Why Is HR Important in the Construction Industry?

Specific aspects of recruitment and hiring, performance management, and strategy management are just a few of the reasons why HR is so important to the construction industry.

  • Recruiting and hiring. Businesses in the construction industry generally face high turnover. Because of this, hiring software can be one of your best investments. HR plays a critical role in finding skilled workers, filling talent gaps, and developing talent.
  • Performance management. HR ensures that performance is managed consistently and clearly. Promotions, career development, terminations and compensation are all supported through the use of performance reviews. Performance reviews can be an excellent way to help set clear expectations. For example, they can help provide clear direction for a general laborer on how to learn a new skill, trade, or even advance to the position of a safety manager or foreman. Feedback doesn’t always have to be during a review, though. Frequent, informal feedback can dramatically increase job performance.
  • Strategy management. An HR professional with solid business acumen can have a great impact on a company’s bottom line. Effective HR leaders in construction need to know how the company runs in order to develop strategy for present and future needs. Once business needs are defined, don’t wait for the company to tell you where HR fits in. Make it your business to know what’s possible in the construction industry. For example, if your construction company has a “go-green” initiative, transform your paper processes into electronic, streamlined ones that save the business time and money.

What Are the Responsibilities of HR in Construction?

HR is responsible for onboarding, employee benefits, compliance, safety, payroll, training, certifications, offboarding—and everything in between. If these are effectively executed, an HR professional in the construction industry can go from good to great. Here are six essential areas of HR expertise.

Compliance

If a job ends and a crew travels to a new state for work, HR must understand and maintain compliance with state and federal laws which govern the payment of wages and hours worked. HR also makes sure that all employees are authorized to work in the United States and documents that appropriately.

Forecasting

Many aspects of the construction industry are project-based. One of HR’s responsibilities is to help coordinate the details of each project—labor needs, timelines, and responsibilities—to ensure that everything goes smoothly. In this, they work closely with project managers, construction managers, and contractors. Forecasting is an important part of the construction industry because project timelines are often directly tied to costs. An accurate forecast can help you avoid going over budget.

Specific duties could include:

  • Working with other departments to determine a forecast for each project (and readjusting as needed)
  • Using forecasting software to collect data and organize information
  • Staying up-to-date with the status of each project, including any delays
  • Communicating with project teams regularly

Hiring

As in any industry, construction companies need good workers before anything can get done. Human resources professionals are well-equipped to find qualified workers, even in highly specialized areas (which are often necessary for construction projects). Because there’s often a lot of turnover in the construction industry, it’s critical that HR stays on top of hiring new employees.

Specific duties could include:

Payroll and Benefits

The number one reason that people work? The money—we all have to make a living. HR can help determine what salary/hourly wage works best for each role by benchmarking. This makes sure that qualified people are attracted to the position. 

It’s also important that construction businesses have somebody to run payroll so that everybody gets their check each pay period (and the company stays compliant with state and federal laws). Even those who know a lot about running payroll often use payroll software to make this part of their job easier.

After financial compensation, benefits are your next most valuable tool in preventing turnover. Understanding and offering comprehensive benefit packages helps you recruit and retain skilled employees. 

 Benefits that construction workers often receive include:

Training

Since many people in the construction industry do specialized work, it’s important that they’re properly trained. HR plays an important role in tracking training, creating training plans, and making sure that every employee has the knowledge they need to do their jobs well. This impacts the success of the business and ensures that everybody stays safe.

Specific duties could include:

  • Understanding the company’s overall training needs
  • Creating training policies and procedures
  • Determining what role-specific training each employee needs based on their skill gaps
  • Keeping track of licenses and certifications, especially for those in roles where a license or certification is required.
  • Planning and conducting workplace safety training
  • Conducting 30, 60, and 90 day reviews to follow up on employee training and provide a refresher if necessary

Safety

Ensuring that correct safety protocols are understood and followed greatly mitigates risk and lowers the possibility of accidents, injuries, higher health insurance premiums, fees, and even lawsuits. HR is responsible for compliance with Occupational Safety and Health Administration (OSHA) regulations, preventing and deconstructing discrimination or harassment, and the development, training, communication, and documentation of safety programs.

Common HR Challenges in the Construction Industry

The average turnover rate of the construction industry is higher than most, and is a common challenge. A lack of understanding of the business and a lack of support from line management can also create hurdles for HR leaders desiring to make positive changes within an organization.

Understanding the Construction Industry

It can be difficult for an HR professional new to the construction industry to implement changes and create policies without first understanding the challenges faced by field employees. You can gain new insights by understanding the challenges and processes of employees who work in the field. Performing a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) can also give you an idea of what direction the business is headed in—what’s working, what isn’t, and how you can help.

Gaining the Support of Line Management

Once you understand the industry and company you work for, you can begin to create strategies and process improvements. Rather than trying to force line management, project managers and foreman to follow policies, try offering them relevant solutions to the issues they face. This is possible by adapting and delivering new policies or changes to them in such a way that solves the problems they are experiencing in the field.

The Cost of Turnover

Turnover is very costly in construction. One example of this is when employees switch jobs after a project ends. Layoffs at the end of projects results in increased unemployment taxes (SUTA and FUTA). Of course, the high cost of turnover in any industry in recruiting and training new employees also applies.

Temporary Workers

Because some people in the construction industry work as contractors, it can be difficult for companies to hold onto people for long periods of time. If it makes more sense financially for someone to move from project to project, and company to company, they’re going to do it. Hiring contractors can make sense for the company financially too, but it requires more planning. You’ll need to establish a solid process for hiring talented workers. Companies who hire temporary workers also need to have solid training plans in place so that new workers can quickly understand what’s required of them. 

Navigating Unions

Construction workers gain many benefits from joining unions, including collective bargaining power for better working conditions, benefits, and pay. According to a recent Bureau of Labor Statistics report, 12.6% of those working in the construction industry were part of a union in 2021. The report also shows that those who are part of unions make more money on average. Working with unions can be tricky, especially as bargaining and employee grievances come into play. HR can navigate this by improving communication and negotiating skills, seeking to see things from the perspective of employees. 

HR Strategies for a Construction Company

HR strategy should always align with the construction company’s business strategy. If you’re not sure what your company’s business strategy is, try starting with the mission statement. A company’s values, mission, and vision are typically found within a mission statement, which can help you formulate an HR strategy. Other important strategies include onboarding, mentorship, and a positive culture.

Create an Engaging Onboarding Experience

Make onboarding easier and more effective by streamlining paperwork and checklists through technology. Automated processes save time and increase compliance. This, paired with a structured orientation, can positively impact your retention rate. It’s important to realize that onboarding isn’t a singular event. Your strategy should include what you want employees to learn about your culture and how you’re going to measure results.

Increase Retention With Mentorship

Investing in a mentorship program that supports both mentees and mentors through weekly check-ins can increase the likelihood that employees stick around for the long term. A mentor acts as a role model for a new employee and works closely with them to show them the ins and outs of their role. They can show mentees how to perform a job correctly, which tools to buy, help them navigate the company, and help them achieve their work goals. Mentors are chosen based on their wisdom, knowledge, skills and abilities. Although a mentorship program is an investment, it can increase employee engagement and be of great benefit to your organization.

Improve the Culture

Employees leave managers or teams, not jobs. Communicating the company values and mission, making sure each employee knows how they contribute to the big goals, giving plenty of feedback, and providing a healthy work/life balance are all ways to nurture a culture that leads to retention and a strong bottom line.

Here are some additional ideas for improving your company culture:

When to Hire an HR Professional for Your Construction Business

While many experts recommend hiring an HR professional when your company reaches 50-100 employees, there are lots of benefits to hiring an HR professional as soon as you can afford to. Those with in-depth knowledge of human resources have the skill set needed to navigate the unique challenges that construction businesses face.

The decision about when to hire an HR pro ultimately rests on the founder’s shoulders. If your construction company has reached a stage where it’s becoming a lot of work to hire new people, track employee information, and run payroll, it’s probably time to make the leap. 

If you need inspiration for your job post, check out these sample job posts from Indeed for the position of HR generalist. While you definitely don’t want to copy these word-for-word, they can help you get started. Consider the specific responsibilities listed in this article as you decide what to include in your job description. 

How Eddy Can Streamline Your HR Processes

Eddy is an all-in-one HR software designed to help small businesses keep their HR functions running smoothly. Newly hired employees quickly move through the onboarding process with digitally-signed paperwork. Deskless workers can easily clock in and out, submit time off requests, and navigate the employee directory using their mobile devices. Eddy also allows you to track employee training and certifications, providing reminders when something needs to be renewed. 

Find out more about how Eddy can streamline your company’s HR processes