Radical way to close the labor gap

BY DENNIS SOWARDS QUALITY MANAGEMENT AUTHORITY Today's industry trade magazines and conferences are full of solutions to the labor shortage problem, but none has proposed this answer. Maybe it's too obvious to suggest or maybe, as I suspect, it is too radical to consider. First, let me define the gap or problem. Today's skilled labor market is shrinking as the baby boomers retire, yet the demand for

BY DENNIS SOWARDS
QUALITY MANAGEMENT AUTHORITY

Today's industry trade magazines and conferences are full of solutions to the labor shortage problem, but none has proposed this answer. Maybe it's too obvious to suggest or maybe, as I suspect, it is too radical to consider.

First, let me define the gap or problem. Today's skilled labor market is shrinking as the baby boomers retire, yet the demand for skilled craftsmen seems to be growing. Everywhere contractors are complaining that they cannot get enough skilled help to take on all the work available.

Finding good project managers and support personnel is also becoming more difficult. The unions are not bringing in new apprentices at the rate needed to meet current and future demands with a workforce nearing retirement age. There is a gap between the work available and the work-ers available. In one study done earlier this year, 41% of the companies surveyed reported they couldn't right people.

The prognoses for 10 years show the skilled gap widening. Many are being used or proposed solve the problem. The ways contractors are looking close the gap are:

  • Advertise job openings more;
  • Hire from the competition;
  • Offer more benefits;
  • Love them or lose them;
  • Recruit in the high schools;
  • Train the unskilled;
  • Offer a signing bonus;
  • Offer working incentives such as a company take-home truck;
  • Offer stock options or some form of owner-ship interest; and
  • Pay more money than your competition.

Higher pay risky
Many of these solutions seek to solve the problem by improving some part of the compensation package. One can compensation only fast as the market will or risk having no money compensate the employees. higher wages and than the competition will so far in recruiting and skilled employees. It ends in a bidding war where only winners are the employees, and even that is short their employers eventually themselves out of the market.

Motivation theory clearly shows that money and benefits best, short-term fixes. Usually pay and benefits are dissatisfiers rather than employee satisfiers. No one ever complained of being overpaid!

Pay incentives can only go so far. Consider this: Could you double your productivity if you could double your salary? (This is a trick question — consider the implications of the possible answers!)

You can't pay less than the market rates and expect employees to stay, but paying top-end rates will not solve the problem.

The most effective method of recruiting good new employees is word-of-mouth promotion where one has gained the reputation as a great contractor for whom to work.

Keeping skilled employees is the greater challenge. Whatever you do to recruit good employees will be wasted if you can't keep them. We want loyal employees so that when the competition comes knocking — and it will — these employees choose us first. It is not about making employees "happy," since the only real way to make them ultimately happy is to pay them to not work. Even that would probably be short lived.

The kinds of things that create loyalty are the same things that build trust. These include asking for their opinions, communicating with them as a trusted peer and involving them in helping to solve problems, not in having the solutions done to them.

Employees will be loyal to you if they for their skills and ideas. actions often require a cultural the company, and that takes effort. The investment, however, pay great dividends as competition labor heats up.

The Lean solution

There is still another solution to close the labor gap. It is not an alternative to paying good market wage rates or developing a culture where employees feel valued, but it helps attack the problem from another direction.

The solution is to become a Lean productive operation. Think about it. If it typically takes 10 workers to install pipe or duct in a building and you can adopt Lean Construction principles and only need eight workers or less, then you don't have to recruit, train and retain as many workers. I witnessed a project recently where this was case. The contractor had the job with 10 hands installing duct, but through some innovations he was able to with fewer.

A study by the Construction Industry Institute showed that only 10% work at a typical construction site is value-added work. From a Lean standpoint, most of the time spent on a job is waste. It doesn't add value.

Much of the waste could be called "treasure hunts." I'm not talking about lazy employees. While some jobs need better supervision, much of the problem is that we have designed our workplaces and work processes so poorly that we enable waste to happen.

"But it's always been that way — this is construction!" the naysayers shout. It is true that we haven't really changed the way we perform our work in the last 50 to 100 years. It doesn't mean it can't be done.

To implement Lean in construction, contractors will have to learn a new language for construction, such as "work flow" as opposed to work waiting. Contractors will have to get into the details of the work processes and do a value-stream analysis.

This simply means to identify the steps of doing the work and determining which steps are valued added and which are not.

Contractors will discover that most of the time the work is not flowing; crews are waiting around for equipment and materials to arrive or hunting around for tools or drawings. The value-added steps are most useful but they are usually few in number.

The non-valued added steps are there because that's either how we designed the process or, more frequently, just allowed by default to happen. Contractors should attack these useless steps and time killers and eliminate them if possible or modify them to use less time and resources.

Plan of attack
So what can we do?

1. Organize the workplace and put material and tools so they are readily accessible. Use the 5S's.

2. Make the work assignments "ready" so that the crews can stay busy installing, not waiting or looking.

Allow the individual who should be the real work planner — the foreman — to commit to work that is ready to be done rather than allowing others to make commitments for him. (The Last Planner System, which is trademarked by the Lean Construction Institute, is the best technique I've seen to do this.)

This article does not allow for a detailed discussion of these and other Lean Construction tools, which I covered in a series of columns on high-performance contractors in CONTRACTOR, beginning in September 2003 ("Contracting performance bar is raised," pg. 64). I later covered the 5S's — sorting, simplifying, sweeping, standardizing and self-discipline — in a feature story ("5S's that would make any CEO happy," June 2004, pg. 31).

That fact is that Lean tools work in construction. The limitation is not in the type of work, but in the mind of management in applying them. We can close the gap between the number of skilled workers needed and available by being more productive with the people we have. We always say work smarter, not harder, but few of us know how to do that.

Lean Construction is a powerful answer.

Dennis Sowards, formerly a quality management executive at a major mechanical contractor and now an industry consultant, led the development of the High-Performing Contractor Assessment model for the Sheet Metal and Air Conditioning Contractors' National Association. His company is Quality Support Services. He can be reached via e-mail at [email protected] or by calling 602/740-7271.