Retain your construction employees: A guide to construction turnover

Employee retention is critical to a construction company’s bottom line. That’s because employee turnover can lead to loss of profitability and revenue. A revolving door of construction workers can lead to higher safety risks as experienced workers leave. Quality of work on the construction site can suffer, and your construction company could be viewed with a subpar reputation from potential employees and clients alike.

It’s time to reevaluate employee turnover in the construction industry. In this blog, we’re identifying the top reasons you’re losing construction workers. Then, we’re giving tips on how to solve each one.

What is construction employee turnover?

Construction employee turnover refers to the rate at which employees leave a construction company and are replaced by new hires over a given period of time. It’s usually expressed as a percentage of the total workforce.

Construction companies can reduce employee turnover by offering competitive salaries and benefits, providing a safe and comfortable working environment, implementing training and career advancement opportunities, recognizing and rewarding good performance, and fostering good relationships between management and employees.

Why is construction employee turnover so high?

Generally, turnover rates in construction tend to be higher than in other industries. There are several possible explanations as to why this is. The physical demands of work, low wage growth and project-based work have all historically played a part in employee turnover. In more recent times, hiring incentives from industries also experiencing labor shortages are drawing construction workers away.

Construction employee turnover rate

The construction employee turnover rate can differ depending on different areas of the industry – such as if the construction company is operating in residential or remodeling services or retail building construction – and where the company is based.  

According to a recent economic news release from the Bureau of Labor and Statistics, the rate of total separations in the construction industry as of January 2023 was 4.6. This means there are over four job openings per 100 workers in the construction industry over a one year period.

Separations include all reasons of employee churn: employee quits, layoffs and retirements. This rate is higher in construction than other industries that may be competing for similar labor including manufacturing (3.1), wholesale trade (2.8), and mining and logging (3.5).

It’s also important to remember that average rates of separation can vary by location. For example, separation rates in the Northeast tend to be lower than those in the South. In regions  where the average rate of separation is higher, there’s likely a higher demand for construction workers.

Job openings and the construction labor shortage

As of January 2023, there are nearly 250,000 job openings in the construction industry nationwide. The Association of Builders and Contractors estimates over 340,000 new workers will need to be hired in 2024 to keep up with demand. Keep in mind that number is in addition to normal hiring activities, bringing the grand total of the construction labor shortage to 546,000.

How to stop losing construction workers

With labor shortage challenges still of concern, many businesses are asking themselves this: How do construction companies retain employees?

We’ve rounded out the top five reasons construction companies are losing employees. The good news is that for each reason, there’s a potential solution.

The problem: Low wages

Low wages, combined with lack of job growth opportunities, may lead to construction workers leaving for higher-paying jobs – even if that means leaving the construction industry altogether.

The solution: Improve benefits as much as your bottom line allows

Actual wage growth for the construction industry is estimated at -2.3% in 2023. If you have the ability to bump wages, it may be one of the most straightforward ways of keeping your construction workers happy.

That said, increasing wages is easier said than done, especially as inflation, banking crises and lingering supply chain issues continue to test profit margins.

The problem: Lack of growth opportunities

Some may think career paths are limited in the construction industry. Training is required for construction workers to specialize in a certain area of work: carpentry, electrical work and plumbing to name a few. Without training, construction workers hired for general labor may churn more often.

The solution: Create training and development programs

By investing in training and development programs designed to help construction workers develop new skills, you can retain top employees longer and increase your network of contacts for different areas of specialty.

These types of training programs can also lead to other areas of improvement across your business, including:

• Reduced job site accidents and injuries as a result of increased safety training

• Increased productivity and higher quality of work completed at construction projects

• Improved teamwork, including the ability to fill gaps by cross-trained employees

• Increased interest from future job seekers (and client) referrals

The problem: Uncertainty of work

Construction crews are often hired temporarily per project. Especially as everyday costs of living continue to rise, this may lead construction workers to look for more stable and predictable employment.

The solution: Offer long-term contracts

Take advantage of the high-demand for construction and offer long-term contracts to construction crews when possible.

Using construction lead management, scheduling and project management software, map out your labor needs based on the duration and scope of each project. Then, negotiate long-term contracts with workers. This helps keep crews locked in for work and reduces the stress on your teams to find new crews.

An added benefit? By committing to future work, you can build strong and lasting relationships with employees.

The problem: Working conditions

Construction is physical work. Construction sites can be dangerous, the hours are long and workers can burn out fast. About 35% of surveyed construction companies report projects are delivered late due to staffing.

The solution: Explore different ways of working

Often times, long hours are being asked of construction workers to help keep project timelines on track. Still, longer hours don’t necessarily result in higher productivity. In fact, recent reports suggest longer hours are only maintaining current work instead of leading to business growth.

There is a case for shorter workdays in construction – especially as an employee retention strategy. As long as you’re maintaining good time management, shortening the workday may even lead to cost savings in the form of reduced overtime. If you combine these efforts with initiatives like improved safety at construction sites, you may see a change in employee turnover.

The problem: Low employee morale and engagement

Low employee engagement is likely a result of a combination of the problems listed above. Add into that the fact that the vast majority of construction companies don’t have written job performances or key performance indicators identified for their team, and you have a recipe for dissatisfied employees (even beyond construction crews).

The solution: Use software for effective construction worker management

You need to dedicate time and resources to construction workforce management. Construction company software enables you to save time managing projects, contract details and scheduled work. That way, you have more time to focus on things that can strengthen employee retention, including:

• Project management. Managing, assigning and tracking task progress in real-time helps you know when construction crews are operating efficiently or when you may need to intervene to get them back on track.
• Resource allocation. By having a clear idea of project timelines, scopes, budgets and actual cash flow, you can ensure you have the tools, materials and equipment on hand for your construction workers when they need it.
• Schedule management. Manage project schedules and identify potential roadblocks that may cause delays. By getting ahead of these issues in advance, you can reduce the need for longer workdays and reduce burnout.
• Communication. By ensuring supervisors at the job site have access to project documentation in one shared place, you can help keep everyone informed of issues, change orders and homeowner questions. This helps reduce the need for your construction crews to do rework.

How do you solve the skilled labor shortage in construction? Turn to Buildertrend.

A software solution can’t solve the labor shortage completely, but it can give you the foundational toolkit you need for effective construction worker management.

Stop losing construction workers. Start winning with Buildertrend.

Want to learn more about labor market trends in the construction industry? Download the “State of the Residential Construction Industry” annual report.

Construction turnover FAQs

Check out these answers to common questions about construction turnover.