Growing Number of Freelancers

According to one of the most comprehensive studies completed on the independent workforce*, the number of freelancers (or independent workers) will surpass employed workers within 10 years. Some studies predict independent workers will represent in excess of 60% of the workforce by the end of the next decade. To put this into perspective, historically freelance has represented 10% of the workforce.

This is predicted to impact most professions, but to hit construction, manufacturing and retail the hardest. In addition, a Canadian study was undertaken by Business Development Bank of Canada (BDC) predicts a steady decline in the workforce over the coming 10 years as baby boomers retire.

Graph source: “Freelancing in America” is the most comprehensive study of the independent workforce, commissioned by Freelancers Union and Upwork. Source: Link.

The Pain is Real

This shift in the labor force, both the entrepreneurial trend, as seen in the growth of freelancers but also the workforce demographic shift, is one of the single greatest obstacles to business growth and is only beginning to have a serious impact on small to medium size businesses (SMEs). 

This is impacting all business sizes, with SMEs being the hardest hit.

Following is an impact graph showing the consequence of the labor shortage on SMEs. Note the impact on efficiencies.  This is especially difficult in construction, likely influenced by the interdependence of trades on site readiness. Where trades can be delayed for unpredictable periods because the site is not accessible. Employees may work long hours, short staffed, manage multiple sites in a day and endure interruptions in detailed workflow, all creating challenge and often delays in the critical final stages of the work.

Inefficiency in the Industry 

The construction business is one of the largest industries in the world, with an annual market capitalization exceeding $10 trillion. Despite its tremendous potential, many firms are struggling due to a shortage of skilled workers, weak productivity growth, and new data showing that the industry generates immense waste, both in terms of human productivity and physical materials.”  (Posted on August 28, 2017 by Tyler from https://esub.com/reshaping-the-construction-industry-automation-tools-and-technology/,)

Estimates suggest that only 25 minutes out of every hour is billed in construction. Without seriously rethinking construction processes, especially as it relates to the labor shortage, there is little hope for improvements in efficiency.

 

The Pain is Growing

To add to this, fewer people are choosing construction as their life vocation. As the boomers retire, the gap between supply and demand is going to grow. In the best scenario, businesses will look inward to improve efficiencies, but this will only address some of the problems.

Both the US and Canada are struggling to keep up with demand. The future of labor in the construction industry is uncertain, but more importantly, the industry is ready for a change. The question is what that change might look like. Automation might be one opportunity, but few of the trades lend themselves to this. Investment in robotics, process flow and systemization are underway to find ways to improve efficiencies, however, many trades such as electricians, carpenters, plumbers are challenging professions to automate and process flow and systematization are difficult across disparate trades.

Firms are already undermanned, with demand exceeding supply in increasing numbers. Those who will succeed and grow, will understand the need to rethink the labor paradigm. They will find ways to improve their efficiency, and therefore billable hours, to offset, if only in part, the challenge of finding and retaining talent.

Not Moving with Technology

The BDC study noted that the firms hardest hit, as a rule, have not updated their operating systems, many still using old processes, like running on excel spreadsheets for example. Few have invested in internal technologies to track ordering and parts, ensure thorough and accurate sales details, manage service or track project logistics. These systems may seem expensive; it is those who do not invest who are the most likely to see declining returns and continue to struggle to manage their businesses.

What you can do

Following is food for thought, possible ways to grow efficiencies and/or billable time, without adding people or over-stressing existing staff:

  • Track everything. Take the plunge and implement an operating system. There are a growing number of specialty offerings designed for your sector. Not having this in place is a handicap.
  • Partner with a local firm that provides services you don’t currently offer to expand offerings.
  • If applicable, find partners for out of town work. Or better yet, don’t take out of town work if you are not properly staffed to do so. Refer or partner.
  • Identify your core talents and invest more in them.
  • Ensure you pay your staff well and work hard on your culture, no one leaves if they love what they do and are paid well to do it.
  • Find ways to employ your staff in quieter times.
  • Make friends with the local colleges or trade schools, offer your firm for their practicums.
  • Find ways to locate freelance or available talent for peak periods. Look at labor platforms such as LincEdge.  There are many entering the market to help optimize labor.
  • Make friends with your competitors. They are the least of your worries.

Conclusion

Labor dependent businesses are going to be increasingly challenged over the coming years. The survivors and thrivers will not be those who do business as they do today.

We’d love to hear what you are doing to deal with the current and growing labor shortage. It is time for all of us to up our game.

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Head shot photograph of Marilyn Sanford

Marilyn Sanford is the co-founder and CEO of LincEdge.

In the past, she had co-founded and ran a custom install firm for 23 years.

You can find Marilyn on LinkedIn.

 

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