Michael Walker explains why companies need to be honest and improve their offer to improve their retention, with significant benefits available when they do.
The Covid pandemic forced consulting practices, including our own, to accept and adapt quickly to issues never seen before and to operate with a greater degree of flexibility. Now, however, we see a swing of the ‘flexibility pendulum’ back from its extreme.
This transition to the ‘new normal’ that we have heard so much about is equally new territory for management as we try to navigate the return to office, in-person meetings and social events. These and many other factors are stressors to our firms, colleagues, the industry, and how we manage these stressors will shape our industry for years to come.
An uncomfortable look at your own business
There are a wide variety of sustainability articles that focus on the outputs of our firms (designs, planning, advice) but I challenge the reader to undertake the uncomfortable process of looking internally to our firms themselves, and your management’s approach to the sustainability of your own firm.
This is a thought experiment that we challenge the participants of the FIDIC Future Leaders Management Certificate (FLMC) programme to do and it continues to generate interesting feedback. Just as our communities and clients have restrictions based on the ‘pillars of sustainability’ – social, environmental and economic – so do our firms. Since we are an industry of people, the impacts of how we implement policies from each of these pillars are predominantly focused around the interaction of people and the firm’s policies. Too often we succumb to the trap of ‘greenwashing’ our own firms’ policies on our websites, claiming top wages and benefits, stellar environmental practice, and fantastic social licence to operate. When it comes down to it, individuals are still opting to leave the engineering and consulting industry for exactly the opposite reasons. For example, being attracted by contractors, or owners with packages that better meet the needs of that individual.
To be clear, I am not advocating for higher compensation packages, or endless volunteering to humanitarian causes, or the lack of consumption of energy to run our computers and offices. I am advocating for sustainable practices of all of the above. We too often incorrectly associate sustainability with extreme changes, but in reality it is really not the case. For example, my firm (Employee owned, 1,000 people, based in Canada) is carbon neutral and has been since 2009. This is a great achievement, but we haven’t achieved this by making our staff walk to construction sites, or by sacrificing profitability, as we wouldn’t be able to continue serving our clients if we weren’t in business.
Some companies overselling themselves
If we could simply refrain from overly greenwashing our websites and LinkedIn posts, we could more accurately attract and retain the staff that match our firms’ individual values. If we can accurately portray these values to the field of current and future employees, then we not only raise our firms’ contribution in the world, but companies could also reduce staff turnover which has a significant impact to our economic bottom line. Achieving such an outcome would therefore result in more funds being available to contribute to causes important to our firms (economic, social, or environmental).
Proof of such achievements can be in the form of some sort of certification or guideline such as ISO 26000:2010 (which is not certifiable) but should also contain so many more pieces that I fear are not valued as much as they are claimed to be. These include easy policies that have positive ROI to firms, such as equity and diversity training, growth programmes, parental leave wage top-up, mental health resources, flexible work arrangements and environmental programmes (shoreline clean-up, tree planting, carbon neutrality, etc.).
I would like to demonstrate the positive ROI on one item above. Since an easing of Covid restrictions the associated requirement for remote working has been changed to a gradual or full return to the office (or flexible work arrangements), however the ROI is difficult to calculate on this item as the impact is generally an intangible and difficult to measure directly. So to assist let’s look at a specific area such as the parental leave wage subsidy. I will give what I think to be a fairly moderate and mid-range example by selecting a mid-level female engineer in Canada – let’s say eight to ten years of progressive experience, and an annual salary of CA$100,000 (for ease of calculation).
Canada has a government funded maternity and parental leave but it only provides wage coverage up to a maximum level (15 weeks at CA$638/week max for new mothers and CA$638 for an additional 35-week period for all new parents to be CA$31,900 over 50 weeks combined). Therefore, many employers in Canada offer a top-up policy to reduce stress on new parents (diapers aren’t cheap!) and to encourage a return to the firm once the period is over in the form of ‘golden handcuffs’ or a repayment of the funds if the employee selects to leave the firm within a given period of time (usually one to two years depending on level of top-up).
In my experience and discussion with others in the industry, across consultants, owners, and contractors, this varies from no policy, to a 100% top up for up to 12 months (wow!). To be somewhat fair, I present the difference between the ‘do nothing’ and what I consider to be the industry average policy in Canada (top-up for part of the leave period – to 100% of base salary for 21 weeks). It should be noted that detailed research is being conducted currently and more accurate numbers are soon to be available.
The value of retention
If we were to take the average cost for this top-up, it would be the difference between the government coverage and the base wage, which works out to about CA$1285/week. Over 21 weeks (15 maternity and six weeks parental) this would equate to be just shy of CA$27,000. Assuming that this person has the world average of 2.4 children (higher than the current 1.47 Canadian average), the total cost to provide this benefit would be CA$65,000 over the average lifetime of the employee. This is not a small amount of money to either entity, but I would argue that a new parent evaluating starting a family with a firm that provides any top-up would be significantly better off compared to one that doesn’t. I would also argue that the industry average bonus structure would dwarf this number over the working life of the individual. This can then (and does) factor into the decision to move firms or industries when this time in life approaches and results in net movement away from firms without these policies in my experience, resulting in higher turnover rates in those firms and higher staffing costs (which they were trying to avoid).
Based on numbers from a Canadian benefits website, and our mid-level female engineer, the cost to replace this employee is around 150% of her annual salary (CA$150,000) should she elect to change employers. This includes factoring hard costs such as recruitment, interviewing, orientations and soft costs, such as reduced productivity during onboarding and time spent with the new hire by senior staff. For reference, the SimplyBenefits.ca website notes that costs or turnover range from 30-50% for juniors, up to 400% for senior staff which lines up with what I have heard over the years from the industry.
For this average case to make economic sense, the policy would need to increase the retention of the employee to compensate for the cost which is exactly what the retention agreement achieves (increasing by CA$65,000/year divided by CA$150,000 = 0.43 years or three months). Additionally, with the current gender split being nowhere near 50/50 (females/males) in the consulting industry in Canada (Engineers Canada’s goal of 30% female engineers by 2030 gives a good idea of how far we have to go). We can see that our policies likely have a negative impact on our ability to hire and retain female staff in our industry. Combined with public government benefits up to 100% for 52 weeks for employees of all genders, one can see that there is significant pull away from the industry, which is costing our firms huge sums in turnover.
I personally took a parental leave (albeit for only six weeks) and can say that the goodwill towards the firm from both myself and my spouse resulted in many extra hours of effort after my leave based on my feelings of reciprocity which likely more than made up for the direct cost.
To add to the financial example above, the ability to work flexibly (location and time) have also become somewhat standard in the industry and clients have become accustomed to video calls and flexible meeting arrangements. This has a two-fold benefit, which I hope we will not lose sight of as individuals return to the office. With the reduced need to be in-person full time (I do think there is value in minimum 60% in office time to allow for team building and better communication), we can reduce the commuting impacts on the environment and our colleagues. These costs include economic factors to the colleague such as vehicle fuel and maintenance, time that can be used for other interests, and environmental benefits including emissions reductions.
In addition to being able to work from home on a part-time basis, we also see increased geographic flexibility in staffing for fully remote work, which increases the talent pool for firms across the world. It is important, however, to recognise there may also be some disadvantages as the above can also cause issues as some locations will inevitably lose the local talent to remote work arrangements, which will cause other stressors in those locations.
Avoiding return to attendance management
Overall, I believe that this flexibility is beneficial as long as management policy and processes can adapt and not return to the weak policy of attendance management. A return to these policies will inevitably drive employees that have enjoyed the flexibility to other employers, and further increase the cost to the industry in turnover cost. To lose sight of the benefits and progress that we have realised over the pandemic years in flexibility would be very unfortunate, but I think we need to keep the progress moving forward to achieve sustainability and improved resiliency of our overall industry. Those firms that can take advantage of this ‘new normal’ will inevitably be an employer of choice and will benefit from the policies that keep the talent in their firms, and the associated reduced turnover costs.
So, please take the time and reach out to your colleagues (on which these policies impact) and see if they are prepared to share their thoughts on what can be done to improve your firm’s ability to attract and retain staff. This will help to continue your firms sustainability journey! Finally, if you want a fresh view from others in the industry, I encourage you to talk to some of the FLMC participants at this year’s FIDIC Global Infrastructure Conference!
Michael is a senior project manager located in Regina, Canada with 19 years of consulting and construction experience. Working at Associated Engineering, he helps his clients deliver a variety of municipal and nation building projects and programs across Western Canada, including work for private corporations, municipalities, provincial, and federal governments including clients such as Parks Canada. These projects include traditional delivery models, as well as P3 and design-builds.
Michael has a long history of contribution to FIDIC and ACEC-Canada through presentations, conference participation, committees and working with DFS to deliver the FIDIC Future Leaders Management Certificate programme. In these areas, Michael works to assist the progression of the industry to provide better value to clients and fellow consultants through training and the promotion of the growth of communication and other critical skills for business and life. In addition to his continued work as the Canadian representative for FIDIC’s Future Leaders Advisory Council, Michael is a member of the overall management and governance team for the evolution of the FIDIC Academy and also chairs the ACEC-SK Careers in Consulting Committee, both of which aim to attract, advance skills and retain people in the industry.
Michael is a 2022 contributor to the FIDIC Future Leaders Council annual book of essays on the shape of the industry.