Policy

Beat The Curve On The Fed Hikes Impact With A People First Focus

Here's a case for looking at all you do to retain your best talent for a rougher ride ahead not as a practice you already excel at but as a dimension you need to learn all over for the very first time.

Policy

Beat The Curve On The Fed Hikes Impact With A People First Focus

Here's a case for looking at all you do to retain your best talent for a rougher ride ahead not as a practice you already excel at but as a dimension you need to learn all over for the very first time.

May 4th, 2022
Beat The Curve On The Fed Hikes Impact With A People First Focus
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Clear-cut differences separate what people in the homebuilding and myriad partner organizations they lead control from what they don't control. Those  distinctions sharpen as real-time ticks toward a flashpoint due today out of the nation's central bank.

Under the "don't control" column – inflation, interest rates, supply chain disruptions – a three-headed spectre the Fed will try to tame with what some call a "growth recession" to cool inflation without debilitating the economy's core drivers. While central bankers will need both Ninja skills and a gust of good luck to accomplish that feat, it is a homebuilding and residential construction sector business leader's place and time to secure the near-term, mid-term, and long-term future of their companies come what may.

That's where the "do control" column is crucial. Common sense and commonly-practiced "best of class" pillars of operational excellence populate that column, and in many – if not most – homebuilding enterprises focus on, obsess about, and constantly improve upon in such matters as customer- and team member care go without saying.

Still, the backdrop and specific context of a moment like ours – with so many key indicators morphing at such accelerated rates – have the uncanny effect of seizing up what we do and know well and converting that expertise and best-practice into what we must learn anew and start afresh as if it's for the very first time.

Look at this, chart, for instance:

Source: Federal Reserve Bank of St. Louis

Analysts who produced this chart at the St. Louis Fed conclude:

The workforce supply issues ... reflect longer-term demographic issues. The technological solutions that have boosted productivity in other sectors may not be as available in construction, because the labor-intensive nature of the construction industry makes labor-saving tech more costly and difficult to implement. For example, while robotics has become more popular in food service and warehousing, it is still nascent technology in the construction sector and practical only at large scale. To this end, research on productivity growth in construction has found varying effects, with some aggregate evidence pointing to flat productivity, while other analyses show positive growth. Though policy changes can boost immigration and alleviate chronic shortages, the construction industry will still have to deal with the effects of an aging population and a shortage of skilled workers.

Now, not one homebuilding strategic leader, or operational leader, or founder principal we know would declare that he or she does not focus 100% plus on people in the organization, with countless programs and practices aimed at promoting retention, engagement, constant improvement, career growth, and job satisfaction.

Leaders still find themselves situated at a crossroads as the Fed pivots headlong into a bone-rattling navigational stretch ahead.

This is going on in the "do control" column, when it comes to the construction industry's human talent capability base. The context so widely appreciated is that there are diminishing numbers of people to perform the tasks organizations want to pay the least to get done – but need, nonetheless – and where there are too few people entering the fields for limitlessly predictable control over organizations' variable costs across 25 or so trade contractor categories needed to assemble each structural box with bedrooms, bathrooms, living areas, and kitchens.

It goes on now within a cultural backdrop of exponential instantaneous technological impact – where both the technologies themselves and the ways in which we humans engage with them change constantly, profoundly, and irreversibly.

So, now, the "do control" column most certainly prioritizes leaders' focus on talent, and capability, and the impact of management, operational constant improvement, and sustainable throughput as they reduce and rationalize their variable costs to deal with a treacherous stretch ahead caused by forces they don't control.

Briefly, there's untold and untapped power in talent – accessible only among those who've chosen to invest in it, commit to it, nurture it, and tend to the renewable value-generation of human capability. Equally – because it is among those matters leaders "do control" – there's outsized risk and exposure to organizations who have chosen, and continue to chose, not to make such an investment.

As strides in technology – both in modern manufacturing and in fusing a digital thread of raw materials inputs directly to what specific homebuyer customers want – progress, it's certain that wholesale changes in human capability will occur, and it's most likely that fewer, more-multiply-skilled talented people will produce more of what homes are made of and more of what they're worth.

Here are a couple of reference points worth a look, since success will owe in great part to leaders' ability to keep the people who produce the greatest value on board even as opportunities open up for them, and even as their roles and responsibilities intensify as "staff actions" and expense reforecast measures become par for the near-term course.

One comes from the Census Bureau, published for all eyes, average payroll per employee for industries on a County level.

Source: U.S. Census

The specific – time and place – context of such data includes visibility, shifts in leverage, etc. that add up to one conclusion homebuilder thought and practice leaders might recognize to their ultimate advantage.

That is that they, we, have more to learn than we know.

For instance, the very people – the talent, the central nervous system, heart, and soul of capability – that each organization's leader regard as crucial in one way or another to the company's performance has this inner dialog going on at some level.

Did these ... companies pay workers fairly? Did they move to a more inclusive model, in which their frontline workers—not just shareholders and executives—share meaningfully in financial gains? Were financial losses borne equitably?
This report finds that nearly all of the companies fell short of their commitments to move to a more inclusive model. Overwhelmingly, financial gains benefitted wealthy shareholders and executives, while frontline workers experienced the greatest losses and benefited minimally from company success. Despite the hope and hype, the companies are paying workers only modestly more in real terms than they did before the pandemic—and, for most workers, still not enough to get by.

In an information-is-power business environment where information is everywhere, instantaneous, and abundant, the "do control" bucket list changes.

This is because all the given wisdom, experience, and knowledge of what it means to take care of people, nurture talent, cultivate upskilling, and deepen capability ... all of it must be learned all over again, and again, and again.

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ABOUT THE AUTHOR

John McManus

John McManus

President and Founder

John McManus, founder and president of The Builder’s Daily, is an award-winning editorial, programming, and digital content strategist. TBD's purpose is a community capable of constant improvement.

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ABOUT THE AUTHOR

John McManus

John McManus

President and Founder

John McManus, founder and president of The Builder’s Daily, is an award-winning editorial, programming, and digital content strategist. TBD's purpose is a community capable of constant improvement.

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