Skills shortage – a company perspective

This is a precis of a presentation by Domenic De-Fazio, chief executive officer, New Zealand Construction, Fulton Hogan, at the Infrastructure NZ Building Nations Symposium 2017.

FOUR MONTHS INTO my new role as chief executive for Fulton Hogan’s construction business here in New Zealand, as we discuss the pipeline of work ahead of us, the narrative is much the same: A conversation about the resources challenge.

Our country is investing billions of dollars in roads, tunnels, bus ways, airports and of course a lot of work with earthquake mediation. Further to this there is a lot of pent-up demand for essential infrastructure. As an example, a quarter of the nation’s three waters infrastructure is over 50 years old, with a replacement value of $36 billion.

Add to this housing shortages and the construction boom in Auckland – and the skill shortage pressure is on. Auckland will require 185,000 construction-related employees by 2021. Unemployment across the country is at record lows. And we are facing competition, not only from our competitors, but from adjacent markets. The skills that we have to offer as an industry are attractive to many markets.

What are the solutions?

I’d like to share with you some of the solutions that many of you may already have in place and some of the things we’re doing at Fulton Hogan – some are short term, some are long term, some are more sustainable than others, but there’s a mixed bag of tools that we’re using.

  • Increase wages and better conditions

The first solution many of us turn to is to increase wages and improve conditions, which in the long term is somewhat unsustainable. At a personal level, people are enjoying the benefits of pressure on wages but, as an industry, we know this is not sustainable.

We’ll get to the stage where it’s just not viable to invest in our infrastructure because the cost is too high.

  • Overseas recruitment

We’ve all gone far and wide to try and fill the gap in our infrastructure needs but this option  is also becoming unsustainable as global markets are now experiencing similar skill shortages and many of the people that we managed to get here to help us are now looking to go back home.

  • Innovation and technology

I’ve put innovation and technology in as a solution with a focus on attracting people. Without discounting the benefits that innovation brings to us in terms of business efficiencies, we are now dealing with a generation that are attracted to and demand innovation and technology. So I think one of the benefits going down this path gives us is the ability to attract those that want to play in this space.

  • Job sharing

This is one of the tools under the umbrella of flexibility that we probably haven’t done that well. For most organisations, we don’t go much beyond the front desk in terms of job sharing. A lost opportunity.

  • Promoting our industry

I don’t think we do a good job in telling the rest of the world what a great industry it is. I know it’s a great industry, but if you go back and you look over the past few years at the annual survey that Randstad puts out every year, as an industry we rank at circa 30 in terms of attractiveness. So we’re not getting in there early enough and telling our school-age children that this is a great career option for them, nor are their parents advising them that it’s a great career option. So I think we’ve got a bit of work to do in terms of promoting our industry.

  • Recruiting final-year students

We used to think that we were doing final-year graduates a favour by offering them employment during their last couple of years of university. I think it’s gone beyond a favour and we’re now seeking them out in an attempt to secure those graduates early. It’s become a bit of a ‘try before you buy’ concept – where you get these young students into your organisation early, they get 12 to 18 months’ experience and quite often they just slide straight into your organisation.

  • Making our organisation an employment of choice

I really love what we’ve done in this space, but I don’t know how sustainable it is, because all that we’re doing is we’re getting better at attracting resources from each other. We’re not creating a bigger pool of resources. We’re just trying to compete against each other in trying to win over those resources.

  • Multi-skilling

There are a couple of options that multi-skilling offers us and how we look at multi-skilling.

Some of the skills we’re looking for are in critical demand. Using our construction engineers as an example, how much engineering does a construction engineer do in a typical day?

What we’re finding is that there’s a lot of work that they are doing that can be done by others. And if we invest in resources that can take some of the pressure from our engineers, we can then free them up to be doing more engineering, or even adjacent skills in things like surveying and architecture.

  • Sustainable pipeline of work

This is one that governments may be getting sick of industry pushing, but when we can see a clear future pipeline of work, we have confidence in investing in resources for the long term.

  • Diversity

This is an area that offers us the most opportunity and an area we haven’t done as well as we think we have.

Using women as an example, although we’ve doubled their numbers in the construction workforce over the past five years – ‘double’ means going from eight percent to 17 percent. And if we look at business critical roles, the number is even smaller.

There is something holding us back; it’s either our internal biases or our concept of what it takes to make this work. So I think this is one of the areas that offers the most opportunity for us.

  • Apprentices and training

Investing in apprentices is a long-term investment and I think one that offers a long-term solution. So again, combined with that clear pipeline, an investment in apprentices is one of our potential solutions.

Training is a long-term and sustainable solution, especially as we have more disruptive technologies coming our way, as we have seen in Australia.

So a combination of long-term training and up-skilling offers a long-term sustainable solution in terms of trying to close this gap.

  • Collaboration and branding

We’re all trying to tackle what I see as a collective problem. We’re coming up with some great ideas but only looking inwards and competing against each other.

I think if we can get our governments, our schools, our universities, working to build the industry pool as opposed to taking from each other, that’s a more sustainable solution to our problem.

When I say ‘branding’ I mean we need to attract, retain and engage people into this industry, not just to our organisation and I do think we have a brand issue.

We need to create a brand that attracts a tech-savvy generation. As I said earlier, our industry rates at 30 out of 100, and I’m quite embarrassed that it’s only at that sort of level. We need as an industry to attract workers. The generation of millennials will represent 75 percent of our workforce within the next seven or eight years and they need a reason to get out of bed and come to work. Just to earn a pay cheque is not enough.

I also think we need to better engage with the workforce we’ve got and we can probably do more with the people we’ve got.

The greatest assets we have are the people we manage and probably a masters’ degree in people would benefit us more than a masters in business.

This article first appeared in Contractor’s February issue.

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