The talent funnel or pipeline is very similar to a sales funnel that starts with opportunities including the basic math about how big that funnel needs to be. Contractors must look at multiple levels of the funnel - for example, what is their pipeline of talent for developing project superintendents. We call this the Talent Value Stream (TVS) and it is a foundational element of the Contractor Business Model.
All contractors are facing incredible problems when it comes to finding and retaining the talent needed to sustain operations, grow, and for succession. There are many contributing factors including migration from rural to urban areas and a deliberate focus away from vocational education in the United States starting in the 1960s and being more formalized with budget cuts for those programs in the 1980s and 1990s.
There are changes in the educational policies, budgeting, and messaging which is helping get more people interested in construction as a career. The curriculum for those programs including the on-the-job (OJT) training must also change to account for the vast majority of the young people entering the programs not growing up in rural areas or working with tools. Kids growing up in the 1970s and 1980s had a much higher likelihood of working on their own cars, helping their parents with DIY projects, or actually working on a farm or similar environment. That foundation builds an incredible foundation in the comfortable capabilities and safety around tools, equipment, and problem solving well before any formal vocational training started.
The CIA tracks "Population Pyramids" and changes over time all over the world because broad demographic changes in the population are predicators of a lot of things including economics and instability. Lots of dynamics come down to ratios.
As an example, consider the ratio of journey-level craft to apprentices in 1990 as compared to 2020. Just based on population alone, there were a lot more people 28-35 (10+ years of craft experience) than those 18-22 for the population in general. Now add in compounding dynamics that have occurred over that period of time:
- Competition and available talent driving contractors to intentionally increase the number of entry-level people to journey-level.
- Those at the entry-level most likely not having the same foundation of growing up with tools or as strong of a vocational education.
In general, we now have a workforce where those at the entry-level need more OJT attention and the journey-level people have less time to give because they are spread too thin. This starts turning out people who have the years of experience on paper but not the quality of experience from a few decades ago. Contractors must be aware of this and work through their associations, unions, colleges, and high schools to adjust curriculum including the certification process accordingly. At the same time, contractors must also adjust their OJT much more strategically, creatively, and deliberately or the challenges will just continue to compound.
That just addresses the craft level which is incredibly important but is a problem that we have solved before as a country including with the Job Instruction (JI) program during World War II. The far bigger challenge is the talent funnel for those higher-level positions that would make then implement those strategic decisions.
Let's take a quick walk through the whole talent funnel including rough high/low timelines for each stage.
The First 18-20 Years of Someone's Life
- Total Quantity of People: This is where it all begins for all industries. This is quite simply the working age population. It should be noted that there was a 25% decline in birth rates between 1960-1975 with the exception of 1969. This is creating a major shortage in those that are 45-65 years old starting in 2015 and not starting to recover until 2030. More details on that challenge.
- Foundational Skills (For Construction): As touched on above, these form a critical foundation. There is nothing like learning math and tools from building a project out of wood with your parents at 10 years old or younger. Between 1970-2020, 38% of the people living in rural areas moved to urban areas.
- Interested in Construction: This starts early on, but decisions begin to get solidified around 16 years old where choices are made about next steps into early adulthood and career. We had an emphasis away from vocational tracks in high school starting in the 60s with funding for shop classes dramatically cut during the 80s and 90s. This is being reversed but we have a very long way to go.
The Next 4-8 Years Beyond High-School and Creating a Career Foundation
- Specific Technical Training: This includes trade schools, college, and OJT to develop foundational knowledge and skills.
- On-the-Job Technical Experience: This is where we all gain the real-world experience of how to apply those skills and knowledge to create outcomes. We start to see how those individual things connect together to build a project whether that is estimating it, designing it, project managing it, hands-on building it, accounting for it, or any of the myriad of other technical capabilities required for the Contractor Business Model.
This stage is the foundation directly delivering value to the customers. You can spend a lifetime at this stage working toward mastery of all dimensions, including the technical know-how, safe productivity, and the development of others.
Supervisory, Management, and Leadership Roles (15-30 Years)
Note that each of the next parts of the funnel will take 5-10 years on average to develop comfortable capabilities along with the relationships and development required to move to the next stage. Moving to these stages requires a combination of desire, aptitudes, capabilities, and opportunity. This brief introduction to the Leadership Pipeline can provide basic context with Tom Foster's explanation of Stratified Systems Theory (SST) going deeper.
- Direct Supervision or Management: Roles including Foreman, Superintendent, Project Manager, Estimating Manager, Accounting Manager, etc.
- Functional Area Management: Roles that have accountabilities for all aspects of certain functions within the Contractor Business model including the development, implementation, management, and continuous improvement of the systems that most predict consistent outcomes. Role titles vary widely but the functional areas like the field (Director of Field Ops or General Super), project management (PX, Ops Manger), estimating (Chief Estimator, Director of Estimating), accounting (Controller, Director of Accounting).
- General Management: Accountabilities for integrating multiple functional areas (VP, EVP, COO, CFO) up to accountability for the entire business (Board, CEO, President).
It is important to remember that these timeframes are just averages. Skipping steps often leads to weaknesses that show up later in careers. Similar to the military, even an exceptional performance record for someone with all the desires, aptitudes, and discipline who joined at age 17 won't get to the rank of Brigadier General until their early to mid 40s.
This is why the general population demographics with a decline in those ages of 45-65 years is critical, including the compounding effect of every other contractor and industry experiencing this same problem creating even more of a demand on these finite resources.
We exist to help contractors build stronger businesses for the next generation. Our philosophy is simple but powerful. We believe talented people form the foundation of every great contractor and if you grow people, you will grow equity. We have deep expertise within the construction industry including technical, process, and strategy. Our approach is designed around identifying and building strengths in the people in the organization.
All relationships begin with a simple conversation. We will share freely with you anything we have learned that will help. Please contact us to schedule time to talk confidentially about your specific team including growth and succession.