How can construction SMEs build the next generation of talent?

A skills gap has plagued the property and construction sectors for decades, so what can small firms do to attract more young people to construction?

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If you work in the construction sector, you’ll be well aware of the industry’s current skills gap. It’s no secret that businesses have been struggling to fill roles for many years, and this recruitment issue has trickled down the supply chain from big-name contractors to SMEs.

As the nation’s emerging workforce, Generation Z is the obvious choice to help plug the labour shortage for construction SMEs.

However, a recent report on young people’s perceptions of the industry found that fewer than one third of Gen-Z respondents would consider a career in construction. The built environment is clearly still negatively perceived by younger crowds, with roles being viewed as dirty and dangerous – particularly amongst women.

In this article, we’ll examine what you can do to attract more young talent as a small business owner in the sector. We’ll also walk you through the different training schemes and funds available to help you tackle this issue.

What are the biggest challenges in attracting Gen-Z talent to construction?

One of the biggest hurdles in bringing younger people into construction is their perception of the industry.

The seminal 2016 Farmer review – ominously titled ‘Modernise or Die’ – predicted a 20-25% decline in the available construction workforce within a decade, due to the industry being seen as outdated. The report recommends innovation as the way forward, and suggests finding future talent that is suitable for a “digitally enabled world”.

Most Gen-Zers still think of construction roles as taking place on dirty and possibly unsafe job sites. Given that 88% of 16-21 year olds believe that digital skills will be most important in future careers, the huge range of office- and computer-based construction jobs needs to be advertised better.

The typical routes into construction –  like apprenticeships and training placements – are also losing favour with Gen-Z. The percentage of young people going to university surpassed 50% in 2019, and has been rising steadily ever since.

Universities and colleges do offer a wide range of NVQs (national vocational qualifications), degrees and HNDs (higher national diplomas) that can qualify students for a wide range of roles in the built environment, including architectural design and quantitative surveying, but these opportunities need to be better communicated to young people.

Mathew Baxter, Group CEO of echelon Consultancy, a procurement consultancy firm, says: “Engagement with schools and colleges in a variety of ways allows contractors to promote the sector as a good place to work, which is essential as the average age of a UK construction worker is 56.”

Sustainability is another big area of concern for the next generation. They were raised on programs like Bob the Builder, and grew up hearing messages of reduce, reuse and recycle.

Three leading businesses operating in the built environment recently came together to publish Are we Gen Z ready?, a report on how to attract younger talent. It showed that the majority (62%) of Generation Z are aware of and engaged with the climate emergency, but that just one in three recognised the construction sector as working to address the issue.

Karina Connolly is Senior Business Development Manager at Morgan Sindall Construction, and led the Are we Gen Z ready? research. Connolly said: “[A pressing concern] is the lack of awareness among Generation Z about the ongoing digital transformation happening within the industry, and the initiatives progressive businesses are leading as they embrace a shared responsibility to tackle the climate emergency. Both of these areas are critical for construction to make real progress in.”

But potentially the biggest factor affecting Gen-Z recruitment is the perception that it is still male-dominated. Construction has typically reported one of the largest gender pay gaps of any industry, with an average disparity of 20% in mean bonus payments in 2020.

Women currently only make up around 14% of the construction workforce, and while 37% of new entrants are female, there is clearly still progress to be made in attracting more women to the sector.

What else is causing the construction industry talent gap?

Alongside a lack of young people entering the sector, there are other causes contributing to the industry’s talent gap.

Britain’s aging population is one – a third of all workers are currently over 50, meaning more people will be retiring and leaving the workforce than joining. There has also been a large migrant shortage caused by Brexit, with reports showing that the UK construction sector lost a quarter of its migrant workers in 2020, or just under 50,000 employees.

Plus, the perfect storm of all these factors has been topped off by the COVID-19 global pandemic. In November 2020, data from the Office of National Statistics (ONS) revealed that redundancies during the pandemic had resulted in the lowest number of people employed in the construction sector since 2013.

Elizabeth Assaf is co-founder of Urban Front Ltd., a hardwood manufacturing company. Assaf says: “In the last two months we have been searching for a Workshop Assistant and a Sprayer to complete our team. It has been virtually impossible to find anyone to fill these positions (one of these has been empty since last year).  We have spread the news of this vacancy wide using recruitment agencies, but it seems apparent that this is the real consequence of Brexit. It is a disaster – how can companies like us survive if we can’t get enough people to work?”

What impact has the construction talent shortage had on SMEs?

Small businesses make up a large majority of the construction industry, accounting for 80-90% of the current workforce, so the talent shortage has had a big impact on SMEs – especially since they typically have less cash reserves to spend on big recruitment drives and training schemes.

The good news is that there is still a big demand for construction and infrastructure work like HS2. However, small businesses are already seeing the impacts of a shrinking workforce in terms of the amount of work that they’re able to get done.

Thomas Jepsen is CEO of construction and architecture company Passion Plans. He says: “The talent shortage has been devastating, and almost forced us into bankruptcy. We were working on a couple of medium-sized construction projects with strict timelines when suddenly it became impossible to find any workers. We were looking at substantial financial losses if these projects were delayed.”

This clearly isn’t an isolated issue – in early 2019, two-thirds of construction SMEs reported difficulties in hiring bricklayers, for example, while almost 60% said they had struggled to find carpenters.

The impact of a reduced workforce can also trickle down the project pipeline and affect other areas, like material production or quality assurance. 55% of respondents in a 2021 survey by LABC Warranty thought that access to skilled workers and trades would be the biggest challenge they’d face in the next year, due in part to the knock-on effects it could cause.

Not being able to successfully deliver a construction job also means a reduction in work and cash flow. It’s no wonder that an ONS survey, completed in February 2021, revealed that 12.5% of small construction firms had little or no confidence their business would survive the next two months.

Chris Jackson, Co-Founding Director of RJC Plant Services Ltd, a construction equipment hire company, comments: “We've hit a really key point of growth for the company, but we have faced issues recruiting. We ideally need people who have a heavy goods license and an up-to-date Driver CPC qualification, but those people are getting difficult to find. We have started recruiting those with little or no experience in apprentice-type roles but even they can be hard to fill. There is so much potential within the industry and plenty of opportunities for someone to have a well-paid, secure career, but it does feel like the next generation feels university is the only route to secure a good job.”

Finding the right construction finance for your company is a great way to stay on top of invoices and increase cash flow. Read our expert article to find out how construction finance can help your small business.

How should small businesses confront the issue?

Gen-Z are bright and tech-savvy, so you’ll want to embrace all things digital. You should be using social media to raise your business profile and advertise for positions. Ensure that employees can access everything they require through their smartphones, and take advantage of popular apps used by Generation Z, including Instagram and TikTok.

Thomas Jepsen also told us: “The construction industry is notorious for being behind on the technology front. We've taken serious strides to become a more technology focused company, and have taken a more active approach at implementing new technologies into our business. With the desire to continue working from home, especially among Gen-Zers, we've had to adapt our work processes to allow that, keeping in mind that we are still designing, selling and building houses. These efforts seem to be working with our desire to hire a younger workforce.”

Training and apprenticeships are good ways to get young people involved in construction so they can get a taste of it as a potential career. And for budget-conscious SMEs, voluntary work placements are a low-cost version of this strategy.

Another way construction SMEs can attract Generation Z is by investing in, and advertising, green-skilled positions like low-carbon heating engineers or sustainability officers. Show that you are working to make your construction company more environmentally-friendly – a cause younger people are passionate about.

Nicky Gordon is managing director of Genesis Homes and Russell Armer Homes, a house building company. He tells us: “Commitment to sustainable construction is, in my opinion, of massive importance to attracting future generations of workers to the industry. We will certainly be investing in more green-skilled jobs, but what will be even more key is making the existing jobs and trades we have more ‘green focused’. Currently, sustainable construction isn’t affordable for businesses of our size. However, with education and more people and businesses entering the marketplace quicker, it will make it more competitive and, therefore, a more achievable target.”

What help is available?

Industry leaders have been aware of the talent shortage in construction for some time, but the effort to attract Generation-Z to the workforce has been relatively lacking – as has the funding.

In particular, the huge shift towards environmentalism has meant that a lot of SMEs are having to retrain and learn new, ‘green’ skills, and invest in more eco-friendly construction methods to fulfill clients’ requirements. Thankfully, there are some initiatives that SMEs can take advantage of to help attract younger workers to their businesses.

Government apprenticeship schemes

As part of this year’s budget, the government announced £22m to continue the paid incentive program for employers who hire an apprentice before September 30 2021. Under the scheme’s rules, you can apply for new apprentices who joined your organisation to receive £1,000 if they are:

  • Aged 16 to 18 years old
  • Aged 19 to 24 and have an education, have a health and care plan, or have been in the care of their local authority

This is in addition to the usual incentive payment already received for hiring an apprentice.

CITB skills and training funds

The CITB (Construction Industry Trade Body) offers a Skills and Training fund for SMEs, which aims to deliver learning and development opportunities for employees, as well as leadership and management training for employers. Here’s how it works:

  • Employers with 1 to 49 directly employed staff can receive up to £5,000
  • Employers with 50 to 74 directly employed staff can receive up to £7,500
  • Employers with 75 to 99 directly employed staff can receive up to £10,000

The CITB also offers the Construction Skills Fund. You’ll need to contact CITB regional representatives directly for specifics, but the scheme essentially works by connecting employers with the right information and tools to register their specific skill gaps and start to fill them.

Through the Construction Skills Fund, you can get help with:

  • Identifying your skills gaps and developing labour plans for your sites
  • Finding and recruiting workers who want a career in construction
  • Giving onsite experience to trainees, making them ready for the workplace
  • Securing funding for bespoke training programmes to create skilled workers

Conclusion

Reports show that that construction industry needs to improve its image amongst Gen-Zers – but this task is achievable with proper support from government and industry leaders. Small businesses should embrace digitalisation, invest in green skills, and take advantage of programs that will help make the sector more appealing to the next generation of workers.

Helena is from Yorkshire and joined Startups in 2021 from a background in B2B communications. She has previously written for a popular fintech startup covering everything from money-saving tips to cultural reviews.

She is particularly interested in project management software and the films of Peter Jackson.

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