Building the engineering and construction workforce
To capitalize on the recent strong growth, engineering and construction firms should consider creative talent management strategies to attract and retain talent
Michelle Meisels
Kate Hardin
Matt Sloane
Sami Alami
Kruttika Dwivedi
John Coykendall
Employment and spending growth in the construction industry is expected to continue to accelerate for the next few years. The construction workforce employment level reached 8.2 million in June 2024, surpassing its peak of 7.7 million in 2006.1 The construction industry employment grew by 1.4% annually between 2019 and 2023—recording a steeper growth than the broad-based employment growth of 0.5% in the same period.2 Construction spending surged by around 11% in the last two years, with infrastructure spending increasing by over 8% and manufacturing spending by 20% in May 2024 year on year (figure 1).3 The Dodge Momentum Index increased by 10% month on month in June 2024, suggesting a strong year ahead.4
This growth momentum is expected to continue over the next few years. The US Bureau of Labor Statistics projects an average of 188,000 annual job openings in architecture and engineering occupations from 2022 to 2032.5 An analysis of this projection reveals the greatest growth in roles such as construction trades; laborers; electricians; and installation, maintenance, and repair workers during this period.6 Furthermore, new infrastructure and semiconductor manufacturing projects, fueled by three recent pieces of legislation—the Infrastructure Investment and Jobs Act, Inflation Reduction Act, and Creating Helpful Incentives to Produce Semiconductors and Science Act—will likely contribute to this job growth.
And yet, despite its growth, the industry is facing a persistent labor shortage, as the number of job openings continues to exceed the number of available workers.7 An aging workforce, waning interest among younger workers, and competition from other sectors are contributing to this talent gap.8 Moreover, the skill requirements of the engineering and construction workforce are evolving as new technologies, customer expectations, and project complexities demand a combination of digital, technical, management, and soft skills. This gap could impact the ability of engineering and construction firms to fully capitalize on the recent market growth.
Three approaches could be considered for talent acquisition and development that, when used in combination, can help engineering and construction firms bridge the existing talent gap while also preparing for the future.
- Investing in the existing workforce while expanding the horizon to find new, diversified talent pools
- Driving cultural change within organizations to meet the evolving needs of the workforce
- Exploring and leveraging new technologies to augment worker productivity
It is important for organizations to understand the drivers of today’s talent shortage, and how changes in jobs due to technology and automation and the evolving needs of today’s workforce are contributing to this shortage.
Measuring the depths of the ongoing talent gap
While job gains are a positive indication of industry growth, they also point to heightened challenges in filling open positions with talent with the right skills, especially when the number of open jobs exceeds the number of people looking for work. More than 80% of executives in a recent survey report experiencing a hard time filling open positions.9
The gap continues to widen. This talent crunch is impacting the talent hunt. At the end of February 2024, 456,000 construction positions were unfilled—the highest number of unfilled positions in the last two decades (figure 2).10 The total separations rate was also high at 4.5% in the same month.11 This could create a tenuous situation for already committed US construction projects.
Skilled jobs are becoming difficult to fill. A large portion of engineering and construction jobs remain highly skilled, requiring industry know-how and expertise, and demand for talent in these roles continues to grow. For instance, the demand for skills in metal fabrication has increased by more than 40% since 2019, likely due to increased labor demand for infrastructure projects.12
Evolving skills requirements complicate the talent search. As firms make technology investments and advancements, they will likely need to update skill requirements and redesign some roles.13 According to the World Economic Forum’s Future of Jobs Report 2023, 44% of the current skill requirements in infrastructure are likely to evolve over the next five years.14 A recent study emphasizes the need for digital skills, as 91% of construction industry respondents agreed that employees increasingly need digital skills to be successful in their firms.15
- Impact of technology on the skills shift: Construction firms are increasingly seeking more applicants with digital skills as they invest in new technology to boost operational efficiency (figure 3).16 Demand for cloud computing skills, for example, rose nearly 15% from 2019 to 2023, and demand for software development skills rose nearly 13% over the same time frame.17 Meanwhile, the requirements for mathematics-related skills also increased by close to 11%, indicating a growing reliance on data modeling and advanced analytics in project planning and execution.18
- Growing importance of soft skills in the digital workplace: While digital skills are often increasing in importance, soft skills are in even higher demand in the construction industry, as shifting customer requirements are elevating the pressure to deliver projects on time and within budget. In particular, people management and business management skills have shown substantial growth, soaring by 77% and 41%, respectively, since 2019.19 The requirements for supplier management skills and social skills grew by 20% and 11%, respectively, emphasizing the importance of effective stakeholder management as construction projects become increasingly complex.20
An aging workforce and low interest among some younger workers could be aggravating the shortage. The share of construction workers ages 55 and above nearly doubled to 22% in 2023 from 11.5% in 2003.21 Moreover, a perceived lack of interest in some young people in construction work can lead to a skills gap and loss of essential trade skills each time an employee retires without onboarding younger talent.22
Filling the gap for tomorrow’s skills and jobs starts today
To address the ongoing talent shortage, efforts are likely to go beyond short-term solutions such as signing bonuses and outsourcing. Companies should take an active approach to developing and influencing a more positive employment future for their workforce. But how can engineering and construction executives actively engage with the workforce to devise strategies to help address this talent shortage? Deloitte’s research identifies some strategic approaches—encompassing the entire life cycle of talent management—that executives can consider mixing and matching to develop an agile workforce of tomorrow.
1. Invest in the existing workforce while diversifying the potential talent pool
a. Competitive wages with holistic employee benefits can be a good measure. Offering higher pay and signing bonuses can help attract talent. Construction employers are offering competitive pay and other benefits, and wages have increased substantially over the last five years compared to the other competing sectors (figure 4).23 Yet, the industry faces strong competition for the same talent pool.24 This has contributed to the increasing importance for engineering and construction firms to focus beyond wages and increase attention on broader aspects of the worker experience such as safety, flexibility, and career development.
b. Upskill the existing workforce to fill open positions. More than two-thirds of construction industry respondents in a study cite the unavailability of qualified candidates for skilled industry roles as a reason for unfilled job positions.25 The study also indicates that craft trade positions are more difficult to fill than other operational profiles.26 Exposing the current workers to skilled trades through training and formal apprenticeship programs may be useful in filling open skilled jobs. Contractors invested more than US$800 million in trade and specialty programs in 2023.27 Experiential learning programs can assist executives in developing new business skills among their employees. The focus of these programs can range from teaching concepts to employees to helping them apply such concepts to real-life projects, ultimately embedding new knowledge into their day-to-day jobs. With the increasing use of augmented reality and virtual reality in training, experiential learning has the potential to exponentially increase upskilling possibilities.
Cross-skilling is another way to develop an employee’s skill set and provide them with new growth opportunities through internal mobility. Job rotation and cross-training initiatives can also expose employees to different roles and functions within the organization. Moreover, companies can promote internal job postings and encourage employees to cross-skill and explore new roles within the organization instead of moving out.
c. Expand the talent pool to boost workforce diversity. Companies can broaden their talent horizon by promoting diversity in their hiring plan. Targeting candidates from different backgrounds, experiences (both professional and personal), and perspectives can help enrich the talent pool. Women constitute only 30% of the construction workforce, and only half of the builders and contractors polled in a recent survey would employ second-chance citizens.28 Enhancing the participation of underrepresented groups in the workforce can potentially alleviate some workforce shortages. Active engagement and equal opportunities for all workers, irrespective of their background, are also critical to developing a diverse work culture. According to a recent Deloitte Global survey, employees who are satisfied with their employers’ societal impact and efforts to create a diverse and inclusive environment are more likely to want to stay within the organization for more than five years.29
2. Driving cultural change within organizations to help meet the evolving needs of the workforce
a. Keep up with cultural changes to meet rapidly evolving market conditions. By the end of 2024, the number of Gen Zers in the workforce is likely to surpass that of baby boomers.30 Gen Z workers may have a different set of expectations from the work culture and environment31 and are more prone to job switching.32 Promoting flexibility and employee well-being and having open and transparent communication channels can help keep younger employees engaged and motivated.33 Actively engaged employees are half as likely to seek new jobs than disengaged employees.34 Keeping communication channels open not only encourages seamless information-sharing but also improves trust and alignment with a leadership vision.35 Implementing well-being programs that focus on health, stress management, and overall wellness can aid in retaining employees. It can also demonstrate a company’s commitment to its employees, build trust, and provide a sense of balance.
b. Become role-agnostic and focus on people and skills. Changing skill requirements have prompted some companies to employ a “skills-based” approach that focuses on employees’ abilities and competencies rather than their job titles or formal qualifications, helping to better align workers with work that fits their skills and capabilities.36 Cross-functional teams can bring together individuals with diverse skill sets and backgrounds to work collaboratively on projects or initiatives. Instead of assigning specific roles based on job titles, these teams are structured around the skills and expertise of team members. Companies that embed a skills-based approach are 98% more likely to retain high performers.37
c. Raise the focus on enhancing worksite safety. The physical demand of construction jobs can lead to exhaustion, increased stress levels, and mental health concerns. Efficient stress management strategies and employee assistance programs can not only ensure the physical and mental well-being of construction workers, but also boost productivity.38 A recent report highlights that a comprehensive onboarding process to inform new hires of the organization’s safety culture, systems, and processes can reduce incident rates substantially.39 Moreover, their workforce development study showed contractors spent nearly 60% of the total investment in workforce development on safety education and training.40 Such efforts focused on worker and jobsite safety can help foster a culture of safety among current employees and enhance the organizational appeal to potential employees.
3. Integrating technologies and ecosystem approach to augment workforce capabilities
a. Invest in technologies to boost workforce productivity. Companies continue to increase their reliance on technologies, especially project and resource management tools to enhance and integrate new capabilities. Companies can explore a wide range of technologies to improve operational efficiency and help drive innovation. Automation technologies such as robotic process automation and artificial intelligence can help streamline repetitive tasks, empowering employees to focus on value-added tasks, and help with risky tasks, removing them from unsafe work environments. The technological integration could help assist in delayed retirement and enhance health and safety measures in the workplace, potentially improving retention of the workforce. These modern technologies can enhance productivity and help firms stay competitive. Engineering and construction firms can partner with technology service providers or incubators to automate processes, enhance training programs, and improve workforce productivity through digital tools and platforms.
b. Leverage an ecosystem approach to stay ahead of the curve. Deloitte’s recent workforce study highlights that an ecosystem approach can assist in overcoming prevailing talent challenges while managing future expectations.41 A talent ecosystem includes traditional and nontraditional organizations that develop and support talent, such as educational institutions, nonprofit organizations, community groups, workforce development agencies, government partners, and other companies within the industry.
Engineering and construction companies have engaged with educational institutions and government workforce agencies or unemployment agencies for career-building programs.42 Companies are also developing different programs to increase the talent pool, including formerly incarcerated women, immigrants, veterans, and other groups.43 Offering apprenticeship and internship programs to students,44 and providing tuition assistance, scholarships, and grants, are contributing to the development of a future talent pool.45
An ecosystem approach can bring synergies for holistic workforce development. Adopting an ecosystem approach with a focus on worker experience requires dedicated effort and additional resources. Companies can invest in a designated individual or team within the company to actively engage with the community and build relationships with organizations across the entire ecosystem.
Implementing a proactive approach to developing a sustainable workforce
Organizations should have active talent management to help them thrive in today’s dynamic and competitive business environment. By prioritizing strategies such as attracting diverse talent, fostering a positive company culture, enabling internal mobility through cross-skilling, and forming strategic partnerships, companies can address their workforce challenges and build a strong and resilient workforce.
Companies can empower their workforce by creating a culture of continuous learning, innovation, and success that drives long-term organizational growth and sustainability. Talent management is not just about recruiting and retaining employees; it is about investing in the future of the organization by building a workforce that is agile, adaptable, and ready to meet the challenges of tomorrow.
