Does Your Construction Company Need an Outsourced HR Manager?

Eric Mochnacz
March 24, 2023

In our experience, the trades industry has been historically underserved by human resources.  When we began working as the interim, outsourced HR department for our construction and contracting clients, we became aware of how important human resources is to the growth of the construction industry. There is great potential when you combine a construction company’s industry knowledge and impeccable customer service with a strong people operations function.  By driving internal change for a business and its people, we support the scalability of construction companies and help them stand out from the competition in the industry.  When you and your competitors are all offering the same product, it’s your people and people processes that make all the difference.  When is it time for you to consider outsourced HR for your construction company?  Keep reading and we’ll tell you.

Signs Your Construction Company Needs HR Help

If you’re a one or two person shop, you most likely don’t need full-time HR help.  Most startups and small businesses can manage when it’s the founder and one or two other employees.  The initial focus is establishing your business and getting customers (and money) through the door.  Generally, you as the owner, are still involved in the day-to-day operation of the business.  So, when you encounter an employee issue or have to answer a question, you’re able to respond in a way aligned with business goals. Initially, as long as your people are getting paid when they are supposed to, they are safe at work, and there are clear expectations for what they’re supposed to be doing – you’re going to be okay.  

However, once you begin scaling beyond that first employee, that’s when you need to consider seeking out HR help.  Working with a skilled HR professional early helps you build out employee lifecycle processes from the beginning, rather than reverse engineering them to fit a business that has scaled too quickly without structure. Even as you grow beyond one or two employees, you don’t need full-time HR.  But, you will need a human resources expert to work directly with you to align the people function and its processes as you grow the business. That may be your sign to work with an HR consulting firm like Red Clover which offers fractional HR support.  We deliver human resources expertise to small businesses and can do it starting one day a week.  We save you money because you don’t have to invest in a full-time HR resource. 

Even if you’re hesitant to bring on an HR resource too early, there comes a time when it becomes untenable for a business owner to run the business and focus on human resources.  Generally, construction company owners reach out to us when they know they no longer have the expertise needed to address the issues and opportunities that come with managing a growing workforce. They need to hire quickly and don’t have the resources or recruitment process to meet the staffing needs. They realize their employees are acting in ways misaligned with their expectations, so they need help developing policies and creating an employee handbook. Or, they just need to have someone with HR experience as part of the leadership team to guide the business through change and growth. Whatever the specific need, when a business owner thinks “We probably need HR at this point”, that’s usually a good sign you do. 

Three Benefits of Having an Outsourced HR Manager

Rather than bringing in a full-time HR resource, it may make sense for a construction owner to outsource their HR function, especially if they are in the early stages of growth. HR needs to be a priority, but a construction company may not need to pay for a fully-loaded resource at 5 days a week. For example, we are typically able to offer a full-time equivalency at three days a week, while saving clients money on payroll taxes and benefits costs. Outsourced HR firms can often shift their resources and time allotment up and down based on the immediate and emergent needs of the business. For example, we work with clients who come to us for immediate recruitment needs, but once we’ve placed the right people in the right seats, we can swap out consultants with different skill sets to focus on other long term people-related issues and processes. Whereas with an internal HR leader, they may have more specific experience in one functional area and will struggle to deliver the whole suite of HR services, so their first inclination is to go to market to fill their own skill gaps, which busts your salary projections and increases costs unexpectedly.  Outsourced HR is an ideal solution for a growing small business.  

1. Easing the Recruiting and Onboarding Process

We are navigating an incredibly complex job market. The ability to recruit talent is even more challenging because of a shortage of skilled trades workers. Outsourcing HR, specifically with recruitment process outsourcing, is one way you can drive the recruiting and onboarding process in your construction firm. Outsourced HR owns the entire recruitment lifecycle and can critically evaluate every step of your existing hiring process – or establish one if you don’t have a process.  Once they’ve identified gaps which may be keeping you from finding the right skilled workers, they introduce solutions to the problems and execute on them. When we worked with a commercial roofing company, it became apparent that many skilled roofers didn’t have resumes.  Although we generally require resumes as part of our proven recruitment process, we adjusted our expectations given the nature of the candidate pool. It also required us to learn quickly about the roofing industry and roofing skills so we could have more valuable and productive phone screens to identify skilled workers.  

2. Guidance on Employment Law and HR Compliance

Whether it be standard employment policies like time off and behavioral expectations or construction-specific policies like motor vehicle operation and workplace safety, it’s beneficial to have outsourced HR provide guidance on policy creation and implementation.  When you are at the point where you are discussing holding employees accountable to company policy, outsourced HR are the people who guide you through policy creation and integrate them into your company handbook. And it’s not just about creating policies, but effectively communicating them to the workforce and interpreting them for appropriate action when employees violate the established policies.  

As the company grows, policy problems can get more complex and carry a greater chance of risk. Regardless of how good you are at running the business, when it comes to workplace investigations, harassment claims, or significant employment action, you want a trusted HR team on your side to remain compliant.  

3. Aid with Payroll, Benefits, and Workers’ Compensation

Outsourced HR is a valuable asset when discussing people-centered growth strategy, but at the end of the day, you want to make sure your worker’s basic needs are being met. You can focus on management training and learning and development and recruiting, but if you can’t pay your people correctly, none of the other stuff matters. Employees will disengage from company initiatives if they can’t trust the company to meet the upfront agreement that they will be paid appropriately for their work. A valuable outsourced HR agreement is one where the assigned HR professional can manage the tactical and strategic responsibilities of HR. Red Clover consultants are familiar with running payroll by noon and then hopping into a meeting to discuss career growth plans and strategic approaches to compensation with senior leadership immediately after. The only way your strategic initiatives can be successful is if they are built on a strong HR infrastructure, all managed by a skilled HR practitioner.  

How HR Management Can Help Your Construction Company 

HR isn’t necessarily one size fits all.  Although labor laws apply to most businesses uniformly, how you approach HR as a business can be tailored to your workforce and specific industry.  That’s why it’s valuable to consider an outsourced HR arrangement to support the growth of your construction business with a consultancy with direct, practical experience in the construction industry.  We take our strong general knowledge and expertise in HR and are able to apply it to the specific issues, challenges, and opportunities construction companies face.  

Speak With a Qualified HR Consultant for Support Today

If you sat in your last L10 meeting and had HR at the top of your IDS list – now is the time to consider working with an outsourced HR solution to solve the issue.  We have direct, practical experience working with companies who manage anything in, on, or around a building. Reach out to learn more about how we can leverage our expertise in the construction industry to elevate your business and make it stand out in the trades industry. 

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