Viewpoints

How Your Construction/Contracting Business Stacks Up

Jim Keefe

Originally Published In:
November 2007
Author: James T. Keefe, CPA

Recently The Bonadio Group conducted a survey, which was sent to construction companies in Buffalo, Rochester and Syracuse New York.  From this survey we were able to learn about compensation, benefits, insurance, the employee performance review process and other financial issues effecting construction companies in upstate New York. One of the most intriguing things we found was that the top issue facing our participants was attracting and retaining personnel with 67% of our respondents picking this as their number one issue.

Attracting, recruiting, and retaining top quality construction leaders and managers to the construction industry can be an onerous task.  On a national level, unwanted employee turnover is costing companies over $140 billion annually in recruiting, training, and administrative costs.  With this in mind, we would like to offer some suggestions to improve your recruiting and retention practices.

Compensation and Benefits

Our study revealed the top 5 benefits offered were healthcare, 401(k), holiday bonus, dental care and professional development, with nearly all respondents offering some type of vacation benefit.

While we all realize that competitive compensation is an important part of attracting and recruiting skilled workers, benefits can make up a large portion of the overall compensation package. Excellent benefits that grow with years of service will entice skilled workers to your company and work to keep them there. Here are a few of our recommendations.

When it comes to insurance, consider the following:  health, dental, vision, and life insurance; flexible spending accounts; prescription drugs; and short-term and long-term disability.  Even if your company may not be in a position to initially fund all of these benefits, offering them through payroll deduction can be a good option with little cost to the company.  Our study revealed that although 38% of our respondents offered employer-provided life insurance, only 33% of them offered voluntary life insurance, a low to no cost option for employers.

Time Away From Work

While nearly all of our survey respondents offered some type of vacation benefit, only 38% of them offered a paid time off (or PTO) policy, which combines vacation, personal days and sick leave into one single benefit.   PTO policies have been known to raise the morale of employees - no more little white lies when they wish to take off time without being ill.  When developing your PTO policy consider:

  • Requiring two days advance notice to use PTO unless they are in fact sick
  • Using a method with a use it or lose it policy after a specific period of time, and
  • Increasing the amount of PTO with years of service such as 2 weeks to start, 3 weeks after 3 years, 4 weeks after 9 years, and so on

Another time away from work benefit to think about is funeral and bereavement leave, a benefit that is hopefully not often needed, but when it is, it is greatly appreciated by your affected employees.

Incentive Plans

Another opportunity to enhance your benefits plan comes in the area of incentives.  Incentive plans are almost always a win-win situation.  Consider profit sharing; project performance, safety and long-term incentives; 401(k) plans with several investment options, company matching funds or company stock.  Our study revealed that only 25% of our respondents were offering profit sharing plans, while 58% offered a 401(k) plan with company match amounts ranging from 0-50%, 3-4% being the most typical.

Recognition

Recognition can be one of your least expensive yet best incentives.  Consider face-to-face thank you’s, making sure they are sincere and specific; spot rewards that can include a small financial reward, certificate, or plaque; hats, shirts, jackets and gift cards; length of service and project achievement awards; and lastly, promotion announcements.

Career Advancement

Providing opportunities for career advancement and professional development greatly enhances your ability to recruit and retain skilled workers.  Our study revealed 50% of our respondents were providing some type of professional development benefits and 25% of them were providing educational reimbursement.  Here are a few things to consider when developing your program:

  • Orientation for new employees
  • Annual performance reviews
  • Financial rewards tied to performance
  • Individual professional development plans
  • Training plans
  • Tuition reimbursement
  • Career path options that include technical and/or management direction with a defined career roadmap
  • A mentor program for both college graduates and experienced employees, making sure the mentor is not the manager

And Finally, Recruiting

  • Visit schools to talk about the benefits of a career in construction. 
  • Develop written recruiting material that includes compensation and benefits, a safety manual and an employee handbook.
  • Be known as a great employer.  Once you have it all in place, make sure everyone knows about it, and lastly
  • Consider an employee referral program.  Pay referral fees to employees that bring in needed talent.  Fees should be paid after the new employee has been with your organization a specific amount of time.

In conclusion

I hope that you have found this information helpful when examining how your company can attract, recruit and retain a top quality workforce.  Developing a skilled workforce takes time.  There are no home runs, but with some well-placed hits you can work toward having a workforce that fits your organizations needs and helps make you profitable. 

Disclaimer: The Bonadio Group provides the information in Viewpoints for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in Viewpoints are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.