Craftworker Retention Rate Monitoring and Documentation Process

Introduction

 What is Rate of Retention?

A key ingredient to the success of a construction company is to maintain an effective craftworker recruitment and retention program.  Keeping craftworker turnover at the minimum practical level is essential in achieving this goal.  Reducing turnover gives the company an economic advantage by reducing the cost of finding, recruiting, and training new craftworkers and improves productivity by enhancing the company’s pool of experienced craftworkers who are familiar with the company’s operations.  The retention rate is one meaningful measure of a company’s overall effectiveness in recruiting/attracting and retaining craftworkers.  The retention rate is defined as:

The magnitude of T_c is a measure of a company’s effectiveness in recruiting/attracting craftworkers whereas T_tg is a measure of a company’s effectiveness in retaining craftworkers.  Rates of retention are for craftworkers employed by any type of construction company – general, specialty, construction management, design-build, etc.

Do Companies Monitor, Document and Utilize Retention Rates by Project and as a Company as a Whole?

The Construction Industry Institute (CII) (Liska & Piper, 1999) reports that while most contractor companies monitor Rate of Retention (RoR) on a project-by-project basis, only 30 percent monitor RoR on a company-wide basis.

CII’s research team (Liska & Piper, 1999) found that the average RoR for contractors that perform company-wide monitoring is 70 percent.  The team also found that successful companies with a RoR of 80 percent or greater utilized some activities to attract and retain craftworkers that the other companies did not.  These companies were

Additionally, they were implementing some key activities to attract and retain employees.  The key activities to attract employees were:

1)       Recruiting at local schools and sponsoring school activities and internships that will help change the negative stereotype construction craftworker image.

2)       Creating a database to find reduction in force (RIF) craftworkers so they can be quickly deployed to other projects.

3)       Working with other companies to schedule projects and plant outages at different locations in order to minimize severe peaks in manpower loading in a particular region of the country.

4)       Advertising through local media and trade publications and conducting interviews at recruitment location to attract craftworkers.

5)       Instituting formal written and performance tests as a mechanism to hire qualified craftworkers.

The key activities to retain workers were:

1)       Conducted a needs assessment on projects and trained craftworkers in needed skills.

2)       Conducted supervisory human relations training.

3)       Tied documented wage progression to skills giving craftworkers an incentive to build skills while building their self-esteem.

4)       Gave long-term preferential treatment in the form of benefits packages and training to tenured employees.

5)       Informed their workers of job progress and asked for feedback to get the job completed quicker with lower costs.

6)       Accomplished promoting the community side of construction through company newsletters, picnics, and other events to help the employee feel more a part of the company and the community.

In order to control craftworker turnover on projects, the CII research team recommended that owners pre-qualify contractors on RoR for past few projects, provide a description of the craft certification program they utilized, also with a summary of the contractor wage and benefit programs.  Contractors should use RoR to diagnose company trends and to adopt the attributes to retain and attract craftworkers to their companies.

Process for Monitoring and Documenting Retention Rates

Lewis Carroll (2006) once said, “If you don’t know where you are going, any road will take you there.”  Thus, evaluation and measurement must surpass normal accounting procedures like profit and loss to include measuring turnover, craftworker attitudes, and management effectiveness.  CII (Liska & Piper, 1999) reports that reduction of construction craftworker turnover results in profit on more projects, completing more projects on or ahead of schedule, and improving safety performance.

Turnover can be managed more effectively through a process of documenting and monitoring retention rates of construction craftworkers.  The process described below basically consists of:

Ten Step Process

Documenting and monitoring rate of retention by project and company-wide basis is a ten step process.  Steps one through five addresses the project-by-project basis and steps six through ten address the company-wide basis.  The first step is to record specific data that can be used to calculate the rate of retention by project on a weekly basis.  This involves completing once a week for each project a project weekly rate of retention form, as shown in Table 1.  The second step is to document reasons why craftworkers quit or were terminated for cause.  For every craftworker that quits, a sample exit interview topic list form (Piper, 2004), as shown in Figure 1, should be completed during an exit interview.  For every craftworker that is terminated for cause, a sample termination for cause form, as shown in Figure 2, should be completed.  Each constructor and subcontractor involved in the project will capture retention rates, conduct exit interviews, and document terminations for their own craftworkers.  The third step is to record specific data that can be used to calculate the rate of retention by project on a monthly basis.  This entails completing a project monthly rate of retention form, such as the one shown in Table 2, each month for each project.  In step four, the documented weekly reasons why craftworkers quit or were terminated for cause are reviewed and summarized.  Any pattern that may exist as to why craftworkers quit or were terminated for cause should be identified and documented.  After reviewing these patterns, necessary corrective action for each identified pattern of causes should be taken and documented.  The fifth step is to monitor the results of the corrective action to see if the project rate of retention improves.  Compare the retention rates before and after the implementation of the corrective action and record any positive or negative impact on the rate of retention.  Re-evaluate the corrective action as necessary due to its impact on the rate of retention.

Table 1

Table 2

The procedure for documenting and monitoring rate of retention on a company-wide basis is outlined in steps six through ten.  The sixth step is to record specific project data that provides the user with a company-wide rate of retention on a monthly basis.  This involves, each month for all the projects, completing a company-wide monthly rate of retention form, as shown in Table 3.  The monthly rate of retention data for all projects is collected and then the monthly company-wide rate of retention is calculated.  Step seven involves reviewing and summarizing the document monthly reasons why craftworkers quit or were terminated for cause for all projects.  Identify and document any pattern that may exist as to why craftworkers quit or terminated for cause and then take the necessary corrective action for each identified pattern of causes.  Step eight is to monitor the results of the corrective action to see if the company-wide monthly rate of retention improves.  Compare the retention rates before and after the implementation of the corrective action.  Document any positive or negative impact on the rate of retention.  Re-evaluate the corrective action as necessary due to its impact on the rate of retention.  Step nine involves recording specific project data that provides the user with a company-wide rate of retention on a yearly basis.  Each year for all the projects, complete a company-wide yearly rate of retention form, as shown in Table 4.  Collect all projects’ yearly rate of retention data and calculate the yearly company-wide rate of retention.  Finally in step ten, evaluate corrective actions implemented throughout the year on all projects to see if the company-wide yearly rate of retention improved.  Compare the retention rates before and after the implementation of the corrective action.  Document any positive or negative impact on the yearly rate of retention.  Re-evaluate the corrective action as necessary due to its impact on the rate of retention.  And, make company-wide policy changes as necessary to improve the yearly retention rate.  A summary of this ten step process is stated below.

Table 3

Table 4

Project Analysis

On a weekly basis, review the actual rate of retention by project.  Also, review the results of the Exit Interview and Termination for Cause forms.  The goal is to identify if one or more patterns exist as to why workers quit and/or were terminated for cause to see if they are job related.  Examples for quitting may be unsafe working conditions, higher pay on another project or relationship with one’s immediate supervisor.  Examples for termination for cause may be not showing up for work, inappropriate behavior, and theft.

If you identify one or more patterns take the necessary corrective action and monitor the results of the follow up activities to ascertain if the rate of retention improves.  Document the results of any follow up actions in a formal report and send a copy to the appropriate company executive for further analysis.

Company-Wide Analysis

Human Resource personnel should conduct a company-wide analysis of craftworker turnover on all projects on a monthly basis.  The appropriate person reviews the retention reports transmitted from every project.  The objective is to determine if company-wide patterns exist which cause turnovers, and to take corrective action to alleviate the problem(s). 

Monitor the results of the follow up activities to ascertain if the rate of retention improves.  Document the results of any follow up actions in a formal report and send a copy to the appropriate company executive for further analysis.

Benefits of Documenting and Monitoring Retention Rates

Studies have shown that constant turnover and low profitability are synonymous.  Reduction of turnover is dependent on management’s success in creating a work environment that is perceived to be safe, satisfactory and enjoyable to employees.  A way to accomplish this is through documenting and monitoring retention rates since high retention rate means low craftworker turnover.  Improved craftworker retention rates for the construction industry can benefit employers by increasing productivity, and reducing the costs associated with hiring and training new workers. 

CII (Liska & Piper, 1999) reports that there is a high correlation between productivity and turnover.  That is, projects having high rates of retention or low turnover rates will most likely be completed on or ahead of schedule.  A plot of Productivity Index Factor (PIF) vs. turnover rate show that an increasing turnover rate results in a decline in the productivity factor, which results in project labor cost increase.

CII further reports that there is also a correlation between retention rate and company profit.  Their research indicates that companies with high rates of retention also experience profits on more projects.  CII found that companies with an overall company rate of retention of at least 80% were

:

·         High turnover rates erode profits due to the additional cost of repetitive training

(safety orientation, qualification testing) for new employees.

·         A consistent work force results in better productivity.

·         Safety performance is negatively affected as most accidents involve new hires due to their unfamiliarity with site conditions.  Therefore, keeping turnover low can improve safety performance.

How to Utilize Retention Rate Information to Control and Reduce Craftworker Turnover

Some of the factors that influence a craftworker’s desire to go to work (job satisfaction) are relationship with one’s supervisor, wages, level of supervision, benefits, opportunity for advancement, job security, the work environment, and use of skills and ability.  Jobsite turnover affects productivity adversely.  It can also negatively affect the budget, ability to complete work on schedule, and the quality of the work.  Therefore, managers and field supervisors must make every effort to control and reduce turnover.  If any program is to be successful, it must be developed, communicated, and periodically evaluated by top management and involve those supervisors whom it will affect.  CII (Liska & Piper, 1999) reports that a comprehensive program for the control and reduction of craftworker turnover consists of the following elements:

·         “Written company policies and procedures dealing with turnover.  Establish policies eliminate confusion and formalize information gathering and dissemination.  Appropriate applicant screening and career path planning can properly match the worker with vacant jobs and help prevent future self-actualization problems.  These procedures should be kept in a personnel handbook for managers and supervisors.  An example of a procedure:

Hiring Methods – Have all potential employees complete a formal job application, which should include the applicant’s employment history.  Request references from previous employers and verify them.  Inquire about the prospective employee’s attendance record.  Review the employment history to determine how often the applicant has changed jobs.

·         Open lines of communication between the home office and field.  The home office can communicate information about policies and procedures regarding turnover.  The field can provide important information about employment and wage trends in the area and voice concerns about company policies to management.

·         Field supervisors and company managers who are trained and experienced in human resource management as well as the technical skills needed to perform their jobs.  Management must provide the necessary training in effective human relation skills, planning, safety, and related areas that affect turnover.  This can help ensure that supervisor-worker relations do not alienate workers.  Examples include dispute resolution, checking and use of field provided information, confrontation techniques, problem recognition and solving, handling criticism, motivation and use of incentives, substance abuse, planning and scheduling, safety, quality control and assurance, and recordkeeping and reporting.

·         Timely promotions, merit raises, and lateral transfers to reward excellent service and prevent good workers from being locked into lower positions.  Feedback (positive and negative) given to workers at appropriate times that reinforces quality work and corrects deficiencies.”

·         A program to monitor the rate and reason for turnover, that is, why craftworkers quit or are terminated for cause.

·         Every time a craftworker is terminated for cause, the field supervisor should record it on a standard form such as the one in Figure 2.  Every time a craftworker quits, the field supervisor should record it on a standard form such as the one in Figure 1.

·         On a regular basis, the field supervisor should send the information to the project manager (or other designated person) who:

·         On a regular basis, the project manager (or other designated person) sends the information to company executives who:

Conclusion

The retention rate is one meaningful measure of a company’s overall effectiveness in recruiting/attracting and retaining craftworkers.  Turnover is most effectively managed through a process of documenting, monitoring, and utilizing retention rates of craftworkers.  The process developed in this paper basically consists of calculating the rate of retention, documenting reasons why craftworkers quit or were terminated for cause, identifying patterns that exist as to why craftworkers quit or were terminated for cause, taking necessary corrective action to minimize or eliminate the causes, and monitoring results of corrective actions to see if rate of retention improves.  This process can be used on project-by-project or company-wide basis.  Project rate of retention is an indicator of potential problems or successes while company-wide rate of retention is an indicator of which company retention programs, policies, and procedures are effective.

References

Carroll, L. (2006, February 27).  The Quotations Page [WWW document]. URL http://www.quotationspage.com/quote/33008.html

Liska, R.W. & Piper, C. (1999).  Attracting and Maintaining a Skilled Workforce (Research Report 135-11). The Construction Industry Institute (CII).  The University of Texas, Austin, TX.

Piper, C. (2004).  Attracting, Recruiting, Hiring & Retaining Qualified Workers: A Best Guide for the Construction Industry. The Associated Builders and Contractors (ABC).  Clemson University, Clemson, SC.

Piper, C. (2004).  Exit Interviews: A Best Guide for the Construction Industry. The Associated Builders and Contractors (ABC).  Clemson University, Clemson, SC.