As 2024 advances, Oregon’s construction industry is dealing with a mixed bag of business prospects. New projects are in the pipeline – consider the transformational Lloyd Center redevelopment and the Broadway Corridor in Portland – but uncertainties over interest rates and material costs pose a continuing drag.

And then there’s the ongoing problem finding and keeping construction professionals to ensure fluctuating demand for labor can be met. Nationally, the industry ended 2023 with – a 5.4 percent rate that’s the highest since 2000.

In Oregon, and elsewhere, construction firms are looking to build up the business pipeline. But they would be well-served to look at other concerns tied to the labor shortage. for construction, at 53 percent, is higher than for any other sector. And  pointed to a $40 billion to $50 billion loss in 2022 due to labor inefficiencies. Nearly half of survey respondents cited worsening worker productivity.

There’s no time like the present for the industry to take a hard look at how its workforce woes can be mended. One place to start is with the behaviors of construction managers and leaders, and whether they do the job of engaging employees in a way that supports long-term recruitment and retention as well as builds a beneficial culture.

Good bosses count

People will quit their bosses more than they’ll quit their jobs. That was the case for  who quit, according to one survey. In fact, poor leadership leads to employee disengagement, which lowers productivity. The cost, , is somewhere between $450 billion and $550 billion.

One way bosses can better engage employees is by being more “human.”  a 37 percent increase in workers who say they’re highly engaged, due to their “human” boss, and that can boost performance by 27 percent.

A more effective – or more human – boss should have requisite hard and soft skills. Hard skills include project planning capabilities, and budget and time management experience. Soft skills include problem-solving and communication, along with conflict management experience.

But the foundational behaviors of human leaders shouldn’t be overlooked. They are empathetic – showing genuine care, respect and concern for their workers. They are authentic – real, genuine, sincere – and true to themselves and their guiding principles. And they are adaptive in meeting their peoples’ individual needs.

This kind of boss can build trust through an attitude that mixes candor with caring. He or she holds people accountable (and is held accountable) on job actions and performance, without getting into a game of “what-about.” In a culture of accountability and caring, this manager cares enough about people to tell them positively how to improve without attacking them personally in the process.

How to develop better bosses

There’s a process to becoming a more effective and human boss.

It takes an openness to understand people and their perspectives, the ability to motivate them, and the flexibility to adjust when necessary. Ultimately, managers must be invested in working on this mindset. This is a challenge because a mindset can become ingrained, especially when people tend to be promoted because they are good workers – not necessarily human ones.

It also takes real coaching – not just advice or mentoring, and not consulting. This guidance is key for helping managers move past the inhibitors to change that usually hold people back. A coach doesn’t help a manager find an authentic leadership style by laying out a list of proposed behavior changes. Instead, the coach asks: “What is the highest potential you might have as a leader … and what behaviors are keeping you from achieving that?”

It takes radical candor to get there and asking: “What am I getting wrong?” “How could I be better?” It’s hard, especially the further you rise through the ranks, to open yourself up this way. But businesses whose leaders do so are likely to experience 30 percent organic growth rates because their people, top to bottom, will mirror their behaviors.

What’s worth considering amid the process is that a mission statement, and the vision and values it expresses, are more than just words posted on the wall outside the executive suite. It aligns to real behaviors and skills that are how everyone in the organization should successfully navigate the business environment.

Jeff Cecchini is a licensed agent for global insurance brokerage HUB International. He specializes in contractor insurance programs. Contact him at 971-888-5394 or jeff.cecchini@hubinternational.com.

The opinions, beliefs and viewpoints expressed in the preceding commentary are those of the author and do not necessarily reflect the opinions, beliefs and viewpoints of the Daily Journal of Commerce or its editors. Neither the author nor the 91��Ƶ guarantees the accuracy or completeness of any information published herein.

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The long-term growth picture for the construction industry in Oregon and Southwest Washington is that the pace set since 2021 – a rate of 17 percent – is likely to continue into 2024 and through the next decade.

That’s good news, especially since every subset is expected to thrive. The issue, though, is how equipped the industry is to manage the growth given the pressures that continue to squeeze profitability: the chronic labor shortage; inflation-driven costs, not just of labor, materials and supplies, but of money; and the uncertainties and costs of doing business as the impacts of climate change intensify.

Construction firms that focus their management strategies on business continuity and risk management will be in a position of relative strength to weather the times. Here’s what is important to know.

The squeeze continues

There was a lot of business coming the way of the region’s contractors in 2023, and that will likely carry over into 2024. The Infrastructure Investment and Jobs Act provided a big boost. Oregon is looking at $3.4 billion in federal and state funding for road projects and $258 million more for bridges. Washington is in line for , including $5.3 billion for road, bridge, transit and climate projects.

Even so, there were challenges. Two-thirds of construction industry respondents to the HUB International 2024 Outlook Executive Survey cited economic challenges and unpredictability as pressures on profitability in 2024.

The impact of inflation and high rates will continue to be felt by the construction industry and wider economy. Volatile pricing for key materials can make it difficult for builders to accurately bid for longer-term projects. Tightening credit combined with the cost of money has caused projects to be stopped or pared back.

Further, high interest rates have had a big impact on mortgage rates and the residential building market. Both Oregon and Washington have struggled with years of underbuilding. Oregon needs to build some 550,000 units over the next 20 years to keep pace with population trends; Washington needs to build nearly 300,000. One trend continuing to build nationally, given these circumstances, is the pivot away from single-family homes toward “build-to-rent” projects.

A chronic lack of labor

The industry’s persistent labor shortage continues to be a major drag on construction firms. Hiring and retention strategies have never been more important, as nationally, construction has experienced just 4 percent unemployment and 374,000 job openings.

It’s become a priority for state policymakers as they look at 2024 budget priorities. Oregon Gov. Tina Kotek’s request for $500 million tied to housing needs underscored a common legislative priority. But recognizing that meeting the needs takes resources, her Housing Production Council has pushed for state funding to train construction workers and create incentives for home-building for low- and middle-income families.

Training is only part of the challenge, though. The workplace culture also has a role in the industry’s ability to recruit and retain workers. That extends to health and safety practices, as well as benefits that speak to individual needs on and off the job and contribute to quality employee experience.

Worker safety is a top priority among construction firms, yet the industry consistently reports more workplace injuries than any other.  in construction were up 6 percent in 2021 over the prior year. A positive safety reputation has become critical for successful recruitment. An increasingly common practice is for firms to identify and address specific safety concerns before work on a site begins. Others have instituted robust safety training programs.

Another way to improve recruitment and retention is by offering alternative insurance programs and personalized benefits. However, only one-third of the respondents to HUB’s survey do so. A personalized benefits strategy boosts engagement while also improving overall employee well-being. Even a small start – by polling workers on benefits they’d value and introducing relevant solutions over time – can have a meaningful impact.

Management to preserve resilience

Construction will continue to be under pressure in 2024. Some risks will be more manageable than others, but firms will be well-served by sound strategies for business continuity and risk mitigation. It will also be helpful to understand how the aid of an experienced broker can turn risk and insurance into a valuable strategic tool.

Some trends limiting the industry’s resilience?  globally start with fires and explosions, at 27 percent of the value of industry claims over five years. Natural disasters like hurricanes and recently, intense heat, accounted for about a fifth of claims, followed by defective products (10 percent) and faulty workmanship and maintenance (8 percent).

Concerns related to supply chains are another risk, with continued cost overruns likely in 2024 as inflation keeps material costs high. To guard against delivery bottlenecks, many will continue to secure materials earlier than needed. One HUB client purchased $1 million in HVAC units in advance of a project it was bidding on. The downside: the cost of storing and insuring them until installation.

The industry will continue to feel the impact of such threats in rising rates for some key coverage lines. Builders in high-risk areas can expect general liability rate increases of as much as 15 percent in 2024. Builder’s risk insurance for large frame projects in catastrophe zones may rise 30 percent higher. But rates will remain flat or decline for workers’ compensation, directors & officers (D&O) coverage and environmental coverage.

The use of risk and insurance as a hedge can take several forms. Firms with a well-capitalized captive, for example, might consider taking a loan from the captive to alleviate temporary cash flow issues. And for those that anticipate and address potential issues, their insurance program can be leveraged as a source of contingent capital to bolster their long-term resilience and results.

Plan for 2024

It’s never too late to have in place a strategy that encompasses insurance, risk management and a vital employee workplace.

It takes an experienced broker to evaluate insurance programs for coverage limits and gaps and ensure risk management resources are provided to support business goals. Numerous benefits options are available – and ways to evaluate individual workers’ needs. The right experts can help ease the challenge of designing a differentiated, personalized benefits program without breaking the bank.

Jeff Cecchini is a licensed agent for global insurance brokerage HUB International. He specializes in contractor insurance programs. Contact him at 971-888-5394 or jeff.cecchini@hubinternational.com.

The opinions, beliefs and viewpoints expressed in the preceding commentary are those of the author and do not necessarily reflect the opinions, beliefs and viewpoints of the Daily Journal of Commerce or its editors. Neither the author nor the 91��Ƶ guarantees the accuracy or completeness of any information published herein.

The post Despite a boom in construction, pressures keep a vise on profitability | Opinion appeared first on Daily Journal of Commerce.

Work performed by contractors is among the most dangerous in the country, . Of the 5,190 fatal work injuries reported in 2021, 951 happened in construction and extraction occupations.

Workers file claims because of hazardous working conditions, the possibility for a long-term disability, and the high risk of occupational diseases caused by prolonged exposure to certain materials used. As a result, it’s no surprise that the industry reports numerous workers’ compensation claims annually.

Companies must create a safe environment to minimize potential risks and encourage employee well-being at every level. Here are four measures organizations can take to reduce work-related injuries and workers’ compensation claims:

Prioritize tasks

For contractors, the nature of the work often poses the greatest risks for workers’ compensation claims. As such, employers should train and properly equip their employees to safely carry out their duties.

Establishing clear and concise work rules is essential for reducing the likelihood of work-related injuries. Education and training should be provided for all new employees to ensure they understand how to complete tasks in a safe manner. Implementing post-hire training sessions that emphasize safety protocols and regulations also helps a company stay compliant with relevant labor laws.

In addition, employers should provide employees with all the necessary tools and equipment needed to complete tasks. Do not fall into the trap of using potentially dangerous improvised methods.

For construction jobs that are especially prone to creating injuries, employers should establish a daily check-in routine so workers can report any potential safety issues or hazards they come across while carrying out their duties. This will help identify and address any areas of risk before an incident occurs. In addition, this allows a firm to adjust any safety protocols or procedures if needed to protect its workers from harm.

Ultimately, implementing regular check-ins encourages open communication between managers and staff, fostering trust among personnel.

Institute pre-hire screenings

Implementation of pre-hire screenings is one of the most effective ways for construction companies to reduce workers’ compensation claims. Pre-hire screenings allow employers to assess a prospective employee’s physical abilities to determine if the person can perform the job. Assessing an employee’s strength, flexibility, balance, coordination, endurance and agility prior to offering a job also helps eliminate any unforeseen risks associated with certain duties.

Hire a third-party professional to implement pre-hire employee physicals and functional capacity evaluations for help in identifying and managing potential risks. These screenings provide employers with an understanding of an individual’s medical history and highlight any underlying health issues that could impact a person’s ability to perform certain tasks.

Create a safe work environment

A safe workspace improves employee productivity and can decrease workers’ compensation claims. Inspecting worksites on a regular basis can help identify potential safety hazards and any other potential risks, which then can be promptly addressed.

While accidents do happen,  – including musculoskeletal disorders and repetitive motion strains – account for a third of worker injuries. They cost employers about $50 billion annually.
Employers also can take additional steps to promote employee wellness and safety while working. Since many contractors work in excessive heat, ensuring employees stay hydrated and wear sunscreen also can help prevent injury.

Ensure supervisors know the signs of heatstroke and schedule mandatory breaks for outdoor workers’ rest and hydration when work is performed in temperatures above 80 degrees Fahrenheit. Make sure break areas are shaded, and that workers are not punished for taking necessary rest.

Foster physical and emotional well-being

The chances of injury and illness can be exacerbated because of stress and anxiety. Establishing formal wellness initiatives could help improve employees’ physical health and reduce fatigue-related injuries.
Employers can do one or more of the following when implementing a wellness initiative:

• Offer stress management classes and seminars.
• Provide access to mental health care providers or counselors for employees who need help coping with anxiety or depression.
• Encourage regular breaks throughout the day.
• Offer incentives for participation in fitness activities, such as discounts on gym memberships or reimbursements for exercise classes.

Employers also should focus on fostering a sense of emotional well-being among staff. To create an atmosphere of trust within the workplace that promotes communication and understanding among all levels of staff, businesses can encourage an open dialogue between supervisors and employees.

Additionally, employers should provide resources for employees who may be dealing with personal issues outside of work. This includes grief counseling services or budgeting advice from financial advisors.

The preceding measures not only show support for people who are struggling but also demonstrate that a company cares about its workers beyond their job performance alone.

Contractors that take the initiative to foster employee health and well-being will go a long way in diminishing work-related injuries and workers’ compensation claims.

Jeff Cecchini is a licensed agent for global insurance brokerage HUB International. He specializes in contractor insurance programs. Contact him at 971-888-5394 or jeff.cecchini@hubinternational.com.

The opinions, beliefs and viewpoints expressed in the preceding commentary are those of the author and do not necessarily reflect the opinions, beliefs and viewpoints of the Daily Journal of Commerce or its editors. Neither the author nor the 91��Ƶ guarantees the accuracy or completeness of any information published herein.

The post 4 ways employers can minimize workers’ compensation claims | Opinion appeared first on Daily Journal of Commerce.