I recently had the opportunity to give a presentation about workforce trends with my friend, Kristi L. Weierbach, PhD, SPHR, SHRM-SCP, FPC, director of workforce advisory services with Stambaugh Ness. I’ve been trying to stay abreast of these trends for several years – as a vice president of my firm and chair of our HR committee, I certainly need to understand what is happening. However, some of these trends are highly disruptive to our companies – or will be soon – and thus have a major impact on our firms’ marketing programs.

As Kristi and I began discussing the megatrends, we found that they fit into four primary themes:

As much as I thought I knew, the reality is that I was shocked when I dove deeper into the trends and what they mean not just to our individual businesses, but to our industry as a whole. We need to stop being reactive about these trends – and to evolve beyond our 20th century thinking. Other industries are already ahead of the A/E/C industry, and if we don’t have the staff, we can’t deliver the projects. It’s just that simple.

So here’s some food for thought – with apologies in advance if I ruin your appetite! This post focuses on the first theme listed above and will cover virtual offices, gig workers, technology, and the workforce shortage. Subsequent posts will address the remaining themes.

Virtual Office

The virtual office is also known as telework. Most of us do it, at least to some degree. Do you read your work email while you are at home? Check. Or spend time doing work on evenings or weekends (or vacation), working from your house or another non-work location? Check. You are part of the remote workforce. Interestingly, GlobalWorkPlaceAnalytics found that 80-90% of the US workforce would like to work remotely. The US Bureau of Labor Statistics tells us that 20-25% of Americans already do. And why not? More than half of our “work” time is spent away from our desk, anyway! Here’s the forecast: by 2020, more than one-third of companies believe that half their workforce will work remotely.  Half. How disruptive will that be to your office? What impact will that have on your teams? On company culture?

Oh, but that will never happen in the A/E/C industry, right? It already is: recent research from PSMJ Resources found that 67% of firms currently allow remote working, with just under half of firms reporting that they currently have employees teleworking. These firms are faced with increased costs for computer hardware, software, and communications infrastructure. Furthermore, there is an inherent friction point in some firms because of their resistance to keeping pace with this rapidly changing business model.

 

Kristi Weierbach, PhD, SPHR, SHRM-SCP, FPC

 

According to Kristi Weierbach, “Employers have long held that working remotely reduces the ability to ‘control’ the work of employees. Technology offers employers the ability to monitor and stay connected with employees as if they were physically sitting at a desk in the office, busting the myth about the inability to manage employees remotely.”

However, Kristi feels that companies need to be wary of cultural issues created by having a “mixed” workforce (some staff in office, others working remotely): “It is critical that companies cultivate a culture where supervisors embrace remote workers, and if not it can lead to a decline in engagement – especially for those employees who work remotely 100% of the time.”

So why bother with allowing telework? “A virtual office provides more flexibility and accessibility for employees, allowing them to plug-in at times that are convenient for their schedule,” notes Kristi. And as you’ll see below, with the Talent War raging, employers must re-evaluate archaic policies and myopic thinking in order to attract and retain talent.

Gig Economy

Gigging is not really a “new” model in the A/E/C space – a lot of carpenters and masons and specialty contractors like electricians have been giggers for years, belonging to their Local Union and using that network to find their next project opportunity.

I first saw gigging on the design side when architects began using the lower-cost engineers (or architects) working out of their basements – typically someone who was let go or voluntarily left a firm and put out a shingle next to their garage door! They became their own independent contractors, but usually only had a few primary clients where they supplemented the in-house teams.

This model is becoming more common, with anywhere between 22% and 35% of the workforce being independent workers (giggers). These figures come from reliable sources – McKinsey and Forbes – but need some clarification. If you work a fulltime job, and then drive for Uber in the evenings, you are a gigger. For years I’ve been paid a few bucks “on the side” to write – articles, books, etc. That makes me a gigger, even though I have a fulltime job.

Giggers are increasingly filling a valuable role at our firms. With so many companies unable to find the right talent when it is needed, they’ve pulled in giggers to fill the gaps. One of the interesting benefits about giggers is their motivation to stay abreast of current trends and technologies. It is in their best interest to do this to stay marketable. Conversely, regular fulltime workers sometimes need a bit of “motivation” to enhance their skillset and knowledge of the market or their industry! 

I recently met with an architectural principal – he’s of retirement age, but not ready to retire. So effective January first, he’s becoming a gigger, working to bring his vast knowledge base and intellectual property as a consultant to firms he used to compete with. My firm has supplemented our staff with giggers on a project-by-project basis, when we either didn’t have the capacity – helping us to get through a workload bubble – or when we needed someone with a unique skillset that we didn’t have through in-house staff.

Kristi Weierbach draws parallels to the tried-and-true concept of outsourcing, and the relatively new concept of gigging. “When ‘outsourcing’ was first introduced, it was not warmly received. Opinions about how companies were looking to replace employees were flying around everywhere. Today, more companies are embracing outsourcing as a possible solution for some or many of their overhead needs. I feel the same perception exists today about ‘giggers.’ While not warmly embraced initially, over time this will subside and companies will begin to lean on ‘giggers’ as a way to enhance their bench strength.” In fact, she believes that bringing giggers on board has the potential to enhance service offerings and improve product development at companies.

Technology

Is technology really a workforce trend? Isn’t it really the ultimate megatrend?

And yet, there are some very real workforce considerations with technology. Consider that over the past year the average age of a Fortune 500 CEO has been 51, and that the oldest Gen Xers are turning 51. That’s huge, because Gen Xers are ten times more likely to use the Internet when making a decision. The speed at which firms are using technology to make decisions is accelerating. Think your website and social media initiatives were important yesterday? Just wait until tomorrow!

Beyond the C-Suite, the oldest “digital natives” – those that have never known life without a computer – are now in their 30s, moving into management positions.

Consider cloud computing, mobile devices, network speed, web conferencing, speech recognition, artificial intelligence, online learning, Internet of Things … These aren’t new, but their use is expanding rapidly, and too many firms don’t have the infrastructure, much less the policies, to effectively keep up.

Most software products that I use today are cloud-based, and “there’s an app for that.” The pre-smartphone technology world now seems foreign to me – as does the Windows 3.1 world that existed in the early 1990s when I graduated from college.

Technology culture is changing – we still use email to communicate, but increasingly companies, departments, and project teams are moving toward a platform that creates a dynamic knowledge base – think SharePoint discussion boards or Basecamp conversations. This is building institutional knowledge.

Clients are demanding technology changes, too. Sure, design and construction technology, but also with communications. One of the most recent RFPs I received stated that travel should be minimized, and that firms must include a virtual communication plan to enhance communication while reducing costs associated with travel.

Technology also plays a major role in attracting and recruiting talent. Kristi Weierbach notes that “Recruiting software has significantly changed the way we connect with applicants and been instrumental in streamlining processes. Additionally, it has allowed us the ability to automate some of the decision-making process, with the use of filters and customized reporting.”

Even social media plays a major role in recruiting. What job-seeker today wouldn’t check out a company’s LinkedIn, Facebook, Twitter, or YouTube channels? (Or Instagram, or Pinterest…) Social media posts say a lot about a company. So does the lack of a presence on social media.

“From a retention perspective,” Kristi notes, “technology has enhanced the resources that we provide to employees. It has allowed companies to offer flexibility to employees, so they can plug-in anywhere. Historically, if an employee moved to a different part of the country, he or she would resign and look for employment close to where they relocated. Now an employee has options, and can stay employed with the same company so long as the company offers the resources to work remotely.”

Sometimes when an employee moves to a new market, the company follows, essentially opening up a satellite office staffed by the relocating employee. Other times, a new shingle is not hung, but the employee continues to perform just as if they were working out of the home office. Technology means never having to say goodbye to an excellent employee. And this is more important than ever, as we segue into the next trend…

Talent War

We’ve all been talking about the talent war for the past decade, and now it’s here. If you are not experiencing it, you will be soon. Baby Boomers are finally retiring, and the pace is accelerating. You’ve probably heard the figure that 10,000 Baby Boomers retire every day! Many of them worked longer than they had originally planned because their nest egg shrunk during the Great Recession and took years to rebuild. However, with the performance of the stock markets over the past few years, they are once again feeling comfortable retiring.

Gen X is a relatively small generation, and certainly not in a position to replace all the senior-level retiring Boomers. So Millennials must fill the gaps being created, but in some professions and geographic markets there aren’t enough Millennials either. Sure, it is a large generation; however, that doesn’t mean that they are going into the A/E/C industry. In fact, for decades high school guidance counselors have been advising students against careers in construction and manufacturing, adding insult to injury.

Plus, there are many foreign students attending American universities to major in the A/E/C fields, but they are returning home upon graduation, creating a “brain drain” of A/E/C talent departing the US.

Within the A/E/C industry, there’s competition for talent from every direction. My firm’s primary focus is MEP engineering, and we used to compete with other MEP engineering firms (or A/E firms) for talent. But today the competition is far broader. Construction managers pursue engineering grads and turn them into project managers. An engineering professor in Georgia recently told me that as much as a quarter of his graduates never go into engineering – they jump directly into project management for CM firms.

Unfortunately, there’s also a lot of competition from outside our industry for the same grads, and A/E/C firms typically have lower salaries. 

In fact, according to PSMJ research, the average starting salary of graduates went down last year – while the salaries of managers went up. Don’t get me wrong – we all want, and deserve, raises, but if we pay our upper level staff more and have trouble filling entry-level positions, we’ll all become too top heavy. Managers will be doers, and our fees will be higher, causing us to lose more work to firms that can do it at a lower cost.

This is already happening, and it is an issue that Kristi Weierbach is now seeing regularly at firms in the A/E/C industry and beyond: “Higher level employees are working down to fill skills and knowledge shortages. Leaders are reacting by working ‘in the trenches’ and not focusing on the training and development that is so desperately needed.” This portends even greater challenges that our firms will face tomorrow.

On top of all this, firms are growing – there’s more work than there was a few years ago, meaning that we are all busier and need more staff.

More Work + Fewer “Recruits” + Retiring Boomers = Workforce Shortage

This creates the perfect storm for a talent war, which has hit the engineering fields the hardest. The size of the engineering labor force is above pre-recession levels and increasing. However, there still aren’t as many jobs in architecture as there were in 2007. And the construction labor force is also smaller than it was a decade ago, but the lack of talent in the skilled trades is a major current issue.

Recent surveys have found that as many as 90% of firms anticipate that the workforce shortage will continue to worsen, and that almost half of firms cannot fill open vacancies. There’s also been a decline in the quality and skillset of jobseekers, resulting in some firms making non-strategic hires that are more akin to “putting bodies in chairs.”

Kristi believes that the Talent War has put significant pressure on companies to be more creative with their workforce initiatives: “The key question is whether or not the right person is strategically positioned in the firm to take the workforce into the future. Will that person(s) work tirelessly to edge out the competition and attract the best and brightest? Will that person continually present new, fresh ideas on how to engage, motivate, reward, and show appreciation to employees? Does this person know how to connect the workforce to growing the firm and achieving results? This is the new normal, and if companies are not thinking along these lines, they will be left in the rear-view mirror.”

Just a few short years ago, “disruption” was barely in the business lexicon. Today, disruption is all around, in every facet of our lives. For companies, there’s a tsunami upending decades of workforce norms. And make no mistake: this tidal wave has the capacity to cripple businesses – or make them a thing of the past! In the next post we’ll look at the impact of multiple generations in the workforce, and the challenges that creates for corporate policies, ownership and leadership transition, company culture, and churn.

 

What do you think? Is this much ado about nothing? Or is a world of hurt hurtling toward the A/E/C industry because we're not paying attention to the myriad changes in how we deal with our human capital?