective and existing employees differently. These leaders have determined there is a risk to reward ratio for investing differently in human capital and that there is a strategic advantage to being more employee centric.
Leading employers are focusing on attracting and retaining workers based on a human-centric culture. These employers recognize that many of today’s workforce have different expectations for their career. Visionary leaders recognize the importance of becoming and staying an employer of choice.
Such “people-first cultures” share common characteristics, including but not limited to the following representative elements:
- Respect and inclusion
- Caring and empathy
- Intentionality and transparency in communications
- Alignment of meaningful work with a purpose
- Shared core values underpinning a clear vision
- Whole-person well-being combining physical health with emotional well-being
- Life-work balance
- Collaboration and teamwork
- Affirmation and recognition
- Celebrating successes
Shifting a mindset is one thing, instilling a cultural change is another altogether. Leaders at these companies recognize that the primary purpose of this human-centric culture is to become or stay more competitive. Leaders at these companies describe being performance driven and are intentional about setting clear performance standards for both individuals and teams. These companies are building a high-performance culture based on the mutual responsibility of individuals and accountability of teams.
Case Study #1: Penn Installations (Summerhill and State College, Pennsylvania)
Howard Bernstein is the president of Penn Installations, Inc. with 35 years with the organization. Bernstein reported that Penn Installations has approximately 80 union workers in the field with 11 administrative staff in two offices. Bernstein shared “the number of field workers fluctuates dramatically based on the volume of work and anticipated backlog.”
Bernstein described the company’s employee count exceeding 200 workers in the past. He described the company’s “sweet spot” as being between 75–85 employees. Bernstein stated that the company’s “peak of over 200 employees was when malls were a staple of our portfolio and a few malls equaled lots of crafts people managed by a handful of our top superintendents.”
He said “this workload can be easier to manage than many more projects, with fewer total employees but not enough supervision.” Bernstein shared “through some painful trial and error, the company found what size projects we are most effective and profitable pursuing.”
Bernstein described another benefit of being smaller is in “really getting to know and understand the workers and their motivations.” He identified the importance of recognizing and understanding generational differences in the workforce. Bernstein described a major difference between generations is that “our younger workers have a better formed awareness of quality of life issues such as mental and emotional health and wellness.”
Bernstein added, in terms of their expectations for their work and career, the younger generation is “looking to be valued and respected in a world where they are faced with a far different set of challenges than those in my generation were.”
Armed with these insights, Bernstein stated Penn Installations has been intentional to respect the company’s historic past while building an adaptable culture for today’s changing workforce.
The culture Penn Installations has been building stands on these five shared values:
- Education—Continue to challenge yourself and improve your skill sets with both your hands and your interactions with others.
- Safety—Follow company policy all day, everyday and look out for your brothers and sisters on the job. Participate in our safety committee and offer your personal insights on how we can improve.
- Quality—Take pride in what you do and respect the 75 years that Penn Installations has been recognized as a leader in the industry.
- Compassion—Take time to listen and act upon the hardships and struggles of others that all of us encounter at times.
- Respect—Treat all around with dignity and kindness.
It is unique to see compassion listed as a core value. The guiding aspiration to “take time to listen and act upon the hardships and struggles of others that all of us encounter at times” is rare. This empathy embodies a sensitivity beyond safety, camaraderie, collaboration and teamwork. It sets the tone of normalizing conversations pertaining to mental health advocacy. The core value of respect and the guiding principle of treating everyone with dignity and kindness further demonstrates the company’s deep foundation of human capital.
Bernstein shared the company is intentional about maintaining and sustaining its culture. He outlined the importance of “weekly meetings to see how we can better assist one another in the office and field,” as well as monthly safety committee meetings of both office and field personnel to try to identify risks and always looking to improve.” He mentioned active participation in the AWCI as well as the Keystone Contractors Association to learn from peers and share best practices.
Case Study #2: MKB Construction (Gilbert and Tucson, Arizona)
Jason Anderson is one of three partners and serves as CEO of MKB Construction. Anderson has 22 total years of service with the company. Anderson reported the company has 500 total employees with approximately 50 administrative staff combined between the company’s two regional offices near Phoenix and in Tucson. The company also relies on the skills of 450 union field workers.
Anderson described MKB Construction as being intentional about creating a people-first culture built on a foundation of human capital. Anderson shared the company’s leaders “believe that a people-first organization will stand the test of time and allow continued personal growth for the people and the legacy we desire for the company.” To Anderson, “a people-first organization focuses on the team versus the individual, no different than any sports team.” Anderson believes that “paired with great policies and procedures, a people-first organization will continue to thrive.”
Anderson attributes the success experienced by MKB Construction to “its people-first culture which encourages winning “as a team and when we lose, we lose as a team and cherish the opportunity to learn and get better from our loss.” These beliefs are embedded in the core values of the company.
Anderson highlighted how MKB Construction recently rewrote the company’s core values. He said the leadership team was intentional in how to undertake this rewrite in sharing “instead of the three partners sitting down and doing this, we brought this to the team and let them create the values” because “we wanted something that everyone could agree on that we could embody and embrace daily and not just be words on paper.”
The collective core values are summarized below and reflect the “people-first” culture:
Team-Centric—Everyone and everything we interact with.
Work-Life Balance—We care about your well-being.
Solution-Driven—Proactively providing innovative solutions.
Reliable—Do what we say we are going to do.
Legacy—Making an impact.
Anderson asserted the partners have been intentional to maintain and sustain its unique culture. One of the key methods Anderson highlighted is ownership’s commitment to learning and development. Anderson describes a “coaching-up” mindset at MKB. The owners leverage the services of an “executive coach on a “weekly basis for 90 minutes” and “a team of self-selected individual contributors known as “The MKB Way Team” meet with the coach once a month”. And, in an uncommon practice, the whole organization meets with the coach once a month for a half a day session.
Anderson shared a keen insight gleaned from the executive coach: the secret of having a great team required a shifting in mindset from “looking at positions to looking at people” and “put the right talent in the right positions to succeed.” The company focused on “everyone getting to know the people they work with and how those people think, feel and communicate.” Anderson said, “when we can better understand those around us, it allows us to be a much more cohesive team”.
MKB also “utilizes various leadership development, mentoring and educational programs offered by its major partner organizations. The company sees value in investing in individual leaders as a means of benefiting the organization and growing the culture.”
Examples of programs include: AWCI’s Emerging Leaders: FMI, International Union of Painters and Allied Trades (IUPAT) Labor Management Cooperative Initiative (LMCI), the Carpenters Union, Construction Financial Management Association (CFMA), Western Wall and Ceiling Contractors Association (WWCCA) and Signatory Wall and Ceiling Contractors Alliance (SWACCA).
Conclusion
The construction industry faces enormous challenges with recruiting and retaining a workforce for today and tomorrow. Workforce development is a crucial competency for all employers. There are winners and losers and becoming and staying an employer of choice pays huge dividends for companies in the competitive world of contracting. Companies can gain a competitive strategic advantage by building a human centric culture. A human capital risk management strategy helps companies consider the risks versus rewards of making such investment. The business case for investing in a “people-first” culture is clear.
Cal Beyer, CWP, is senior director for SAFE Workplaces for national nonprofit SAFE Project. SAFE stands for Stop the Addiction Fatality Epidemic. Beyer has more than 30 years of construction risk management, safety and well-being experience. Beyer serves on the Executive Committee for the National Action Alliance for Suicide Prevention and helped launch the Construction Industry Alliance for Suicide Prevention in 2016. He also serves on Advisory Groups for MindWise Innovations, Goldfinch Health, and the Suicide Prevention Resource Center. Contact Beyer at [email protected] or via cell at 651-307-7883. www.safeproject.us.
References
Associated Builders and Contractors (ABC) (2024). Construction Workforce Shortage Tops Half a Million. News Release. www.abc.org/News-Media/News-Releases/abc-2024-construction-workforce-shortage-tops-half-a-million#:~:text=%E2%80%9CABC%20estimates%20that%20the%20U.S.,Bellaman%2C%20ABC%20president%20and%20CEO (accessed October 18, 2024).
Associated General Contractors of America (AGC) (2024). 2024 Workforce Survey Results. www.agc.org/sites/default/files/users/user21902/2024_Workforce_Survey_National_FINALIZED.pdf (accessed October 18, 2024).