September 22nd, 2023

The Challenges of HR in Construction for Small Businesses

Small business HR professionals face no shortage of HR challenges these days. From navigating post-COVID workplace policies and whether or not they should stay in place as the pandemic spikes, falls, and spikes again, to complying with new laws and regulations, to recruiting and hiring talent amid national worker shortages. All of these challenges are top of mind for human resources professionals.  

But HR in construction is a slightly different story; it poses unique challenges for HR departments. Challenges that eat up valuable time and brain power, since there aren’t as many readily available resources to HR management for such nuanced and specific HR issues.

What’s the Role of HR in Construction?

Like most industries, Human Resources in construction is responsible for hiring workers, managing employee training and safety, and ideally helping to support employees with career development–which helps in retaining talent.

But where HR in construction differs from most industries is in major skill shortages and training issues, along with the constant need to ensure worker safety and regulatory compliance on a job site. Staying aware of these challenges can help construction businesses develop stronger HR strategies and plan for how to overcome them and thrive.

Here’s a look at the top challenges for human resources in the construction industry:

1. Aging and Retiring Workforce

The construction industry is facing a change in its workforce: many of the older, more experienced construction employees are now aging out of the profession and retiring. Around 40% of all workers in the industry are between 45 to 64 years old; 56% of electricians and 65% of all heavy equipment and pile-driver operators are now over 40 years old.

Yet expert trade and construction workers are often the greatest sources of knowledge and on-the-job initial training for new hires. Without that experienced cohort available to show the next generation of workers how things are done, all that valuable knowledge gets lost. This puts more pressure on HR teams to fund and provide comprehensive employee training through other avenues.

2. Not Enough Skilled Workers

An ongoing shortage of skilled construction workers is putting many businesses in a bind as they try to stay on schedule and deliver projects on time. A large majority, or 88% of construction contractors, say they have a moderate to high level of difficulty finding skilled workers, and almost half (45%) say they have a high level of difficulty. The skills gap continues to grow.

When combined with high rates of turnover in the construction industry, there’s a possibility that even if a business is able to find the skilled workers it needs, those workers may leave in favor of other jobs that offer higher pay, better benefits, or more growth opportunity. This is especially important to younger workers who want to know that learning new skills and gaining experience will be worth their time.

HR managers in charge of recruiting and hiring qualified workers may not have a lot of bargaining power when bringing in younger workers, compared to larger enterprises. They may also have to settle for workers who only have some necessary skills and need to be trained on the rest.

3. Lack of Updated Technology & Training

Much of the construction industry is quickly moving toward advanced technologies and digital tools that help them perform their work with more efficiency and accuracy. But small businesses by nature have to operate with smaller budgets, and many can’t afford to adopt the latest technologies to the extent they need to.

Or if they do, they may not necessarily have the time, money, or in-house knowledge to properly train current or new employees on how to use the tools. In a recent ConTech report, 28% of participants said a lack of knowledge about new technology limits their tech adoption.

Lagging behind in technology not only puts small businesses at a competitive disadvantage, but it can also make it harder to attract workers who would otherwise be interested in the industry because of its technological breakthroughs and innovation.

HR teams in construction already have a harder time recruiting and hiring new workers, but attracting the younger ones interested in developing long-term careers without providing updated technology and training is a near-impossible task. This poses a significant challenge for a small business HR department.

4. Concerns About Safety & Compliance

Any construction or trade business has to be particularly concerned with the health and safety of its workforce and make sure all the various OSHA standards are being met, in addition to following any other safety-related state and local laws. But compliance isn’t the only factor. Workplace injuries can be devastating and expensive, costing over $44 billion in wage and productivity losses in 2020 alone and $12.8 billion in uninsured costs for employers.

Even though jobsite project managers might be responsible for ensuring the day-to-day safety of workers on construction projects, it’s the responsibility of human resources to stay on top of new and changing laws and regulations. HR then has to translate those laws into workplace safety policies and communicate those policies to the workforce — in addition to providing and managing workers’ compensation insurance.

It’s an especially precarious job for a small business HR department. They’re often dividing their time among many other important tasks, making it easy for something to slip through the cracks, or they simply don’t have the legal and regulatory expertise available to fully understand and comply with the laws.

How Obsidian HR Can Help Small Business Construction Companies

Running a construction company is important in today’s society with all the many infrastructure, residential, and commercial building projects that are needed — especially here in Colorado! But small business owners and the HR teams that work for them have a lot on their plates that require both careful attention to detail and big-picture strategic thinking.

As small businesses in the construction industry grapple with various HR challenges, Obsidian HR can help by reducing the time, focus, and worry owners and HR staff have to expend on them. Our online platform and services:

  • Ease new worker hiring and onboarding processes by tracking applicants, facilitating forms and paperwork, setting up payroll, making sure employee handbooks are up-to-date and accessible, and administering benefits
  • Facilitate worker training and development, track training completion, and provide training reports that help businesses meet and stay compliant with industry standards and guidelines
  • Update businesses on changing laws and regulations, help reduce risk and ensure compliance, provide cost-effective workers’ compensation coverage, give guidance on injuries and safety issues, and help resolve worker grievances and disputes

To learn more about how we can help your business, download our guide below.

Download Our Guide: 3 Key Benefits of Outsourcing HR

Learn more about outsourcing HR to help you save costs, stay compliant, relieve administrative burden, and more!

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