Predictions are a far cry from prophecy. This is what we estimate from what we see in an ultracompetitive and malnourished hiring environment. But I’ll guarantee one of these will prove true.
A combination of cost inflation, monetary and supply chain driven, along with an aging and relocating professional construction management cadre will drive increased competitiveness for the top 10% talent, with wages increasing ruthlessly (we’re already seeing that in the San Francisco bay area - Growth limited by hiring, not sales).General Contractors without flexible construction contracts that can handle material and labor shortages and pricing increases will find themselves in brutal financial quandarys. *Factor your recruiting costs into estimating
Leaders who engender loyalty will enjoy significant advantages over transactional leaders. Particularly leaders skilled in developing talent. The incentive to ‘grow your own talent’ will never be stronger. The key will be holding on to that precious talent as the market competes ferociously. With all your uniqueness, build strong relationships.Cultivating talented carpenters and mentoring field roles into junior management roles is critical.
A sudden downturn is very possible. This prosperous economy has lifted all the boats but we have a habit of forgetting how things can change. I sense our prosperity is being taken for granted now, which is concerning. Our economy tends to move in cycles as the Fed messes with rates and we are overdue for the downturn. Of course, you might suggest the 2020 recession was just that (and it was 34%) but consider the cause and ferocious bounce back.Take an anti-fragile approach to compensation and expectation setting. Don’t focus too much on salary - Consider project financial performance and pay well for it to maintain some overhead flexibility if things tighten up.
Transactional job-hopping will continue because desperate companies do desperate things. But in the long-run it will cost people as quality employers persist expecting people with a track record of problem-solving performance over time within the same team. In essence, people are capitalizing on market demand but trading trust for negotiating leverage. This is not a long-term play. I see the contractor market segmenting further and the top players extending their lead.
Water will continue to be wet. The more things change, the more they will stay the same. The only constant is change itself.
TJ's advice on the challenges and market changes relevant to SME construction companies searching for talent on the West Coast.