Why is staff retention a growing concern in the Hong Kong construction industry?

Construction businesses in Hong Kong are well below capacity to meet a surge in project demands, as skills shortages are compounded by a competitive labour market, high turnover rates and an ageing workforce. As[KH1]  projects and employment costs continue to climb, employers will need to invest in staff retention strategies to stay competitive.

High employee satisfaction will be key for construction businesses looking to attract and retain talent in 2023, as more professionals seek to develop their skills and enjoy meaningful employee benefits. Keep reading to learn how employee retention will support the construction industry in Hong Kong to overcome skills shortages and meet critical project demands.

The most recent RICS Global Construction Monitor (a quarterly member survey which acts as a sentiment indicator for construction markets globally) finds that 66% of survey respondents in Hong Kong cite staff shortages as one of the main issues holding back the sector. Learn from RICS members how the construction landscape is changing in Hong Kong.

Attracting Talent vs Employee Retention

Retaining experienced staff and attracting new talent are equally vital to an organisation’s success. In cases of skills shortages, attracting new talent can help businesses to innovate and adapt to changing market trends, allowing them to keep a competitive advantage in their industry.

Still, businesses will gain more from new hires if they already have a skilled workforce in place to train and develop them. Employee retention is crucial for helping organisations maintain institutional knowledge, skills and experience, while is easier and more cost-effective than having to recruit and retrain new staff.

In a highly competitive labour market, attracting talent and employee retention will both play a large role in closing skills gaps, as retention strategies will help businesses play to their existing strengths and identify where new talent can support competition in the long term.

Why is employee retention important in Hong Kong?

High demand for talent

Mass skills shortages have intensified the war for talent in Hong Kong, making it challenging for businesses to retain talent. 1 in 4 skilled professionals are seeking salary increases of up to 15% if they are to change roles in 2023, while the urgency to fill skills gaps and meet critical project needs has driven large employers to offer unprecedented pay rises to secure workers. As organisations try to find cost-efficiencies, stoked by fears of recession and rising inflation, many employers are below budget to meet these expectations.

High turnover rates

Candidate shortages are also increasing employer reliance on contractors to fill business critical and time-sensitive vacancies. Despite high contractor costs and lower quality and consistency in work delivered, this is likely to continue as tech professionals opt for more interesting projects with job flexibility over permanent roles.

An ageing workforce

75% of Hong Kong employers expect the most acute talent shortage will be among mid-to-senior level employees as they approach retirement age. As Hong Kong is already facing a ‘net brain drain’ across its professional sectors, retaining young talent to fill these gaps is proving more difficult as they become more attracted to working in other cities.

Staff retention strategies can help to avoid a talent price war

With high project costs and rising inflation rates to consider, construction employers will need to offer fair and sustainable salaries. As the labour market continues to be driven by the highest bidder, financial incentives are an immediate but unsustainable approach to skills shortages. If employment costs climb too high, businesses will likely lose their competitive edge as it becomes more expensive to operate.

To avoid getting stuck in a price war, businesses will need to offer alternative benefits to help promote their employer brand and naturally engage talent. But first, they will need to connect with their existing workforce to understand employee challenges and identify meaningful ways to retain staff.

Job satisfaction is key for retaining your workforce

Talent expectations are changing. While many professionals are seeking a salary increment to help with the increased cost of living, Hong Kong workforce trends show this likely won’t be enough to attract or retain skilled workers, as more professionals seek holistic workplace experiences from employers who share their values and will support their career development goals.

In this way, employees which experience high satisfaction are an organisation’s most valuable stakeholders: not only are they more likely to be invested in their organisation’s success; they attract like-minded professionals with similar values, increasing interest in their employer brand.

What are the best staff retention strategies for job satisfaction?

Meaningful employee benefits

More employers in Hong Kong are finding they need to shape employee retention policies which respond to employee workplace challenges and experiences on a personal level. Mainly, these include:

• Flexible working, with manageable workloads. 66% of Hong Kong professionals report having poor work-life balance due to excessive workloads and overtime. While flexible working has helped workers to establish more autonomy and personal time, manageable workloads, improved communication and a supportive work environment are key for ensuring they are not sacrificing that personal time to catch up on work. 
  
• Improved wellbeing initiatives. Professionals have a much higher appreciation for wellbeing initiatives after the pandemic. Not only have these become a strategic priority for staff retention and attracting talent; they drive business results, as employees feel more supported and productive at work.
• Improved learning and development. Fostering a learning culture and upskilling employees is essential to keeping staff turnover low. Employees are more likely to be satisfied with their jobs when they know they are adding value to their careers, without the worry they are missing out on better opportunities elsewhere. Organisations which offer career progression pathways are also more likely to attract talent with a growth mentality, reflecting a strong employer brand.

Upskilling your workforce

While many employers may view upskilling as a ‘nice to have’ employee benefit, this will become increasingly vital to avoiding future skills gaps and creating a strong employer brand which can attract the talent it needs. This will be a leading topic at the Hong Kong Construction Conference, as delegates discuss solutions to labour shortages and optimising productivity.

Upskilling employees is essential for retaining your workforce as employees feel more valued, enhancing innovation as they learn and apply new skills, while making your construction business more adaptable and resilient to changing technologies and market trends. Employers can guide employees to develop as future leaders, preparing your organisation for contingencies where critical vacancies must be filled.

By training employees to learn skills identified as most in need, organisations can maintain and advance institutional knowledge, increasing its capacity to stay competitive. Learn how RICS can support your construction business with staff retention strategies, from upskilling your workforce to building an employer brand recognised by clients and businesses around the world.

Showcase the achievements of your employees. Nominate construction teams, individuals and organisations for built environment excellence at the RICS Hong Kong Awards 2023. Submissions open now until Friday 9 June 2023.