In construction, margins are thin and labor accounts for a major portion of costs. Employee engagement goes beyond human resources; it’s a critical financial issue that can make or break project profitability.
Disengaged employees — those who are emotionally detached from their work — can impact productivity, safety, project timelines, and company morale, all of which directly affect financial performance. In fact, a global study estimated that disengaged workers cost businesses $8.8 trillion annually in lost productivity.1
Construction companies face unique workforce challenges, heightening the impact of disengagement on profitability. To thrive in a highly competitive market, construction financial professionals (CFPs) must understand how workforce dynamics contribute to long-term sustainability and profitability. By addressing employee disengagement with proven strategies, companies can enhance profitability, mitigate safety risks, and ensure smoother project execution.
This article explores the impact of disengagement on project outcomes and provides actionable steps that CFPs can take to involve their workforce and drive better financial results.
The Financial Toll of Disengagement
The costs of disengagement often manifest in many ways.
For example, more direct costs may include rework due to mistakes, missed deadlines, absenteeism, and turnover. But on the other hand, some expenses can be harder to quantify, such as the reputational damage a company incurs by consistently underperforming due to a disengaged workforce.
Project Delays & Cost Overruns
Time is money in construction, and projects that fall behind schedule almost always cost more than anticipated.
When employees are disengaged, they are more likely to miss deadlines or fail to deliver work at the expected quality, which often leads to rework, extended project timelines, and contractual penalties for delays.
Safety Risks
In the construction industry, safety incidents result in costly insurance claims, lawsuits, and lost productivity, which has a devastating impact on financial performance. According to the National Safety Council, workplace injuries and illnesses cost U.S. businesses roughly $167 billion each year.2
In construction, where hazards are ubiquitous, a disengaged worker poses a higher risk to both themselves and their colleagues.
Absenteeism & Presenteeism
Disengaged workers tend to take more sick and personal days, and are mentally checked out when they show up to work. In these scenarios, the team’s productivity suffers.
In contrast, a 2023 Gallup article explains that “teams with thriving workers see significantly lower absenteeism, turnover[,] and accidents; they also see higher customer loyalty.”3
Turnover Costs
The construction industry already faces a shortage of skilled labor and high turnover rates, and the COVID-19 pandemic and the Great Resignation further exacerbated these issues.
Disengaged employees are more likely to quit and pursue new opportunities, leaving the company to shoulder the financial burden of recruiting, hiring, and training new workers.
Studies show that the cost of replacing a single employee ranges between 40% and 200% of the annual salary when recruitment, training, and lost productivity are considered.4
Profitability
All of these issues culminate in a significant decrease in profitability. Construction companies with disengaged workforces are more likely to go over budget, miss deadlines, and experience higher turnover. When labor is such a critical expense, small inefficiencies can compound into significant financial losses.
The Root Causes of Disengagement
The construction industry presents unique challenges that drive higher rates of disengagement compared to other sectors.
Inconsistent Work Schedules & Project-Based Employment
The cyclical nature of construction projects means that workers often face periods of intense activity followed by gaps in employment. This lack of stability can lead to disengagement, as workers often disconnect from the company during downtime and find it difficult to regain momentum when work resumes.
Lack of Career Development Opportunities
Construction workers may perceive limited opportunities for career advancement. Some companies offer few formal training or development programs, leaving employees feeling that they have plateaued in their roles.
Without clear paths to advancement, employees may become disengaged when they feel that their hard work is not rewarded.
Poor Communication From Leadership
In the fast-paced environment of construction, communication breakdowns between management and workers are common. When leadership fails to articulate clear expectations, workers may feel unappreciated or misunderstood, fostering disengagement.
Work-Life Imbalance
Long hours and physically demanding work can lead to burnout, particularly if employees feel unsupported. According to a Construction Dive report, many workers feel overworked and underpaid,5 and without policies that prioritize wellbeing and work-life balance, workers often disengage emotionally from their roles.
Technological Disconnect
The adoption of new technologies like project management software and advanced machinery can alienate older workers who may be unfamiliar with these tools. If not adequately trained, employees may feel they lack the skills to succeed in a tech-driven workplace, and ultimately, become disengaged.
Best Practices for Improving Employee Engagement
While each company’s approach differs, several strategies have proven effective in boosting engagement and, in turn, improving financial outcomes.
The following are some actionable steps that CFPs can implement.
Prioritize Clear Communication
A common issue in construction is the breakdown in communication between field employees, management, and stakeholders. When workers don’t feel heard or are unclear about project goals and their role in achieving them, it becomes difficult for them to maintain morale. Establishing clear lines of communication is essential for keeping teams aligned and motivated.
A best practice is to implement regular check-ins between team leads and crew members, where feedback is encouraged and concerns get resolved quickly. Additionally, ensure communication tools, such as project management software, are in place to streamline information sharing.
Invest in Professional Development
Construction is an industry where skill development drives better job satisfaction. Employees who feel they are growing professionally are more likely to stay engaged. Providing training, certifications, and clear pathways for advancement within the company not only motivates employees, but also ensures a highly skilled workforce.
It’s a best practice to offer training programs that enable employees to enhance their skills and advance in their careers.
Foster a Positive Work Environment
Creating a work culture that prioritizes wellbeing, recognition, and respect can significantly improve employee engagement. Workers who feel valued are more likely to remain loyal and contribute to the company’s long-term success.
It’s best practice to implement wellness programs and initiatives and adopt small routines such as group stretching and team huddles at the start of the day.
Develop a Structured Onboarding Process
The onboarding process sets the tone for an employee’s experience with the company. A structured and engaging onboarding process helps new employees feel connected and motivated from day one. This is particularly important in construction, where project teams frequently change and new hires need to integrate quickly.
It’s important to develop an onboarding program that introduces new hires to the company’s values, safety protocols, and career development opportunities. Also, including mentor programs is essential to help them feel supported during their initial months on the job.
Enhance Safety Culture
Safety is a top priority in construction, and disengaged employees are more likely to take shortcuts that compromise safety. Reinforcing a culture where safety is prioritized not only protects workers, but also ensures that projects proceed without costly delays or incidents.
It’s crucial to continuously reinforce safety training, making it a central part of daily routines. Engaged workers are more likely to follow safety protocols when they understand the importance of their role in keeping jobsites secure.
Offer Flexible Work Arrangements Where Possible
Although construction requires physical presence, offering flexibility in shift scheduling or task assignments can give employees a greater sense of control over their work-life balance. By accommodating employees’ personal needs where possible, companies can help reduce burnout and increase engagement.
It’s best to implement shift rotation systems or flexible schedules during non-peak times, allowing workers to manage personal responsibilities while staying engaged.
Recognize & Reward Performance
Regularly recognizing and rewarding employees for their hard work and contributions goes a long way toward fostering engagement. Recognition doesn’t have to be expensive — public acknowledgment, additional responsibilities, or small incentives can boost morale.
It can be beneficial to develop an employee recognition program
that highlights individual and team achievements. Tie rewards to specific performance metrics such as project completion rates, safety records, or cost-saving initiatives.
Leadership’s Role in Employee Engagement
One of the most significant factors in employee engagement is the role of leadership. CFPs and company executives play a pivotal part in shaping a culture of engagement.