Out-Law / Your Daily Need-To-Know

Industrialising construction presents challenges for management

Out-Law Analysis | 28 Jan 2022 | 9:58 am | 4 min. read

As industrialisation and decarbonisation transform the construction industry, leadership teams will face new challenges and will have to develop new skills to guide their companies through a complex marketplace.

Of course, people are essential to the success of any enterprise – but as the infrastructure sector evolves the engagement, education and development of its people will be of paramount importance.

Dealing with new challenges and new opportunities will require an adaptable leadership team, one that is equally adept in the traditional high-quality management of teams and projects as with the commercial, strategic, technological and media skills necessary to manage increased expectations from new and existing stakeholders.

The challenges are often the most obvious and include a potential clash of incentives, the shift from a short-term to a longer-term outlook and managing employees of diverse cultures, backgrounds and skills. Management must be ready to contend with talent shortages, adapting and using technology and engaging with a much broader and more diverse range of colleagues and consultants, as well as public sentiment.

The successful chief executives and business leaders of the future will be those who can think strategically, who can lead by example and who can educate and engage both the workforce and the communities that their projects will benefit.

The leaders of the future

The move to modular and manufacturing methods of construction is a massive one, that will require innovative thinking. While traditional leadership teams usually feature a ‘director of operations’ or other role focused on technology, they are unlikely to already have the sort of internal know-how at board level required for true transformation.

Many construction businesses will need to look to other industries including technology, manufacturing and aerospace to fill these skills gaps, and a ‘rush for talent’ at senior and executive level is likely. Lendlease, for example, appointed Bill Ruh, formerly of Cisco Systems, as chief executive officer of its digital team in January 2019. Firms may also seek to make strategic acquisitions or enter into joint ventures (JVs) with technology businesses with the necessary expertise – although JVs present their own challenges.

Characteristics this next generation of leaders should embody include:

Strategic thinking

The approach that the leadership team has taken in the past to winning and delivering large infrastructure projects may need to evolve. Leaders must be able to consider all available options with a long-term and sustainable mindset, and to engage with the best and most innovative ideas.

Decisions may need to be based on different metrics and values, a different financial environment, more effective technology and more public and workforce influence to best develop and optimise the strategic vision of the business.

Collaboration and engagement

Existing leadership cannot be expected to have all of the skills and experience required to embrace the new environment to deliver major projects. Instead, they must be able to partner and collaborate effectively, with experts and capabilities across the entire organisation as well as external consultants.

The leadership team should place topics such as effective use of technology, evolution of the sector, decarbonisation and social impact high on the agenda. They will be required to engage and inspire colleagues and consultants across a much broader range of disciplines and skillsets than they have done historically.

Education

Infrastructure leaders must be able to educate and engage on the topics of industrialisation and decarbonisation, and the opportunities that they create within the sector.

The team must lead by example, in both their language and their decisions, around the technology opportunities, reputational influence and financial impact. Given the direct impact of infrastructure projects on communities, leaders must be engaged with public opinion and be able to communicate and educate effectively through public and social media platforms.

Diversity of background

Infrastructure companies have a fantastic track record of promoting colleagues from within the organisation. However, the leadership team will increasingly need to consider recruiting strategically and with diversity. This is likely to mean recruiting from outside the sector where appropriate and recruiting individuals from different backgrounds, with different characteristics and with different international experience.

Increasing the diversity of talent is necessary in an industry facing changes on multiple fronts. There will be an increased demand for skills around change management, technology experience and legal experience. The sector will need to reposition both itself and the range of careers it offers to compete with other sectors seeking to increase their own digital skill sets.

Diversity of departments

Another option to change the business is either creating a new leadership role within the organisation or making a strategic acquisition of the relevant business or technology – whether as a straightforward acquisition or by way of a JV arrangement. Both options are something the leadership team should be actively considering and reviewing.

Incentivising for change

Employers will have to reimagine how to incentivise an entire workforce to prioritise industrialisation of the sector from within the workforce and encourage employees to engage with innovative ways of working and focus on innovation within their roles. This could be based on career development opportunities, changes to job descriptions and key performance indicators, developing values and an organisational purpose which is linked to industrialisation and sustainability and of course reviewing how financial and compensation benefits are determined.

Developing the talent of the future

Leadership teams will also have a responsibility to attract and retain more junior talent with the right mix of leadership and technical skills in order to build the business for the future.

The construction industry is already facing a general skills shortage due to the attractiveness of other industries, including technology. Recruitment, retention and development of staff with the right mix of skills will depend on its ability to compete with those sectors. Growth and career development opportunities, a strong mix of benefits and aligning with people’s personal values will all have to be considered.

One of the most effective ways to attract the best people in this sector has always been having the best projects to work on. Being seen as a leader on decarbonisation and innovation could itself be one of the best ways to ensure the business is able to attract and retain those talented individuals.

Changing the culture

Achieving all this will also require a cultural shift within the business, on which the leadership team will be expected to take a proactive role.

Delivering the required cultural change could be as simple as incremental, internal policy changes around how remuneration is determined and bonus policies implemented – including by way of long-term incentive plans, tied to decarbonisation commitments – and allocating budget to areas of the business that will help to drive its evolution.

Industrialised Construction
Transforming infrastructure performance needs a new approach. Industrialised construction can improve productivity and deliver efficient and low carbon infrastructure through digital and modern methods of construction. We investigate the opportunities and challenges.
Industrialised Construction