Business Inquiry:

Evolving Employment Trends in the Construction Industry

Dhawal Vaidya - VP Commercial
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This calendar year began on not such a promising note for the real estate sector and in general for the construction industry. Disclosures around banking sector NPAs led to tighter scrutiny of lending, leading to a slowdown. This put extreme pressure on NBFCs which were the primary channel of investment and lending in real estate. Add to that, the decline in perceived creditworthiness of real estate entities and an already sluggish demand curve, this sole channel was also fast becoming a narrow one. To say the least, the real estate industry has seen much better times. On the other hand, an infrastructure boom has been anticipated for many years but has not materialized in any manner so as to offset the lethargy in real estate.

As if this was not enough, we now have a pandemic which promises to disrupt if not destroy even the safest, most evergreen businesses (think hospitality, tourism, transportation, even religion for that matter). Many from the construction industry have lost their jobs, either due to already stressed businesses having to shut shop or due to a “trim the fat” exercise, which more often than not means letting people go. Extreme work pressure and uncertainty around continuity of our current roles are also not uncommon. Another challenge faced by professionals in this typically low-tech industry has been adapting to the alien concept of working from home. Employment in the construction industry now needs to be looked at through a different lens as compared to the pre-Covid days.

Redistribution

Real estate continues to suffer setback after setback (while not having completely recovered from the first major jolt back in November 2016). Each “setback” has triggered a gradual consolidation within the industry with the smaller, unorganized players no longer being able to operate. They have either been taken over or dissolved; their existing assets acquired by entities with deeper pockets. Naturally, jobs have also moved across these firms. There have also been some redundancies and a few employees have unfortunately been left looking out for new opportunities.

This is true not just of developers (owners) but across the entire value chain. With the financial stress on developers and a general intent to conserve cash, the new project pipeline is drier now than ever before. The impact of this stagnation on associated stakeholders such as contractors, subcontractors, material vendors and consultants is evidenced by the job losses, payment defaults, salary cuts and salary delays. Among this group as well, only a fortunate few have and shall continue to survive – ones with deep pockets or a healthy order book or another source of income – effectively those with strong fundamentals in one form or other. Employment is shifting from the smaller to larger firms within the real estate sector.

Apart from this, there is also a likely shift from within real estate outward – into infrastructure contracting firms or other sectors such as logistics, industrial, manufacturing and corporate that may be looking at a better pipeline of projects to support their growth. As an example, warehousing is expected to see a CAGR of 13.57% between 2020 and 2024 according to a recent report. This growth is expected to be fueled by the necessity for last mile delivery for various e-retailers as well as the massive network of FMCG (Fast Moving Consumer Goods), FMCD (Fast Moving Consumer Durables) and agricultural supply chains. Amongst these, the agricultural supply chain; supported largely by warehousing and cold chain logistics leads in terms of growth potential during the same period.

With a number of these new projects in infrastructure, industrial facilities and logistics hubs starting up, the general trend of employment would move away from housing and towards public and private infrastructure. Engineers and managers who have so far shaped their careers within real estate would do well to prepare for this inevitable shift. It would be wise to upskill and leverage overall corporate or project expertise rather than relying on a tunneled vision of real estate experience.

Upskilling

In certain industries such as IT and pharma, changes in technology are so fast-paced that a generation of workforce sees multiple radical shifts and complete overhaul of processes. Survival in such industries is dependent on the ability to adapt and upskill. In contrast, construction and civil engineering are much slower in terms of the advent of technology and the journey from idea to implementation. This means that we are usually reluctant to pick up a new idea, try it out, revise, reshape and restructure it for better implementation. We are also comfortable creating niches throughout our careers, activities and capabilities that we become extremely good at while ignoring how the rest of the universe (value chain) functions.

An expert in the field of concrete technology may face a challenge when it comes to understanding and supervising finishing activities. Viewed in another dimension, a controller may be excellent at tracking progress of projects but find it difficult to communicate with clients and manage their expectations. Irrespective of the roles that we are currently executing, it is not difficult to identify areas where we could do with skill enhancement (and practical experience thereafter).

The current business landscape requires employees to do more than they normally would, not just within their own functions but across their value chain. The ability of an employee to manage multiple activities is paramount now more than ever. It would serve us well to spend time on identifying, refining and redefining our skill set during these tumultuous times. This is a period which has thrown open as many opportunities as the number of threats it has posed.

Versatility and Flexibility

In continuation of the previous point, another trend that is becoming apparent is fluidity across roles and responsibilities. This could mean delivering a key cost improvement initiative across the project or managing the migration to the latest version of ERP in addition to executing your daily responsibilities. Flexibility could also be demonstrated by working as per an alternate schedule or being open to traveling or relocating for a critical task. Of course, each of these decisions needs to be evaluated based on the impact to one’s health, comfort and other constraints.

An employer would certainly evaluate potential candidates based on their attitude towards handling multiple tasks with relative ease rather than being an expert who cannot be engaged in any domain apart from their own.

A mindset of flexibility and being open to work outside the comfort zone also leads to a richer, more well-rounded experience on paper as well as in practice. This kind of experience often proves to be an accelerator for career growth. A quick study of profiles of senior leaders would reveal stints in various roles and in varying capacities. Therefore, an attitude of “will do what is needed” is likely to be a solid strategy not only to tide through the current situation but also a template for building a robust work experience profile.

New Businesses

Most of us view this pandemic as an event that has wiped out a bulk of the jobs. This is certainly a misconception. There are two events playing out in parallel that project this illusion. First, job cuts happen first in firms that are overweight and employ more staff than necessary during normal times. There is a general optimism instead of a conservatism which leads most companies to believe that they will themselves fare better than the rest across their competitive landscapes. Therefore, companies usually employ more staff than necessary and each member of staff contributes lower than their potential. Second, companies may shut down a division or a business line or a market segment or a specific service, but this does not mean no other entity is active (and growing as a direct result) in that space.

As an example, a contracting company may have decided to shut down their in-house design division, foreclosed the lease of their office, let go of the entire team and cancelled the subscription to their software package platforms. However, this does not mean that the need for is service no longer exists. The same activities would now be performed by another firm (likely a competitor now operating in an easier competitive landscape). Or perhaps independently by a design head who is senior enough to deliver the assignment in their personal capacity. Or maybe by a completely different entity within the supply chain (such as a consultant offering this new service). The disruption that the pandemic has caused will also drive a shift towards efficiency in the long run –people and teams more suited for tasks which were previously being performed inefficiently.

A watchful observation of the changes in the operating models is going to be the key to finding new employment.

Gigs – the new buzzword

Right before the pandemic broke out, or at least arrived in India, there was much talk about the growing gig economy across the globe. At the beginning of this year, there were reportedly around 3 million gig workers. There are a couple of reasons why this number may be misleading. While the number seems huge, it is dwarfed by the enormous 500 million strong workforce that the country can boast of. Additionally, it is very difficult to define who can be termed a gig worker, let alone estimate their total number at any point in time.

So how do we understand what a gig means? A gig is temporary contractual job or an assignment-based engagement where a task is managed by a professional (often an expert) offering services in an independent capacity instead of being undertaken by an employee on the payroll. Feasibility consultants, property dealers, contract sales representatives, hired PR coordinators, liaising agents, channel partners, even architects and other entities within the supply chain of projects have always been performing these gigs without us giving too much thought to the concept. The biggest part of the workforce on any construction project (the labourer), is almost always performing gigs. Each of us can think of scenarios where our services can be offered finitely for a specific duration in time on a project or at a regional / corporate level.

If you have experience initiating a project, you could offer your service as a mobilization / deployment manager who only steps in at the initiation of the project and manages the onboarding of man, material, machine and money onto the project. This gig would probably span only the first three months of the project which are critical but often overlooked because nobody is available to handle this temporarily.

Extending the gig concept to other functions is now being given more serious thought, given the commercial implications and uncertainty about the future.

How does the gig outlook affect employment in these uncertain times? Simply put, an employer would be a lot more comfortable staffing a flexible workforce. An offer from a candidate on these lines would certainly enhance employability. The recommendation here is to not only seek such opportunities but also offer “open to work on contract” as the key differentiator.

Benefits to the employer include a flexible workforce i.e. employing someone only as long as there is enough work to be done, assignment based payout, having an estimated value (price tag) against work done as well as an easy accounting and allocation of overheads.

For the employee, a gig opportunity offers independence and flexibility in terms of time and place, result orientation and productivity focus. Going back to one of the earlier topics, independent contractors (freelancers) can also view this as a low-risk step towards trying a new role. Most firms in the service economies, big or small, have their roots in an assignment (a gig) performed by someone (the founder) in an independent capacity.

While the aspects discussed here deal with specific changes taking place against the backdrop of a pandemic, the remedy suggested follows conventional wisdom. A job is meaningful as long as the person executing it is adding value. Most of the job cuts have occurred in functions or specific positions that were not adding value and were therefore axed at the first sign of trouble. The CEO of Intel and great management guru, Andrew Grove famously noted – “Only the paranoid survive”! While this insightful quote was meant for the ever-changing technology businesses, it is equally relevant to the current situation. We must all endeavour to seek, find and yet continue to search for the value that we add in the roles we execute and in the positions we occupy.

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Mr. Chetan Ingale (Management Representative)
Net promoter score surveys are aimed to collect customer feedback, and can also be extended to measure employee sentiment eNPS.
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