December 13, 2023 min read

Top 9 Hiring & Retention Challenges AEC Firms Face




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The market size of the architecture, engineering, and construction (AEC) industry is set to grow from $8.9 billion in 2022 to $16.5 billion in 2030. That is a tremendous amount of growth in a short period of time. But as the demand for work outpaces the supply of labor, AEC firms are facing numerous hiring and retention challenges as we head into the new year.

A Perfect Storm: The State of Hiring and Retention for AEC

AEC hiring and retention challenges are only getting worse. It’s a perfect storm of rapid industry growth clashing with tightening budgets, continued supply chain disruptions, inflation and the increasing cost of labor, and robust digital transformation.

It’s no surprise that our research shows that hiring and employee retention is the top challenge AEC firms are struggling with right now.

Here’s how we got here:

  • A focus on aging infrastructure. Updating and fixing the infrastructure in the U.S. has finally become a government priority. In one respect, this is great news. The Infrastructure Investment and Jobs Act (IIJA) is going to inject money into the market. And, typically, creating jobs is a great thing. But analytics predict the IIJA will create over 82,000 engineering jobs. But there are already hundreds of thousands of job vacancies in AEC. There simply aren’t enough qualified workers.
  • A growing need for sustainable, green buildings. Global pressures to combat climate change and adopt energy-efficient buildings and sustainable design practices are creating more projects. But that means these construction projects are only growing in scale and complexity, requiring a workforce that’s trained in sustainability best practices.
  • Continued pandemic fallout. Even pre-pandemic there were 300,000 vacancies in construction. And that’s only getting worse. The Associated Builders and Contractors (ABC) estimated that U.S. construction companies needed to hire over 650,000 workers to meet demand in 2022. With IIJA funds being allocated, that demand will only grow.

There are numerous other factors contributing to the current AEC labor shortage, but the reality is this: there are simply too many jobs to fill.

This creates an incredibly competitive labor market. Now, let’s break down the AEC hiring and retention challenges in detail so you can create strategies to overcome them.

Top 3 Hiring Challenges AEC Companies Face

Filling an increasing number of open positions isn’t easy. And the cost of hiring talent is very steep right now. Let’s shine a spotlight on the top four challenges AEC firms are dealing with when it comes to attracting and hiring employees.

1. Skills Gaps Among Younger Workers Joining AEC Workforce

Young workers are joining the workforce, but there’s a small problem…they don’t always have the right skills and experience.

Industry experts have reported that one of the biggest gaps in their knowledge are soft skills like communication, building relationships, and strategic thinking.

Not to mention, due to the COVID-19 pandemic, many of these employees haven’t had much in-person instruction. In fields like engineering, this can leave some gaps in knowledge that are only gained by experience.

But with the scope and complexity of construction projects increasing, AEC firms are finding that the talent pool might not have the right real-world experience to handle these projects.

2. Tightening Budgets

Economic fluctuations, rising inflation, and continued supply chain disruption have led to tightening budgets across the industry.

The challenge for AEC firms lies in striking a delicate balance between cost-cutting measures and maintaining the quality of talent acquisition. This dynamic requires innovative recruitment strategies and a keen eye on cost-effective yet impactful hiring, onboarding, and training solutions.

3. Shrinking Labor Pool Drives up Competition for Talent

As demand for AEC professionals continues to rise, a shrinking labor pool intensifies competition among firms seeking top-tier talent.

Navigating this competitive landscape requires AEC companies to differentiate themselves, not only through competitive compensation but also by emphasizing their unique workplace culture, growth opportunities, and commitment to employee development. But small firms might struggle to keep pace with smaller hiring budgets.

Top 6 Retention Challenges AEC Companies Face

Retaining talent is not always easy. There are so many factors that can contribute to employees wanting to leave. From workplace culture to well-being to continuing education, there are many things AEC firms have to focus on to retain talent. Let’s review the top six retention challenges.

1. The Great Resignation is Still Impacting AEC

The aftershocks of the Great Resignation continue to reverberate through the AEC industry. In fact, over half of architects and engineers would consider leaving their current employer for a new opportunity.

According to Engineering Management Institute, the top reasons that AEC professionals quit this year were:

  1. Wanting career advancement (53%)
  2. To have a more competitive salary (40%)
  3. High levels of stress and not feeling valued at work (33%)
  4. Wanting a more flexible work schedule (25%)

Retaining valuable talent becomes an ongoing challenge as professionals explore new opportunities, seeking environments that align with their evolving priorities and expectations.

But delivering on these demands isn’t always easy. With tightening budgets, a labor shortage, and a growing list of work, many firms feel stretched thin. It can be difficult to compete with rising salaries while also focusing on employee experience factors like workplace culture and flexibility.

2. Lack of Flexible Working Arrangements

Let’s dive deeper into the flexible work arrangement challenge.

In today’s work landscape, flexibility has become a highly desirable benefit to employees and a key factor in job satisfaction. But the work that AEC firms do isn’t always conducive to flexible or hybrid/remote work arrangements.

Architects and engineers often have to be on site or meeting with clients, which often can’t be on their schedule. Outside of that, however, architects, designers, and engineers might have the ability to have more flexibility and even work from home some of the time. But construction workers really don’t have this option.

It puts AEC firms who employ field-based employees in a difficult position. If they offer flexible work to some of their workforce, but can’t offer it to everyone, this can have impacts on culture.

Finding ways to offer some flexibility or other benefits that can reduce stress and support your workforce’s needs is going to need to be a priority in the years ahead to retain staff.

3. High Levels of Stress and Burnout Impacting Industry Professionals

A staggering 58% of architects and engineers say stress and burnout is impacting their physical and mental health. And 71% say it is restraining their career growth (Engineering Management Institute).

Burnout is still common among these workers due to the demanding nature of AEC projects. From tight deadlines to staffing shortages, it’s only natural that employees are feeling the pressure.

To retain top talent in this kind of working environment requires a proactive approach to address employee well-being and foster a healthy work environment.

4. Workplace Culture and DEI Issues Persist

Creating an inclusive and diverse workplace remains a challenge for many AEC firms. Despite the benefits of having a diverse workforce—higher innovation, revenue, and more—AEC is still a male-dominated and mostly white industry.

And while industry stereotypes and biases make hiring diverse candidates more difficult, this is also a big retention issue.

Women have been leaving the engineering field at higher rates than men due to flagrant violations of HR policies like sexual harassment and discrimination.

During COVID-19, architecture firms lost many women due to culture, inflexible hours, lack of advancement opportunities, and difficulty finding mentors.

AEC firms need to focus on establishing company cultures that value diversity and promote inclusivity. It’s not enough to hire diverse talent if the experience for them is harmful or unsupportive. And at a time where the industry desperately needs more employees, getting diversity, equity, and inclusion right is a game-changer.

5. An Aging Workforce on the Brink of Retirement

The U.S. Bureau of Labor Statistics (BLS) and American Institute of Architects (AIA) have both reported that roughly a third of architects, engineers, and construction workers are all over the age of 55.

The AEC industry now faces the imminent retirement of a significant portion of its workforce, which can lead to huge knowledge and skills gaps.

Retaining institutional knowledge and transferring it to the next generation is a critical challenge that will require thoughtful training, mentoring, and succession planning before it’s too late.

6. Insufficient Training Programs Leaving Gaps

Companies that don’t focus on employee training and development are going to struggle. Training simply cannot be an afterthought. It is required at every stage of the employee journey from onboarding to long-term growth.

  • Onboarding. Numerous studies have shown that insufficient employee onboarding can lead to higher employee turnover rates.
  • Skill building. The industry is rapidly changing. If companies don’t focus on continuous education to close skills gaps and build knowledge around new standards, best practices, and industry trends will fall behind. And these employees are likely to go elsewhere to receive this training.
  • Professional development. AEC professionals are quitting to seek development opportunities. If you don’t provide these learning and career paths to your architects and engineers, construction project managers, and construction teams, they are likely to go elsewhere.

Employee Onboarding Guide for AEC Companies

Learn how to get your AEC workforce up to speed faster and increase long-term employee retention.

Download Guide
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Where Do We Go from Here? Hiring & Retention Strategies for AEC Companies

As the AEC industry grapples with an unprecedented confluence of challenges in hiring and retaining talent, where can we go from here?

Let’s explore some actionable strategies to address these challenges.

  1. Skills training. Investing in skills development is key, especially considering the skills gaps among younger workers. Implement targeted training programs that focus on both technical and soft skills.
  2. Adaptive recruitment strategies. Tightening budgets and a competitive labor market necessitate a reevaluation of recruitment strategies. Explore innovative and cost-effective approaches to attract top-tier talent like networking events, partnerships with educational institutions, and mentoring programs.
  3. Well-being programs. Address high levels of stress and burnout by prioritizing employee well-being. Consider offering mental health resources, flexible schedules (when possible), and providing more opportunities for employees to share feedback.
  4. Invest in meaningful DEI initiatives. Improving DEI requires a dedicated focus and initiatives that go beyond recruitment. Create programs to ensure your entire workforce feels valued and supported. Supporting a diverse and inclusive workplace is not only the right thing to do but also a key driver of innovation and success.
  5. Succession planning. Address gaps left by turnover and retirement by developing robust succession plans. Facilitate knowledge transfer through mentoring programs and structured training programs.
  6. Comprehensive training programs. Make training a strategic priority at every stage of the employee experience. A proactive approach ensures that your team remains adaptable and equipped to navigate industry changes.

In the face of the perfect storm impacting the AEC industry, these strategies can help firms hire, train, and retain top talent in the year ahead.

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