15 June 2023
In 2023, the construction industry faces challenges in supply chain management, production capacities, and sales markets. These challenges have varying impacts on HR, including recruiting, retaining, developing, and reducing the workforce. By understanding these challenges and adapting HR strategies accordingly, companies can navigate these obstacles and continue to grow.
Drawing insights from diverse construction experts, we’ve compiled a comprehensive summary on the challenges faced by the industry in 2023. This report thoroughly examines the impact of these challenges on human resources (HR).
Construction Industry Challenges in 2023
1. Supply Chain:
- While supply chains have stabilized post-COVID-19, managing them remains a challenge.
- Companies struggle with fluctuating supplier prices and ensuring parts are available at production plants.
2. Production Capacities:
- Some companies report overcapacity, while others are fully booked until 2024.
- Production capacity challenges vary depending on the market segment a company focuses on.
3. Sales Market:
- The “new build residential” sector faces pressure due to increased interest rates and credit costs, with sales dropping by 20-30%.
- However, companies in the “non-residential” or “renovation” sectors report stable or moderately increasing sales.
Impact of Challenges on HR
- 33% of the professionals we spoke to mention open vacancies, with some positions remaining unfilled for extended periods.
- Hiring practices depend on the company’s market segment and current sales figures.
- 11% emphasize the importance of employee retention, which is crucial during challenging times and for those with extended induction periods.
- 44% discuss HR, team, or organizational development, with a focus on HR development.
- Current challenges require companies to invest in more flexible employability, renovation competencies, consulting skills, and digital design processes like BIM.
4. Reducing Workforce:
- 11% of report workforce reduction through position cancellations or short-time work, but no company mentioned dismissing employees.
These insights were collected from representatives attending the Bau 2023 exhibition, a major event showcasing software, tools, products, and elements used in the construction industry.
The construction industry faces various challenges in 2023, with differing impacts on HR depending on the company’s market segment. By understanding these challenges and adapting HR strategies accordingly, companies can navigate these obstacles and continue to grow.
Construction Industry Megatrends in 2023
In addition to the hurdles mentioned earlier, the construction industry is experiencing three major megatrends: sustainability, modular construction, and digitization through tools like Building Information Modeling (BIM) and intelligent products. These are shaping the landscape of the industry and opening pathways to more innovative and efficient building methods.
Sustainability: The industry is increasingly focusing on sustainable construction practices to minimize environmental impact and create energy-efficient buildings. This trend involves using eco-friendly materials, reducing waste, and implementing energy-saving technologies.
Modular Construction: This trend involves constructing buildings using prefabricated modules, which are assembled on-site. Modular construction offers benefits such as reduced construction time, cost savings, and improved quality control.
Digitization, BIM, and Intelligent Products: The construction industry is embracing digital technologies like Building Information Modeling (BIM) to improve collaboration, streamline processes, and enhance decision-making. Intelligent products, such as smart sensors and IoT devices, are being integrated into buildings to optimize energy consumption and enhance occupant comfort.
- Recruiting remains a high priority, but retaining and developing employees is even more critical. The “hire & fire” approach is no longer viable, as it is more expensive and difficult to continually hire and onboard new employees.
- There is a significant demand for Learning & Development (L&D) to upskill existing employees and help them adapt to industry changes.
- Workforce reduction is not a common practice, and those who are reducing their workforce emphasize that it is only a temporary measure.
- Challenges in the industry vary depending on the sector, with some sectors experiencing growth while others face difficulties.
- The trend is towards developing buildings and products that are smarter and more energy-efficient, driven by the three megatrends of sustainability, modular construction, and digitization, BIM, and intelligent products.
- By understanding these challenges and trends, companies in the construction industry can adapt their HR strategies to navigate obstacles and continue to grow.
If you’re facing HR challenges in the construction industry, our team of experts at AIMS International’s Global Industrial Practice is just a click away. We can help identify the right executives for the job, develop internal talent, manage performance, and develop effective strategies that steer your business to growth and success. Reach out today to find out how we can support you.
About the Author:
Matthias started his professional career in the real estate and construction sector in 2003. He worked for Bureau Veritas Germany as project manager. Foreign assignments in Russia, Austria, Turkey and Denmark followed. Later on, he was appointed as business developer and held executive positions in giant projects.