Why employee retention is important in the construction industry

Finding and keeping talented employees is an uphill battle for most hiring managers, regardless of the industry. You invest resources in hiring, training, and developing your workforce, only to see them walk out the door and into the arms of your competitors. It's a frustrating and all-too-common struggle that can leave you feeling exhausted and uncertain about the future of your business. That’s why employee retention is important, especially in the construction industry. As of 2021, the construction industry had an average turnover rate of 68%—higher than most other industries, where the average hovers between 30-40%. The good news? It’s not all hopeless. With a little help, you can retain your valuable construction workers and avoid becoming another turnover statistic. In this article, we’ll give you effective strategies to reduce turnover and improve employee retention. We get into why employee retention is important, as well as proven methods to engage, motivate, and retain your construction team.

What is employee turnover?

Employee turnover is when workers leave the business they work for. A turnover rate refers to the number of employees who left an employer within a specific time frame. When employee turnover is high, it means more employees are leaving. The result is that you have to keep finding and training new ones. This can be a headache for small business owners as it disrupts your operations and team culture. Ideally, you want to aim for low turnover, where employees stick around and contribute to the long-term success of your business.

What is employee retention?

Employee retention is a business’ ability to reduce employee turnover. It’s your ongoing, dedicated effort to keeping your current employees happy so they remain on board and your business can function. If you want good employee retention rates, you have to put the work in. High employee retention rates require ongoing efforts by management to create a positive work environment. That includes providing opportunities for growth and development, recognizing and valuing employees' contributions, and ensuring their well-being. This is why employee retention is important to the overall success of your business. By focusing on improving retention as a business metric, you end up creating a workplace where employees want to stick around. They feel valued, connected, and fulfilled, which ultimately benefits the overall success and stability of your small business.

Why employee retention is important—and difficult—in the construction industry

Having technically skilled and experienced workers is crucial for construction companies. These folks have specialized knowledge and expertise that keep projects running smoothly. When you start losing these valuable employees, it can mess with project timelines, the quality of the work, and overall productivity. When you dedicate time, money, and effort towards implementing strategies to keep your employees happy, you’ll have less employee turnover to worry about—simple as that. Putting in the work to retain skilled construction workers minimizes the need for you to retrain new talent, allowing you to deliver consistently high-quality work. It’s tough to get to that ideal state for a number of very real socioeconomic reasons, which we’ll explore below.

1. Skilled construction labor is high in demand, but limited in supply

According to statistics by the U.S. Bureau of Labor, the construction sector has experienced a steadily increasing number of job openings and projects. The problem? The skilled labor force hasn’t kept up with this rise in demand. According to a study conducted by the Associated General Contractors of America (AGC), nearly 80% of construction firms report difficulty in filling hourly craft positions. Over 50% anticipate a shortage of qualified workers in the future. One of the factors affecting this problem is the aging workforce. Skilled construction workers are reaching retirement age, creating a gap in the talent pool. A report by the National Association of Home Builders (NAHB) showed that the average age of construction workers is higher than the average for all industries. This is why employee retention is important, especially for construction companies: as experienced workers retire, there’s a limited supply of younger workers with the necessary training, skills and experiences to replace them.

2. Construction work is mostly seasonal or project-based

Data from the U.S. Bureau of Labor Statistics (BLS) confirms that construction employment tends to be affected by seasonal patterns, impacting the availability of work and stability for employees. For example, in the nonresidential specialty trade contractors sector—things like electrical work, plumbing, and HVAC installation—employment can vary significantly throughout the year. This seasonal pattern can result in reduced work opportunities or layoffs during the slower seasons, leading to uncertainty for construction workers. The impact of seasonality on employee retention is clear. According to an online survey by the Associated General Contractors of America, roughly 40% of construction firms experience seasonal layoffs. During off-peak periods, when work may be scarce, employees may seek more stable employment at other types of business or sectors, leading to higher turnover rates.

3. Construction work can be physically demanding and dangerous

The physically demanding and hazardous conditions of construction work can have a significant impact on the well-being, safety, and job satisfaction of construction workers. In 2021, the U.S. Bureau of Labor Statistics found that construction and extraction occupations had the second most occupational deaths in 2021. Employers need to create the right incentives for construction workers. The construction industry also consistently ranks among the highest for non-fatal occupational injuries and illnesses. The physical demands of the job—like heavy lifting, repetitive motions, and prolonged periods of standing or working at heights—can lead to musculoskeletal disorders and other health issues in the long-term. On top of the physical risks, the demanding conditions of construction work can also result in higher levels of fatigue, stress, and burnout. A study published in the Journal of Construction Engineering and Management found a strong relationship between physical demands and mental fatigue.

4. Construction businesses offer few opportunities for growth

Construction companies, especially small ones, can have a hierarchical structure and a limited number of managerial positions available. A survey done by the Building Talent Foundation found that the top reason survey respondents gave for staying in their jobs was that they had opportunities for advancement on the job, training, and learning new skills. A lack of opportunities for growth and advancement can lead to decreased job satisfaction and higher turnover rates. On top of that, the construction industry has a larger proportion of frontline workers compared to managerial and supervisory positions. This imbalance in the job hierarchy can limit the number of available positions for employees trying to advance their careers. And, finally, the construction industry often faces a perception problem among young professionals. According to a report by the National Center for Construction Education and Research (NCCER), 77% of young craft professionals stated that their friends and family don't view construction as a viable long-term career option. This perception of the industry can keep workers from considering the construction industry as a place for long-term employment and advancement.

5. Long hours and less work-life balance

The demanding schedules and long working hours of construction work can strain personal lives and contribute to the dissatisfaction among your employees. According to the U.S. Bureau of Labor Statistics, the construction industry ranks among the top sectors with the highest percentage of employees working more than 40 hours per week. Excessive work hours can lead to increased stress, reduced job satisfaction, and higher intentions to leave the industry. Construction workers want a healthy work-life balance, something that’s tough to find in the industry–and yet it’s still an important factor in their decision to leave or stay at a job. A report published by the Construction Industry Training Board (CITB) highlighted that work-life balance was a key factor affecting employee retention in the construction sector. The report emphasized this reason for why employee retention is important—employers should consider flexible working arrangements and promote well-being to address the issue.

Retention strategies for employees in the construction industry

So far, you’ve seen why employee retention is important and the main reasons why there’s so much turnover among construction workers. The good news is that there are effective tactics, strategies and tools you can use to prevent your construction workers from walking out the door. Each of the issues outlined in the previous section might seem like powerful forces you can’t control. The truth is there are tons of effective retention strategies you can implement at your business to reduce the turnover of your skilled employees.

1. Create a performance-driven workplace—and reward your top performers

Employee appreciation is more than just a “nice to have” at a business. Will Zhao, a Senior Engineering Manager at Airbnb, saw the value in establishing a robust performance management system that rewards high performers and provides them with growth opportunities. The right performance management system can give you a structured way to measure, evaluate, and improve employee performance using the rewards that motivate them the most. “Actively managing low performers and free riders is also important as sometimes a bad actor can do really big damage to an A-team’s culture,” says Will. “Helping top performers grow their skills and having them work with similarly-minded teammates are the best way to motivate and retain them.” Here are a few tips and best practices for getting started with establishing a performance management process within your business:

Ask your employees what rewards would motivate them

Engage your skilled workers through surveys, focus groups, or informal conversations to understand their preferences regarding recognition and rewards.

Define the objectives of your recognition program

Determine what you’ll measure, like boosting morale, improving teamwork, and raising job satisfaction in order to reduce turnover.

Establish what the success criteria will be

Develop a set of clear criteria for recognition. Look at exceptional craftsmanship, adherence to safety protocols, or going above and beyond expectations.

Foster a culture of peer recognition

Promote a culture where appreciation is valued and actively practiced by everyone in the team. Establish mechanisms for your team members to nominate their colleagues for recognition, like using a dedicated tool (like Homebase’s Shout Outs) or regular team meetings. At Homebase, we understand why employee retention is important. With Homebase as your performance management system, you can set and track performance goals for your employees. When it’s time to give feedback to your employees, there’s no need to wait until performance reviews roll around; you can do it directly and in real time via our free employee messaging app. Our automated reminders can also help improve your team’s performance. You can send staff members automated shift reminders to help them show up on time, add feedback notes they can see in their inbox when they clock in, and share their performance stats so they can keep track of how they’re doing.

2. Offer growth and skill development opportunities

Managers that understand why employee retention is important are willing to invest in the potential of their workers. Investing in the professional growth of your construction workers makes all the difference in a retention strategy, according to Rick Berres, owner of the Minneapolis remodeling and roofing business Honey-Doers. “If an entry level employee doesn’t see a path upward within the company, they will go to another company to advance,” says Rick. “[Construction businesses] give occasional raises, but they don’t spend any time or energy improving their employees, or in creating a ladder for them to climb.” “Every entry level employee we have comes to work for us because they know that they’re going to learn everything there is to know about this business as long as they stay with us. If they stay with us they will either wind up in management, or they’ll start their own venture. I consider either result a win.” Here are some tips for how to offer development opportunities for your employees:

Get a sense of your employees’ aspirations

Talk to your workers to figure out what career paths they’re interested in, like project management, site supervision, estimating, or specialized trades.

Align the training with real priorities

Prioritize the areas of training that will have the most significant impact on the growth of your employees. Ensure they’re also being aligned with relevant areas and business objectives that matter to your business.

Define a budget

Determine the budget and resources you have for implementing career development opportunities at your business.

Define the eligibility criteria

Determine what your workers need to do in order to qualify for your career development program.

Start with internal mentorship and training programs

Establish a mentorship program where experienced employees can guide and support those seeking career development.

Choose the training programs and certifications that will support employee growth

You can work with external training providers or consider partnering with industry associations for specialized training. Pro tip: If you’re going with the internal mentorships and training programs, make sure your shift leads and managers are properly trained. Every manager on your team should know that retaining great employees is an important business goal. More importantly, you need to give them the tools they need in order to be successful managers.

3. Create a collaborative and inclusive work environment

Construction workers often face demanding and complex tasks that require effective communication. Poor communication can lead to misunderstandings, delays, and errors in project execution—not to mention conflicts among your workers. On top of that, in an environment that isn’t inclusive, employees may feel isolated, undervalued, and unsupported. This can lead to decreased job satisfaction, low morale, and a lack of enthusiasm in their work, which in turn negatively impacts their motivation and engagement. Consider the following strategies to promote a collaborative and inclusive work environment among your construction workers:

• Encourage open communication: Create channels where employees feel comfortable sharing ideas, concerns, and feedback without fear of judgment or reprisal. Encourage regular team meetings, toolbox talks, and project debriefs to ensure that everyone is on the same page. Using a messaging app on a platform like Homebase lets you increase transparency, ensure staff know what they’re doing, and let them chat together to build a community.
• Promote cross-functional collaboration: Encourage team members from different trades and specialties to work together, share knowledge, and learn from one another.
• Embrace diversity and inclusion: Promote diversity in recruitment efforts and provide training on cultural sensitivity and unconscious bias to create a more inclusive workplace.
• Establish team-building activities: Organize team-building activities that promote camaraderie and strengthen relationships among construction workers. This can include team outings, sports events, or volunteer opportunities that allow employees to bond outside of work and develop a sense of unity and belonging.

4. Prioritize safety and implement effective safety protocols

As we mentioned earlier, safety and long-term health effects are one of the reasons why construction turnover rates are so high and why employee retention is so important. Construction workers face inherent risks on the job, so when you put a strong emphasis on safety, it shows that you value their well-being. Here are specific strategies to enhance safety and improve employee retention in the construction industry:

• Provide comprehensive safety training: Give your workers safety training before they start work and continue to provide ongoing training to reinforce safe practices. This includes educating them on hazard identification, proper equipment usage, and emergency procedures.
• Establish clear safety protocols and policies: Develop and communicate clear guidelines and policies for safety procedures on construction sites. This includes enforcing safety protocols, like the use of personal protective equipment (PPE), regular equipment maintenance, and regular safety inspections.
• Encourage a safety-conscious culture: Promote open communication about safety concerns, encourage reporting of near-miss incidents, and recognize and reward employees who consistently prioritize safety.
• Conduct regular safety meetings and toolbox talks: Hold regular safety meetings to discuss current safety issues, provide updates on safety regulations, and address any questions or concerns raised by employees. Additionally, conduct toolbox talks at job sites to provide specific safety reminders and address site-specific hazards.
• Empower employees to participate in safety initiatives: Involve your construction workers in safety committees or safety improvement initiatives. Encourage them to share their expertise and insights, as they often have valuable on-the-ground experience and can contribute to identifying and addressing potential safety hazards.

5. Ask for feedback—and take it seriously

Want to know how to improve employee engagement? Ask them—often. This isn’t a one-and-done task. As demands and roles change, as new staff onboard, and as policies develop, it becomes more and more important to get feedback from your team. John Ward, co-owner of Austin Iron Fences, gave his approach a try. He implemented an employee engagement program with regular check-ins and feedback sessions that had “almost immediately noticeable” effects. “Not only does [a retention strategy] lead to cost savings by reducing recruitment costs, it also boosts overall productivity levels while creating a more desirable workplace culture for current staff members,” John said. Ask them things like:

• What’s your favorite part of your role?
• How do you think management could help you feel more engaged?
• What do you need to support you in your role?
• What are three things we’re doing well?
• What are three things you think we could improve on?

These are open-ended questions that can give you a ton of insight into where your employees are at. You can use something as simple as a suggestion box for anonymous feedback, a survey they can fill out during a shift, or an ongoing policy of feedback in a communication thread on a messenger app. Feedback can be tough––but remember––retention and engagement are the name of the game here.

How Homebase can help you improve retain construction workers

At Homebase, we understand why employee retention is important. But retention is about more than just employee surveys and recognition. It’s also about ensuring an organized and predictable work environment. And that’s where Homebase can help you shine. Homebase is a management and team communication tool that lets you stay organized when it comes to scheduling, time clocks, and payroll. You can focus less on admin tasks, and more on employee happiness and boosting morale, using our tools like team chats. This saves you time and money on hiring HR admin staff. That way you're left with more headspace and budget to figure out ways you can keep your employees happy and engaged. To make things easier on you, Homebase is available on desktop and via a mobile app. That way you and your employees can keep track of everything wherever you are, with much-needed flexibility. Homebase’s tools keep everything workplace-related in one place. With our hiring and onboarding process systems, you can make employee communication easier from day one, empowering them so they succeed from the beginning. Recruit and retain top talent With Homebase, you’ll have everything you need to recruit, train, and retain the best talent in the construction industry. Try Homebase for free.

Employee retention in the construction industry FAQs

What is employee retention?

Employee retention is your company’s ability to reduce high employee turnover rate. It’s your ongoing, dedicated effort to keep your current employees happy. That way they remain on board and your business can function.

How can you improve employee retention in the construction industry?

You can improve employee retention in the construction industry by establishing a performance-driven culture that rewards effort. Look to offer growth and career advancement opportunities, creating a positive work culture,

What employee retention tools can construction businesses use to reduce employee turnover?

Homebase is an employee retention tool that can help construction businesses reduce employee turnover.