Archived Insight | November 15, 2021
On November 6, the House of Representatives passed the $1.2 trillion Infrastructure Investment and Jobs Act (Act), which the Senate approved on August 10. Now that President Biden has signed the Act, projected federal spending to build and repair U.S. infrastructure will increase by over $550 billion. Government contractors, especially those specializing in heavy civil construction, could reap the benefits of this economic stimulus — if they prepare effectively and have the right talent in place.
Despite this legislative opportunity, current labor shortages, coupled with the ongoing challenges of the COVID-19 pandemic, have made this preparation more challenging. Developing a deliberate workforce planning strategy and creating competitive total rewards that comply with applicable wage and hour laws will help you navigate those challenges and best position your organization for bidding success.
With a historic nationwide labor shortage, contractors need to consider whether their current workforce strategy is ready for a potential rapid increase in infrastructure projects. Here are some of the steps to consider:
Entities working in the quickly-evolving contractor and built environment industry know the importance of strategic scenario planning. The pandemic underscores the need for a deliberate, focused and thoughtful process.
Scenario planning requires development of short- and long-term strategies to ramp up (and perhaps ramp down) the size of a team, projects or full staffing model, depending on the expected workflow. Employers must also develop contingency plans to adapt to external threats, such as evolving vaccination mandates, social distancing rules and requests for accommodations.
Job candidates currently have substantial and increasing labor-market power. They’re demanding greater flexibility in where, when and how they work. While the level of flexibility will depend on the particular job, responding to these new expectations requires thinking differently about workforce utilization and staffing, as well as having a well-defined employee value proposition (EVP). Your EVP explains to job candidates why working for you is more attractive than working for your competitors.
To expand candidate pools, consider developing “upskilling” programs that provide training and certification to candidates who may not have the full range of skills needed to qualify for existing positions. Regardless of your approach, it will be critical to balance flexibility with equity across your workforce, paying close attention to your culture and internal communications.
DEI is a critical issue for the construction and built environment industry. Consequently, your recruiting efforts should include programs to attract job candidates who have been overlooked historically by the industry, most notably women. The National Association of Women in Construction (NAWIC) is creating awareness about meaningful careers in construction for women. NAWIC’s September 30 blog post includes some interesting statistics.
U.S. employers may be able to look to other countries for examples of how to address this issue. For instance, at some construction sites in other countries women make up over 33 percent of the labor force.
Workforce total rewards — such as competitive salaries and benefits — are key to getting and keeping talent. The result is more negotiated work and competitive bids, which increases the chances of winning projects.
The core components of total rewards are:
The fast-changing labor market means you need to pay attention to empirical pay data. Rely on valid pay surveys and move away from using “street knowledge,” one-off candidate claims and recruiter opinions. Create a unified compensation philosophy so leaders are consistent in how they make offers and pay employees. Install a salary structure that communicates standardized pay ranges and provides career ladders for advancement.
Compensation transparency is also becoming more important. Structured incentive plans are one example of a transparent program because they communicate clear earnings opportunities and required performance expectations.
The pandemic has highlighted the need for people to feel financially secure in their jobs. Obviously, compensation is a significant piece of that security. In addition, your employees want to feel confident that they can afford ongoing living expenses, weather economic instability with shorter-term emergency vehicles, and save effectively for retirement.
Many employers are carefully analyzing their total rewards to address these priorities, including:
For more information about this topic, see our December 2020 survey “Investing in Workers’ Financial Wellness Pays Dividends.”
Saving for retirement continues to be a highly valued employee benefit and vital piece of your comprehensive total rewards. Many employers are revisiting those programs to confirm they’re best designed for the populations they need to attract and retain. If your organization hasn’t updated its retirement program design in several years, odds are it requires a refresh. For several DC plan ideas, read our March 31, 2021 article “2021 Focus Points for Defined Contribution Plans.”
Employers are also making sure they’re getting the best bang for the buck from their vendors and third-party administrators. For instance, whether you’re sponsoring a DB plan, a DC plan or some sort of hybrid, you’ll want to take a long, hard look to make sure service and fee creep haven’t settled in. Are you still paying fees based on a percentage of assets? Modern fee structures now base fees on a flat dollar per participant. Flat-dollar fee structures are especially efficient for larger retirement plans. If you haven’t assessed your retirement plan offerings in the past three years, now is the time to do so.
In addition to making your employees feel financially secure, be sure they’re physically and emotionally secure. To help you retain and attract key talent and keep that talent healthy and productive, a thoughtful health benefit program is essential.
The construction industry is seeing a significant rise in the need for additional mental health and substance use disorder support for many populations. Employers increasingly recognize that access to traditional mental health care is not sufficient in many areas of the country, leading to coverage additions such as employee assistance programs. Employers also recognize that paid time away from work (i.e., vacation, sick leave, parental leave and family caregiver leave) help significantly with workforce emotional well-being. To learn more, see our March 25, 2020 article, “Helping Individuals Cope in Response to COVID-19.”
Telemedicine and digital therapeutics for chronic disease management make access to high-quality providers more convenient, reduce healthcare costs for the employer and produce better outcomes for injured or ill employees. Comparing and contrasting these “point solutions” can be challenging because the health insurance marketplace is flooded with choices. Employers who ignore these complexities and continue with legacy health plan design and delivery approaches will miss significant opportunity gains. Listen to the recording of our May 5, 2021 webinar, “Digital Transformation in Healthcare.”
Finally, contractors are focusing considerable efforts on staving off high healthcare costs by focusing on pharmacy benefit management. Taking the time to design the right health plan for your workforce will go a long way towards supporting your talent and managing expenses. We cover various strategies for managing healthcare costs in the 2022 Segal Health Plan Cost Trend Survey.
Confirming that your total rewards remain compliant with the ever-evolving legislative and regulatory landscape is vital. Not doing so could result in significant liability resulting from litigation and audits.
As a government contractor, you might also have to address the obligations of DOL wage and hour laws, including the Davis-Bacon Act. This law applies to certain construction industry contractors (and their subcontractors) and must be followed if awarded applicable contracts. The law dictates that government contractors must offer no less than the locally prevailing wages and benefits for similar work in the same geographic area.
Effective compliance with these and the other relevant employee benefit and employment laws is important.
This page is for informational purposes only and does not constitute legal, tax or investment advice. You are encouraged to discuss the issues raised here with your legal, tax and other advisors before determining how the issues apply to your specific situations.