Empowering the Next Generation of Construction Leaders

It’s no secret that the construction industry is facing a workforce shortage, but it’s not the only consideration when thinking about the industry’s future. There are several dynamics that will drastically impact the future of work within construction, creating opportunities for forward-thinking companies to elevate and differentiate themselves to both clients and employees.

How are companies investing in and leveraging their emerging leaders? Emerging leaders and middle managers operate as connectors and translators to ensure alignment throughout the organization, from senior leaders to frontline workers.1

This article explores how current leaders, financial professionals, and emerging leaders play a vital role in making this transition successful for all.

State of the Industry

Contractors are experiencing pressure to create new ways of working and prepare tomorrow’s workforce to better manage disruptions and maintain resiliency in the areas of technology, demographics, and work culture.

Technology

While the construction industry has been viewed as a slow adopter of new technology, there is a significant opportunity for rapid advancement and innovation. Companies that do this well will differentiate themselves and set the standard for others to follow.

Robotics & Artificial Intelligence

Two forms of technology that have an outsized potential to change the construction industry are robotics and artificial intelligence (AI).

Robotics have had an increasing presence on jobsites but have yet to reach mainstream operations. With certain applications, robots can be leveraged to work alongside humans to increase productivity and improve safety.

As new technology is developed and deployed more regularly throughout the industry, many site team members will need to be trained, upskilled, or reskilled as their roles and functions evolve.

AI also presents the unique opportunity to drastically advance the construction industry, shifting into a new way of working for both the field and office.

According to ConstructConnect, AI will likely plug into all phases of construction, from preconstruction through turnover and occupancy.2 Applications include running automated go/no-go processes, completing takeoff, labor and equipment planning, performing live safety audits, etc.

Like robotics, as AI is more broadly adopted, companies will need to redefine roles and upskill team members.

Demographics

Throughout organizations, generational transitions are often felt most dramatically at the senior leadership levels.

Historically, there were relatively the same number of retirees exiting an organization as there were entering it. But today, there is a much different dynamic at play.

The Baby Boomer generation has had an outsized impact on the U.S. economy and these workers are now in their final years of employment. While many continue working several years past the typical retirement age, the average construction worker retires at 61.3 This creates a challenge with senior talent leaving companies at an earlier age.

There were roughly 20 million more Baby Boomers born than Gen X, and if a large percentage of them are in leadership roles, then there will be a significant amount of transition in the years to come.4 But, who will take their place?

It is estimated that over 40% of the construction workforce is planning to retire in the next decade, creating an urgent need that is quickly approaching.5

Organizations will likely need to look beyond Gen X for other sources of leadership; however, Millennials and Gen Z are often viewed as not having the required experiences to step into vacated senior leader roles, even though they have faced struggles many other generations have not. They exhibit their own strengths and are uniquely positioned to bring the industry into new ways of working.

Compounding this demographic challenge is the associated trend around workplace culture. Younger generations are demanding a different experience from employers, creating new workplace dynamics and career paths.

Cultural Shifts

Many employees today view work differently than their predecessors. The perceived employee/employer relationship has evolved, but companies are slow to catch up.

According to the 2021 Homebuilding Workforce Engagement Study, the top reasons individuals gave for leaving their current company were:

  1. Lack of career advancement/training and development
  2. Pay and benefits
  3. Not being valued and respected by their boss6

While pay is a key component for retention, it’s no longer the most important, and it alone won’t retain employees.

The role of the middle manager/emerging leader comes into play when looking at opportunities for career advancement and feeling like a valued contributor to a company.

Microcultures — a subgroup within the larger culture with its own unique behaviors, values, and beliefs created by a specific company manager — are often more impactful to an employee than the overall company culture. Companies must elevate the leadership skills of these middle managers and place an emphasis on supporting and growing them as people leaders. Gallup describes this as the transition from boss to coach.7

This leadership model of the future is not authoritative and top-down, but rather networked and powered from within; it will be key to meeting the expectations of employees now and in the future.

If companies fail to meet these expectations around development and respect, then the industry may continue on the same trajectory of increased turnover and decreased tenure. According to the most recent data from the U.S. Bureau of Labor Statistics, the average tenure in construction offices has dropped from 4.3 years in 2012 to 3.9 years in 2022.8

While turnover can cause an immediate loss in productivity (especially at the field level), decreased tenure can strain a company’s long-term continuity and succession planning.

As technology, demographics, and work culture are putting pressure on organizations to create new ways of working, these new ways should be developed collaboratively with input from various stakeholders within a company.

The Role of the Emerging Leader

Historically, leadership has been very hierarchical, where knowledge flows up and decisions flow down. This command-and-control leadership model of the past is now being replaced with a networked leadership model where knowledge and decisions are shared broadly and freely.9 This new model is more efficient, given the rate of change in business and the world, and the role that truly makes this model successful is the emerging leader.

Big Think defines middle managers as “people who are at least once removed from the front line and at least a layer below the senior leadership.”10 Taking this one step further, emerging leaders are those top-performing middle managers who have been identified by senior leaders as having elevated potential and will likely see higher investments in their development.

Emerging leaders will be critical in translating the new way of working into meaningful roles and responsibilities for their staff, acting as a bridge between the boots-on-the-ground employees and senior leaders.11 They get unfiltered feedback from the workforce — which isn’t often shared directly with others in the organization, particularly senior levels — yet they still have access and insight into the company’s larger vision and strategy.

Given these two dynamics, emerging leaders should be spending meaningful time working to translate vision and strategy into roles and responsibilities and then coaching and supporting their teams to ensure execution. They take care of their people, and their people take care of their customers.

However, people currently in this emerging leader role often do not have the ability to focus on people management and strategy. More often, they are burdened with administrative work or work that others aren’t willing to complete, acting as a catch-all in the organization.

So, what must companies do to set emerging leaders up for success? Redistribute administrative tasks, arm emerging leaders with the right skills, and include them in strategic planning. By doing this, the company’s performance and workforce will reap the rewards.

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About the Authors

Jennifer Knox

Jennifer Knox, PE, MBA, is a Consultant in the Strategic Growth Advisory practice at Stambaugh Ness (stambaughness.com) in York, PA. Her technical background in engineering and construction provides a unique lens in helping AEC firms develop growth strategies, leverage a performance improvement mindset, and build high-performing teams.

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Scott D. Butcher

Scott D. Butcher, FSMPS, CPSM, is Managing Director of Strategic Growth Advisory for Stambaugh Ness (stambaughness.com) in York, PA, where he works to help architecture, engineering, and construction (AEC) firms improve their business, marketing, and sales acumen.

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