While employee engagement impacts every organization, according to Gallup, it has dropped in finance, insurance, transportation, technology and professional service sectors.

If declining employee engagement isn’t raising a red flag for business leaders, it should. Gallup shares that disengaged employees incur 37% higher absenteeism, 18% lower productivity and 15% lower profitability. This is the equivalent of approximately 34% of the disengaged employee’s salary. 

Imagine: $125,000 in annual salary costing you and additional $42,500 annually because of disengagement.

Not only should low employee engagement give organizations pause, the impact it has on top talent retention, is even greater.

 

Low Engagement Is Like Really Bad Scope Creep!

It adds a slew of additional business challenges and costs, such as:

  • Poor Firm Reputation & Profitability – low engagement impacts project timelines, profit margins, increased safety incidents or insurance claims (i.e. workers’ compensation or professional liability), ability to bid on projects, and ability to attract, engage and retain talent. Increased absenteeism, workplace injuries or project claims, high Experience Modification Ratings (EMRs) and employee experience impact how the firm is perceived among the community and clients, as well as new candidates and prospective clients.
  • High Turnover – for a salaried role, the Society of Human Resources Management (SHRM) predicts that a business may incur a cost of six to nine months of an employee’s annual salary between recruiting and training costs combined. While these costs vary greatly on the role, costs can rise up to 213% of the salary expense.  A high rate of turnover can also impact productivity, since remaining employees may become overwhelmed with additional work.
  • Hiring Challenges – while the current job market has swung in favor of employers, within the AEC industry, employees still hold the cards. With fewer AEC workers entering the workforce, a study by the Engineering Management Institute shared that 96% of industry leaders reported talent shortages will impede their growth.
  • Quality of Life Crisis – this industry has remarkably high levels of burnout, with 69% of engineers and architects stating they are highly stressed according to the 2024 Future of Work in Engineering & Architecture. Workplace burnout becomes a business-sustainability issue as it will eventually impact firm reputation and profit, turnover, hiring, engagement, and retention. It also impacts health insurance premiums, through increased health claims, as a result of chronic conditions caused by stress. To top this issue, according to the same report, 46% of professionals surveyed stated that if remote or flexible work was repealed completely, they’d quit their jobs. Firms that don’t offer flexibility run the risk of losing top talent to a competitor firm who does offer it or who offers alternative staffing options.
  • Skills Gap & Knowledge Exodus – only 19% of AEC professionals rate their current organizations’ training programs as excellent . According to the National Center for Construction Education & Research, approximately 41% of AEC workers, including management roles, are set to retire by 2031. This creates a significant gap in the transfer of knowledge across mentoring and succession programs, as well as a significant loss in a firm’s competitive advantage.
  • Culture & Alignment Erosion – the lack of alignment between career goals, work styles and philosophies of late-career leaders versus early-career professionals, differing experiences between men and women AEC professionals, with women professionals 14% less aligned with the organization’s mission, vision and values in comparison to their male coworkers, the future of AI, employee turnover and a shrinking talent pool –remaining AEC employees are feeling the pinch. This void indicates that firms are missing the mark on developing the right conditions for all employees to feel aligned and successful in the industry. It’s spiking higher levels of turnover, dissatisfaction and subpar performance, overall.

 

With Strategic HR Programs, AEC Firm Can Start Closing These Gaps

Developing long-term, sustainable and scalable solutions to these business challenges, starts with a thoughtful and strong Employee Value Proposition (EVP). AEC firms committed to winning this battle will emphasize the importance of investing in talent strategies and programs that honor individual worker experiences, preferences and interests. In return, these firms will not only strengthen the bond these workers will have to the organization, it will ensure the organization remains competitive and thriving. 

Below, are a few ways to build out your EVP:

  • Diversify Hiring Strategies – technical professionals with five to nine years of experience are expressing an interest in full-time freelancing career options. Firms that improve their talent management infrastructure, to include part-time or freelance professionals to plug into projects, on worker terms, may strategically improve the overall talent ecosystem and bridge the gap on current talent shortages.
  • Develop More “Opt-In” Programs – according to the 2024 Future of Work in Engineering & Architecture report, organizations that create employment conditions that shift where, when, or how employees work, including how they are evaluated and rewarded, unique to your organizations’ workforce, will significantly help reduce turnover, and increase engagement and retention. More than 50% of AEC employees would prefer to be measured based on output (i.e. results) and not hours worked. Firms that incorporate project management training and development programs, while defining two to three key performance indicators (KPIs) to measure performance will help to improve performance, transparency and accountability.
  • Enhance your Total Rewards Package – it’s no surprise, financial security is a critical driver for employees. While it may not be the leading driver, ensuring your firm is devoted to competitive market rates, industry benefits and programs your workforce values, is necessary.
  • Elevate Culture & Alignment – blending work styles and generational friction is complex. However, firms that embrace continuous improvement and strong performance mechanisms and weave these practices throughout their culture and across people practices will realize a “blending” of the best of all styles. Later-career engineers, may expect early-career engineers to “pay their dues” by working long hours. The workforce is changing and firms can embrace it or be held at a disadvantage. Taking time to revisit, polish, or completely overhaul outdated cultural norms, standards around performance and accountability, and purpose and alignment to address both current and future desired state should be a top priority for firm leaders.
  • Improving Career Development & Growth Opportunities – in an online poll conducted by the Engineering Management Institute, “career development” and “growth opportunities” are the #1 driver for AEC employee retention.  Investing in career development and encouraging employees to upskill themselves in emerging technologies is critical to staying competitive and increases retention 30-50%. With a shortage of AEC professionals entering the workforce, early-career professionals aren’t receiving needed “hands-on” experience with project management or the technical tools to oversee complex projects.
    • Soft Skills Development, such as leadership development, mentorship programs, time management, conflict resolution, communication and delegation. Developing programs that drive professional development of both soft and technical skills contributes to higher engagement and retention, especially to women AEC professionals.
    • Technical Skills Development, like project management, learning emerging technologies such as Building Information Modeling (BIM), MEP modeling, adoption of other digital and AI-driven solutions and sustainability and green building practices.
    • Professional Develop & Continuing Education Support, each trade and focus area brings extra training needs, CEs requirements, license renewal requirements, or additional certifications – LEED, ICC, ACI, AIA, PE etc. Investing in technology solutions that help ease the administrative lift to all stakeholders, from HR/Office Manager (tracking expirations, saving certificates, etc.) to employee’s submitting them -- finding ways to support or develop “budgets” to automate this process are essential.
    • Regulatory Compliance, i.e. OSHA – ensuring safety continues to be prioritized, from onboarding to offboarding programs.
    • Succession Mapping & Career Ladders (vertical or lateral), with workers exiting, talent shortages and competing for talent, developing strong succession plans through strategic workforce planning exercises as well as career growth opportunities – either vertically or laterally, firms need to get creative with career architecture and programs that enhance intrinsic satisfaction.
    • Embracing AI-driven Tech, it’s true, AI is going to disrupt the AEC industry. It will disrupt every industry. Currently, about one in four organizations utilize AI platforms and many AEC professionals worry it devalues their degrees.  As AI shifts how work is done (or replaces job functions or some jobs outright), it will always require human oversight and quality control. Educating employees on the ethical and practical use of it, helps them become more comfortable adopting it, or adapting their roles to remain viable to the ecosystem. There is a real need to develop AI “subject matter experts” in the AEC industry, or in-house. As older methods of working start to sunset, others are primed for mastery and employees who can lead the charge in this territory bring a real competitive advantage to the table.

With economic constraints, inflation and supply chain challenges – carving out budgets to attract, engage and retain employees can be crippling to small and mid-size organizations. Strategic partnerships with consultants or private equity firms, who bring expertise or capital, may be a viable consideration for business owners to help address the above business challenges. Firms that get this right will notice an influx of employees who opt-in to high-performing workplaces and firms will thrive.