Strategy Defined

Strategy Defined

What’s all this about strategic planning? Many contractors still consider strategic thinking an academic exercise not worth taking into the real world of nuts and bolts construction. Ask a contractor if he considers himself a “doer” or a “thinker”, and 9 out of 10 will answer “doer”. Successful contractors consider themselves problem solvers, not academic thinkers.

Negative Bias

 

This negative bias toward “strategic thinking” has prevented top management in the construction industry from readily adopting one of the most practical and effective management tools. Let’s take a closer look at exactly what we mean by strategic thinking and try to dispel this bias once and for all.

Define Our Terms

 

The father of Western modern strategic studies, Carl von Clausewitz (1780–1831), defined military strategy as “the employment of battles to gain the end of war.” Think about that for a minute. The “Battles” are tacticsemployed to achieve the strategy, “gaining the end of the war.” In other words, “strategic” planning is nothing more than “long-range” or “big picture” planning. It is not a mysterious academic exercise.

  • Think of strategic thinkingas long term planning for attaining a vision.
  • Tactical thinkingis short term planning to solve a problem.

Construction industry senior management already think “strategically”. They just don’t call it that.

An Illustration

 

The construction industry is now facing a serious shortage of skilled labor. Let’s call this “the problem”. Current industry research reveals the following:

  • During the 2006-2011 recession construction companies shed about 2.3 million jobs.
  • Today, the Bureau of Labor Statistics reports there are over 404,000 unfilled construction positions.
  • Despite steady industry growth, companies are still struggling to fill key roles on the jobsite and, as a result, are at risk of missing out on jobs or extending project timelines.
  • 80% are having a hard time filling hourly craft positions.
  • 73% believe it will get harder over the next 12 months.
  • 45% say local training of skilled workers is poor.
  • 43% say project costs are higher than anticipated.
  • 44% report projects take longer.

Tactical Response

 

Industry research reveals the industry’s “knee-jerk” tactical “problem solving” response:

  • 50% of contractors are aggressively recruiting skilled craftsmen from their competitors.
  • 66% have increased base pay.
  • 29% have improved benefits like incentives and bonuses.

These are tactical responses employed to solve the immediate problem. While they may mitigate the immediate labor shortage on your current job, they do nothing to solve the long-range labor problem and will, in fact, exacerbate the problem in the future. While the construction labor shortage is an immediate threat to your bottom line, strategies that employ the right tools can mitigate your risk exposure in the long term.

Strategic Response

 

Some contractors have taken a slightly longer-range strategicapproach:

  • 46% have launched in-house training programs.
  • 29% are investing in technology to automate and eliminate hourly craft positions.
  • 25% are using robots, drones, and/or 3D printers.
  • 23% are attempting to replace workers with Building Information Modelingand doing more off-site prefabrication.
  • Many have begun an aggressive recruiting program at local trade schools.

Strategic View of Labor Market

 

Contractors are considering new labor markets to recruit for construction jobs.

  • They are designing approaches tailored to untapped pools like women and veterans.
  • Those Millennialsyou’re hoping to hire are digital natives; they’ve grown up with technology and embrace it fully. If you want a youthful workforce that can make the most of the available technology as they learn the construction business, now is the time to reach out to them.
  • A January 2017 Labor Force Statistics report indicates that 9% of the construction industry is Hispanic or Latino, and that number is only increasing with time. In addition to having bilingual supervisors, the right software can help bridge the gap by supporting localized languages and allowing your business to safely and effectively employ the abundant population of Spanish-speaking craftspeople.
  • Finally, when new workers are few and far between, it’s time to start making the most of the workforce you have. It begins with giving your team the technology necessary for them to be 100% efficient in their jobs, in addition to looking beyond traditional hiring and retention strategies. With this two-fold approach, it’s possible to lessen the impact of the construction labor shortage for your firm, while attracting the next generation of construction talent.

This is a strategic approach to the labor shortage problem that some construction managers are already employing. Strategic planning is not an academic exercise. It is the instinctive, practical response of experienced professionals.