BDO Global Construction Sector Survey Report - The Future W…

BDO commissioned global research across ten major markets for the construction sector, involving students and industry executives. Our survey results show that the construction industry faces a legacy of challenges arising both directly and indirectly from the Covid-19 pandemic. These challenges have been further complicated by difficulties in recruiting and attracting skilled talent to meet current vacancies and anticipated future demand. The report explores what motivates Gen Z and outlines what the construction industry needs to do to improve its perception among this demographic, to help leaders in the sector successfully navigate the challenges and opportunities ahead.

Overcoming the talent crisis BDO GLOBAL CONSTRUCTION SURVEY REPORT 2023 REPOSITIONING THE CONSTRUCTION INDUSTRY AS AN EMPLOYER OF CHOICE FOR GEN Z

May 2023 >

Construction Navigating the talent crisis

Construction Navigating the talent crisis 02 Employment growth

The construction sector is bouncing back following difficult years and heavy impact on profits 03 Gen Z Understanding what motivates the workforce of tomorrow 04 Closing the gap Aligning the construction industry with Gen Z’s aspirations 05 Proactively altering Gen Z’s perceptions Addressing the construction industry’s image problem 06 Refreshing the industry’s

The global construction industry is at a crossroads. In many regions, the

attractive out of the 11 industry sectors tested among students in BDO’s research. What is causing this talent crisis in the construction sector? Our research reveals misalignments between the values, expectations and priorities of the new generation entering the workforce and senior decision-makers in the construction industry. The good news is that these barriers are not insurmountable. Realignment is possible if construction companies are prepared to listen and adapt to the needs of Generation Z (Gen Z) – i.e. individuals born between the late 1990s and early 2010s. As the talent crisis intensifies, the construction industry needs to take a fresh approach to its talent strategies. Fresh thinking is needed to reposition the construction sector as an employer of choice for Gen Z, and to dispel the myths and misconceptions that are turning students away from the rewarding and varied career options that the sector can offer. At BDO we are committed to helping the construction industry to navigate these challenges. BDO commissioned global research across ten major markets for the construction sector among both students

and industry executives. Our goal was to understand what motivates Gen Z and what the construction industry needs to do to improve its perception among this demographic. We hope this report will be the start of a valuable conversation about how leaders in the sector can successfully navigate the challenges and opportunities ahead.

construction industry has rebounded after the pandemic. Half of the construction companies surveyed by BDO anticipate they will grow headcount during the remainder of 2023. As a result of wider societal shifts, demand for affordable housing, essential infrastructure and greener buildings is high. However, a perfect storm of challenges lingers on the horizon. Inflationary pressures, supply chain challenges and ongoing site delays resulting from COVID-19 cause continued uncertainty. These problems are worsened by the difficulties in attracting and retaining talent, particularly among the younger generation. Half of the construction companies surveyed by BDO say they find it very difficult to attract and retain early career professionals. Only 16% report no difficulties in hiring to fill vacancies. The construction industry must recognise that it risks not being able to meet demand if it cannot develop a reliable pipeline of young talent who see a bright future ahead for themselves in construction. Students are turning away from a career in the industry. Construction ranks as only the eighth most

approach to recruitment, retention and diversity

07 Conclusion

BDO’s message to Gen Z Practical lessons for construction executives 08 Countries in focus

Arjan Endhoven Head of Global Real Estate & Construction

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Employment growth The construction sector is bouncing back following difficult years and heavy impact on profits

01 Construction

Navigating the talent crisis Employment growth

All industries were blindsided by the experience of the COVID-19 pandemic three years ago, and the impact on the global construction sector was no less significant. BDO’s research shows that the construction industry faces a legacy of challenges arising both directly and indirectly from the pandemic. These challenges have been further complicated by the difficulty in recruiting and attracting skilled talent to meet current vacancies and anticipated future demand. THE LEGACY OF THE PANDEMIC ON CONSTRUCTION When asked to rate the biggest issues negatively impacting their profitability, construction sector executives cite disruptions to supply chain as the leading factor. Supply chain issues have caused delays in receiving building materials on site and have led to spikes in prices for raw materials in high demand. Nearly two thirds (63%) of survey respondents place this within their top four factors – see Figure 1. Executives report that the fragility of industry supply chains have resulted in a direct hit on their profit. For example, just over half (52%) of construction industry companies

surveyed by BDO reported a financial loss over the last 12 months due to the insolvency of a contractor, supplier and/or subcontractor. This happened with greater frequency across the most mature markets in our research, such as Norway, Belgium, Australia and USA, and among mid-market construction companies (i.e. those with revenues between $250 million and $1 billion). Alongside supply chain disruption, other issues top of mind for industry decision-makers include the real time impact of unprecedented high inflation on project budgeting, late payments by clients and ongoing site restrictions associated with COVID-19 safety policies. While macroeconomic factors such as inflation and supply chain disruption are likely to ease over the short to medium-term in many markets, executives say they are also concerned about the long-term recruitment crisis facing the industry. Staffing difficulties and labour shortages - both attracting young professionals and retaining skilled workers - is the second most frequently cited negative impact on profitability for industry leaders in our survey, as shown in Figure 1.

Disruptions to supply chain causing delays in receiving building materials and parts (and/or) causing increases in price and material costs

63%

Staffing difficulties and labour shortages (attracting young professionals, but also retaining skilled workers)

49%

Project budgeting vs. real time price increases on the construction site

47%

Delays in one or more project timelines/one or more projects suspended or placed on hold

approach to recruitment, retention and diversity

44%

07 Conclusion

Late payments by clients compared to 12 months ago (and/or) more requests for longer payment terms in new contracts

BDO’s message to Gen Z Practical lessons for construction executives 08 Countries in focus

42%

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Subcontractors and suppliers seeking shorter payment terms compared to 12 months ago

35%

Restrictions to the number of tradespeople on-site at a given time due to COVID-19

35%

Clients imposing more contractual risks on the construction company (especially for design and build contracts)

34%

16%

Intensified competition

Figure 1: Rate the most negative impacts affecting your profit in the last 12 months, if any. Anything else (please specify)

Figure 1: Rate the negative most impacts affecting your profit in the last 12 months, if any (Top four aggregated).

Our research suggests that hiring is likely to be most active for highly skilled roles, with skilled fieldwork, engineering and procurement roles most in demand across the sector globally – see Figure 2. Alongside these on-site technical roles, a range of other roles encompassing competencies such as data analytics, environmental expertise, computer science and health and safety are all cited as secondary areas of increased demand.

REASONS FOR OPTIMISM: DEMAND IS BOUNCING BACK Despite the issues noted above, executives in the construction industry remain optimistic about their future. They are gearing up for growth.

01 Construction

Navigating the talent crisis Employment growth

51%

More than half of those surveyed by BDO anticipate the size of their workforce will increase over the next six months. Confidence in project pipelines is returning throughout 2023 and beyond, to the extent that executives are looking to invest in hiring new staff or rehiring to replace those made redundant during the pandemic. In contrast, just 17% of construction companies anticipate their overall headcount will decrease this year. The USA, South Africa and the LATAM region all anticipate the largest increases in their workforce this year, with more than 60% of executives in each of these regions expecting to grow headcount throughout 2023.

Skilled field work

50%

29%

18%

Procurement and contracts negotiation skills i.e. with materials suppliers and service providers Engineering

41%

43%

11%

38%

44%

14%

Unskilled construction site labor

36%

22%

approach to recruitment, retention and diversity

Health & safety expertise

35%

47%

13%

07 Conclusion

Strategic leadership

33%

50%

13%

BDO’s message to Gen Z Practical lessons for construction executives 08 Countries in focus

Environmental expertise

32%

47%

13%

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Data analysis

31%

50%

13%

Computer science/coding

30%

43%

14%

13%

Finance and accounting

29%

55%

13%

Expertise in robotics & automation/Artificial Intelligence (AI) Legal, risk and quality knowledge

27%

55%

12%

27%

43%

14%

16%

Communications and PR

24%

55%

14%

Don't know Downsize No change Hire

Figure 2: Which of the following roles are you looking to hire or downsize at your company over the next 12 months? Figure 2: Which of the following roles are you looking to hire or downsize at your company over the next 12 months?

THE SKILLED WORKER SHORTAGE

01 Construction

Navigating the talent crisis Employment growth

Construction sector executives find themselves facing a dilemma. As confidence returns to the industry and macroeconomic shocks settle down, there is likely to be a shortage of skilled workers available to fill the vacancies needed to rebound quickly after three difficult years. Our survey presents several warning signs to which executives should pay close attention. 50% of the corporate decision- makers surveyed say they find it very difficult to attract and retain early career professionals to roles in the construction industry Ranking a difficulty level of 7 and above out of 10 on a scale of difficulty

What are some of the main skills that your organisation finds hardest to recruit? THE RECRUITMENT EXPERIENCE FOR CONSTRUCTION EXECUTIVES

“It is hard to recruit self-motivated and hard-working young adults.” - USA

“Finding young workers that are willing to give it their all.” - Australia

16% report no difficulties in attracting and retaining early career talent. 14% describe filling vacancies as ‘extremely difficult’ 9 or 10 out of 10 on the difficulty scale.

“Engineering. There are a lot of people with false degrees and at the moment the best way is to contact their referees to determine if they are legitimate.” - South Africa

approach to recruitment, retention and diversity

“General trades have been difficult - there is a labour shortage there. We do our best to plan resources to match volume but there isn’t much we can do when the workforce simply does not exist.” - Canada

07 Conclusion

BDO’s message to Gen Z Practical lessons for construction executives 08 Countries in focus

“The main qualifications that my organisation finds difficult are candidates with specialised technical skills and advanced soft skills such as leadership, problem solving and team collaboration.” - LATAM (Mexico)

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“People with management and leadership skills.” - Australia

“Experts in app development and cloud management.” - LATAM (Colombia)

Although the talent crisis is present across all markets in our research, it is most strongly reported by decision-makers in the Netherlands, Australia and LATAM.

> In the following sections of this report, we will uncover the reasons why Gen Z are turning away from a career in construction, and what strategies construction companies can take to overcome this talent crisis.

Gen Z Understanding what motivates the workforce of tomorrow

01 Construction

Navigating the talent crisis 02 Employment growth

The construction sector is bouncing back following difficult years and heavy impact on profits Gen Z Understanding what motivates the workforce of tomorrow 04 Closing the gap Aligning the construction industry with Gen Z’s aspirations 05 Proactively altering Gen Z’s perceptions Addressing the construction industry’s image problem 06 Refreshing the industry’s

The generation entering the workforce today has more choice than ever before about the career options available to them. Despite this, students still gravitate towards industries that have been popular with previous generations of graduates entering the workplace. The industries that appeal most to the Gen Z participants in our survey are technology, media and telecoms (42% of Gen Z surveyed report being ‘very interested’ in pursuing a career in the industry), life sciences and pharmaceuticals (41% ‘very interested’) and financial services (37% ‘very interested’).

Nearly a third of students (29%) report no interest at all in joining the sector upon graduation, with the remainder agnostic or in need of more information to convince them about the suitability of a construction career. GEN Z: AN EMPOWERED AND SOCIALLY MOTIVATED GENERATION What lies behind Gen Z’s reluctance to consider a career in construction? To answer this question it is important to understand what motivates this generation. When asked in our survey to rank the importance of 14 different factors when assessing their career options, students rank work-life balance and well-being as the top factor. Just under half (48%) describe this as ‘essential’ when assessing career options and a further 37% describe it as ‘important’ – see Figure 3.

Being respected and recognised for the work done Work-life balance/well-being

37%

48%

12%

37%

45%

Job security

11%

40%

43%

Career progression

11%

43%

41%

Working with interesting and diverse people Social purpose/doing something for the collective benefit Financial reward

12%

42%

41%

19%

39%

36%

approach to recruitment, retention and diversity

16%

45%

33%

07 Conclusion

Working in a highly respected profession

18%

41%

33%

BDO’s message to Gen Z Practical lessons for construction executives 08 Countries in focus

Flexible or hybrid working patterns

20%

37%

32%

28% In comparison, only

Having variety and change at work

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20%

41%

31%

Doing intellectually challenging work

17%

46%

31%

Opportunity to travel/mobility

15%

19%

34%

29%

of Gen Z said they were interested

Working on collaborative projects

10%

23%

37%

28%

Using cutting-edge technologies

10%

24%

38%

25%

in a career in construction.

Regional political affiliation

24%

29%

25%

15%

Not at all important Somewhat important Important Essential

Don't know

This places the sector eighth out of the 11 tested in our research for popularity.

Figure 3: How important are each of the following factors when assessing your future career options? Figure 3: How important are each of the following factors when assessing your future career options?

Factors such as doing intellectually challenging work, having variety at work and using cutting-edge technology rank towards the bottom of the list for Gen Z. Although these factors remain important for many, they are less critical than job security and well- being at work. THE IMPORTANCE OF ENVIRONMENTAL IMPACT Alongside social purpose, Gen Z tell us it is important to them that their career has a positive impact on the climate. 60% of the young people in our survey rate having a career in an industry that positively impacts climate change as at least a 7 out of 10 on a scale of importance, where 10 is extremely important. More than a quarter (26%) rate this as at least a 9 out of 10. Students from Brazil, LATAM, and South Africa are most likely to say that having a career in an industry that positively impacts climate change is highly important to them. There is a close relationship in our research between the markets that are most negatively impacted by the climate emergency and the desire among Gen Z that their future career has a positive impact on climate.

This suggests that Gen Z feel empowered to make conscious choices about how their career will fit around other aspects of their life such as family, friends and relationships. They want to enjoy their work and choose career options that will enhance their mental and physical well-being. However, Gen Z also feel strongly that they want to be recognised and respected for their contribution in the workplace: 45% describe this as ‘essential’ and 37% as ‘important’. Also among the top five factors shaping Gen Z’s decision-making is ease of career progression. Taken together, these two factors suggest that Gen Z place high importance on personal development and want to choose careers where they will be able to move up the career ladder quickly, in recognition of their performance. While financial reward is important to this generation - they are aware of the rising cost of living and want to be compensated fairly for their efforts - is it equally important to them that their chosen industry offers job security and long-term potential. Ranking just outside the top five factors are two factors that suggest that Gen Z are altruistically motivated. This generation place a high degree of importance on a career that has a social purpose or collective benefit, and the ability to work with a diverse group of people. This is perceived to be more important than the nature of the work itself.

01 Construction

Navigating the talent crisis 02 Employment growth

approach to recruitment, retention and diversity

07 Conclusion

BDO’s message to Gen Z Practical lessons for construction executives 08 Countries in focus

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Closing the gap Aligning the construction industry with Gen Z’s aspirations

01 Construction

Navigating the talent crisis 02 Employment growth

The construction sector is bouncing back following difficult years and heavy impact on profits 03 Gen Z Understanding what motivates the workforce of tomorrow Closing the gap Aligning the construction industry with Gen Z’s aspirations 05 Proactively altering Gen Z’s perceptions Addressing the construction industry’s image problem 06 Refreshing the industry’s

Our research provides very clear evidence about which factors drive Gen Z when they are selecting their future career. However, it also reveals three clear areas of misalignment that lie at the heart of the construction industry’s talent crisis. These are: Motivational misalignment Executive decision-makers in the industry are not in tune with the factors that are important to Gen Z when assessing their career options. 01

As well as misunderstanding the importance of financial reward, executive decision-makers also consider access to the latest technology to be a stronger motivating factor for Gen Z than the reality uncovered in our research.

Figure 4 shows that while just 25% of students believe that using cutting-edge technologies at work is an ‘essential’ factor for their career, 40% of executives believe this is ‘essential’ for Gen Z.

THE MOTIVATIONAL MISALIGNMENT

with half of C-suite respondents believing this is an ‘essential’ factor for Gen Z. In reality, this is only the fifth most important factor for Gen Z with only Executive decision-makers believe that Gen Z are most strongly motivated by financial reward, While Gen Z tell us they prioritise work- life balance and being respected at work as the most essential criteria when assessing the attractiveness of future career options, executive decision-makers in the construction industry are failing to recognise this.

48%

Work-life balance/well-being

47%

45%

Being respected and recognised for the work done

43%

Job security

36%

41%

approach to recruitment, retention and diversity

Career progression

43%

41%

Financial reward

07 Conclusion

50%

Perception misalignment Gen Z don’t believe a career in construction will fulfill their most important career aspirations.

BDO’s message to Gen Z Practical lessons for construction executives 08 Countries in focus

36%

Social purpose/doing something for collective benefit

26%

33%

Working with interesting and diverse people

31%

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33%

Working in a highly respected profession

37%

ESG misalignment (environmental, social and governance) The construction sector is seen by Gen Z as falling behind expectations on its environmental impact as well as broader social commitments.

32%

Flexible or hybrid working patterns

36%

31%

Doing intellectually challenging work

28%

31%

Having variety and change at work

27%

29%

Opportunity to travel/mobility

14%

27%

26%

Working on collaborative projects

23%

25%

Using cutting-edge technologies

40%

citing it as ‘essential’.

Students Corporates

Figure 4: Importance of the following factors when assessing future career options – showing % ‘essential’ Figure 4: The importance of the following factors when assessing future career options – showing % ‘essential’

factor for Gen Z. However, less than half (48%) agree that a career in the construction industry offers good work-life balance and autonomy – see Figure 5.

01 Construction

which our research reveals as the two largest gaps in between the two groups. job security and social purpose as motivating messages for Gen Z, As a result of this misalignment, executives are not putting enough emphasis on the factors that matter most to Gen Z. They are neglecting the importance of

Navigating the talent crisis 02 Employment growth

Total Agree 77%

It requires physical effort

44%

34%

14%

71%

It requires a high degree of collaboration

31%

43%

15%

61%

The workforce is diverse

19%

42%

21%

58%

It is financially rewarding

22%

36%

21%

It is intellectually challenging, with constantly changing work

57%

22%

35%

23%

57%

It is technologically advanced

20%

37%

25%

approach to recruitment, retention and diversity

57%

It offers job stability

17%

40%

22%

11%

07 Conclusion

BDO’s message to Gen Z Practical lessons for construction executives 08 Countries in focus

48%

It offers good work-life balance and autonomy

14%

34%

28%

12%

10%

47%

It offers flexible or hybrid working patterns

16%

31%

22%

19%

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THE PERCEPTION MISALIGNMENT

It has a positive impact on communities and the environment

45%

17%

28%

13%

Students are clear about what they value from a future career, but do they believe a career in construction can give them what they are looking for? The results of our research suggest there is a strong misalignment in perception between what Gen Z are looking for and what they perceive a career in the construction industry can offer them.

44%

There is relatively easy career progression

12%

32%

28%

13%

12%

Employees' mental health, personal relationships and social activities are well managed

40%

16%

24%

30%

14%

12%

40%

It offers a high degree of international travel

13%

27%

19%

Don't know Strongly disagree Disagree Neither

Agree Strongly agree

Figure 5: To what extent do you agree or disagree with the following statements about a career in the construction industry? – STUDENTS Figure 5: To what extent do you agree or disagree with the following statements about a career in the construction industry? – STUDENTS

For example, ‘work-life balance and well- being’ is reported as the most ‘essential’

pursuing a career in the sector, relative to more attractive industries such as financial services, pharmaceuticals or technology.

Other important perception gaps emerge in the way Gen Z perceive the construction industry:

01 Construction

Navigating the talent crisis 02 Employment growth

Just 40% agree that employees’ mental health, personal relationships and social activities are well managed in the construction industry. Gen Z place high importance on well-being in the workplace. Just 44% agree that there is relatively easy career progression within the construction industry. Gen Z show a strong preference for careers that reward and respect effort through rapid development and progression. Just 57% agree that the construction industry offers job stability, yet this is the third most important criteria for Gen Z when selecting a job.

THE ESG MISALIGNMENT

6 in 10 With among Gen Z rating a career in an industry that positively impacts climate change as highly important to them it is noticeable that students in our survey consider the construction industry to be one of the most environmentally detrimental sectors.

57%

44%

approach to recruitment, retention and diversity

07 Conclusion

BDO’s message to Gen Z Practical lessons for construction executives 08 Countries in focus

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40%

A third of those surveyed (32%) say the construction industry has a net negative

impact on climate. This is second only to the manufacturing and industrial sector, which 43% believe has a net negative impact on the environment. Among students surveyed by BDO just 36% consider real estate and construction to have a net positive impact on climate. Yet is it not just its perceived negative environmental impact that causes Gen Z to turn away from a career in construction. Only

The positive attributes that Gen Z most associate with a career in construction – that it is collaborative and financially rewarding – are of secondary importance to them when evaluating their career options. This suggests that without a fundamental shift in the way Gen Z perceive the construction industry, fewer and fewer graduates will prioritise

45% of those surveyed by BDO believe the construction sector has a positive impact within communities. For this new generation entering the workplace, the belief in the power of work to ‘do good’ is strongly held and they look to potential employers to deliver tangible impact in these areas.

Proactively altering Gen Z’s perceptions Addressing the construction industry’s image problem

01 Construction

Navigating the talent crisis 02 Employment growth

The construction sector is bouncing back following difficult years and heavy impact on profits 03 Gen Z Understanding what motivates the workforce of tomorrow 04 Closing the gap Aligning the construction industry with Gen Z’s aspirations Proactively altering Gen Z’s perceptions Addressing the construction industry’s image problem 06 Refreshing the industry’s

To counter the misalignments highlighted through BDO’s research, executives in the construction industry need to work hard to dispel the myths that dominate Gen Z’s thinking about the industry. Our research suggests that there are three main areas in which construction industry decision- makers need to focus. First, challenging tired stereotypes about construction that linger in the minds of Gen Z. Second, expanding Gen Z’s view about the roles available within the construction sector. Third, exploring the positive impact that the sector can have in the race towards net zero carbon.

Given that Gen Z strongly prioritise the importance of health and well-being at work, employers in the construction sector need to demonstrate that they care about the well- being of their employees. While some roles in the sector undoubtedly involve a degree of physical labour, this is an over-simplified stereotype about working in the sector that does not reflect the broad range of roles on offer to graduates.

Risk of injury and/or mental health hazards

55%

Potential for hard physical and manual work

40%

Working six or more days a week

32%

Low wages compared to many other industries and/or the risk of delays in paying salaries

28%

approach to recruitment, retention and diversity

Having to relocate to a construction site in a new region or country every few years

25%

07 Conclusion

BDO’s message to Gen Z Practical lessons for construction executives 08 Countries in focus

Negative environmental impact

23%

DISPELLING STEREOTYPES ABOUT CONSTRUCTION

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Potential occurrence of discrimination, harassments, bullying, or unfair treatment

15%

Students tell us they are put off by a career in construction due to perceptions that it represents hazardous and hard physical working conditions. Over half (55%) of Gen Z surveyed by BDO said they believe a major drawback to working in construction is the risk of injury and/or mental health hazards – see Figure 6. Across all markets in BDO’s research, the top two drawbacks consistently cited by students were the risk of injury and/or mental health hazards, and potential for hard physical and manual work.

Less diversity and inclusion

12%

Bad reputation, negative press and media coverage

11%

Poor link between sustainability and construction methods/materials

11%

Students

Figure 6: In your opinion, what are some of the biggest drawbacks to working in the construction sector? Figure 6: In your opinion, what are some of the biggest drawbacks to working in the construction sector?

BROADENING THE HORIZONS OF GEN Z BEYOND TECHNICAL ENGINEERING ROLES Figure 6 shows that Gen Z still largely retain an old-fashioned view of the construction sector: that it is predominately challenging, manual labour, often requiring work six days a week and with less financial reward or job security on offer than other industries. The reality is very different. Executives need to work hard to counter this perception by explaining the diversity of roles and opportunities available to graduates entering the construction sector. Our research shows that Gen Z strongly associate a career in construction with competencies such as engineering, health and safety expertise and skilled fieldwork. They are less likely to see the relevance of wider skills such as finance and accounting, data analytics, computer science or legal expertise. Among the students who are most open to consider a career in construction, we see they are most likely to be drawn to project management and construction management roles (55% say they are most interested in these roles), closely followed by site engineers, engineering managers and technology experts. This group is largely comprised of males who are already studying engineering or other scientific disciplines. The task for construction executives is show a broader cohort of students that there are relevant options available to them.

REPOSITIONING THE ESG NARRATIVE FOR CONSTRUCTION Executives in construction need to work hard to reverse Gen Z’s perception that the construction sector has poor ESG credentials relative to other industries. Many students base their understanding on the most visible signs of the construction industry - pollution, noise, waste, and disruption to communities – without a deeper understanding of the positive strides the industry is taking on ESG- related issues. support the transition to net zero carbon emissions For example, our research suggests that most students do not fully understand the work being done to through the construction of new, energy efficient buildings and the retrofitting of older assets to bring them up to contemporary green building standards.

01 Construction

Navigating the talent crisis 02 Employment growth

The construction sector is bouncing back following difficult years and heavy impact on profits 03 Gen Z Understanding what motivates the workforce of tomorrow 04 Closing the gap Aligning the construction industry with Gen Z’s aspirations Proactively altering Gen Z’s perceptions Addressing the construction industry’s image problem 06 Refreshing the industry’s

approach to recruitment, retention and diversity

07 Conclusion

BDO’s message to Gen Z Practical lessons for construction executives 08 Countries in focus

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01 Construction

Our research reveals there is a window of opportunity to make this argument to the upcoming generation. However, this window may be closing quickly. There is a strong correlation in our research between perceptions about the construction industry’s climate impact among this generation and their level of interest in the industry. In markets such as South Africa, Australia and USA, where understanding of construction’s role in improving climate outcomes is strongest, we see Gen Z most open to consider a career in construction. In other markets, such as Canada, Norway, Belgium and Brazil, there is a much greater need to convince students of the industry’s ESG credentials. meet their net zero pledges over the next decade. This work is vital if national governments are to In the same way, the construction sector can provide important community benefits such as local employment, community regeneration and support for local businesses and suppliers.

Navigating the talent crisis 02 Employment growth

The construction sector is bouncing back following difficult years and heavy impact on profits 03 Gen Z Understanding what motivates the workforce of tomorrow 04 Closing the gap Aligning the construction industry with Gen Z’s aspirations Proactively altering Gen Z’s perceptions Addressing the construction industry’s image problem 06 Refreshing the industry’s

approach to recruitment, retention and diversity

07 Conclusion

BDO’s message to Gen Z Practical lessons for construction executives 08 Countries in focus

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Refreshing the industry’s approach to recruitment, retention and diversity

01 Construction

Navigating the talent crisis 02 Employment growth

Now is the time for decision-makers in the construction industry to radically rethink their approach to talent attraction and retention, to close the gap on other industry sectors that are perceived as much more appealing to Gen Z. Our research shows that current recruitment strategies are not delivering the desired results for construction organisations. Decision-makers should consider making improvements in three specific areas to address this: improving gender diversity, aligning messaging with Gen Z’s interests, and prioritising effort in the most effective communication channels. ADDRESSING THE GENDER DIVERSITY CHALLENGE Gender is a critical factor in our research. males much more likely to be interested than females. We found that gender was significantly associated with an interest in a career in construction, with

Many construction executives have already recognised this challenge,

ALIGNING RECRUITMENT MESSAGING ABOUT CONSTRUCTION As illustrated in earlier sections of this report, there are significant areas of misalignment between the perceptions of Gen Z and construction industry executives about career in the sector. One way to close this gap is for industry decision-makers to ensure their recruitment strategies focus on the messages that resonate most strongly with Gen Z. In addition to emphasising aspects of a career in construction that are top of the Gen Z wish list – such as work-life balance, well-being, career progression and recognition – there are a number of specific messages that Gen Z tell us are of most interest to them.

with 58% saying they have programmes and processes in place to attract a diverse workforce.

58%

A further 12% in our research were unaware of what initiatives, if any, exist in their organisation to address diversity. However, this leaves more than a third (37%) of corporates without specific plans to address the gender diversity challenge.

Refreshing the industry’s approach to recruitment, retention and diversity

37%

07 Conclusion

BDO’s message to Gen Z Practical lessons for construction executives 08 Countries in focus

Australia Belgium Brazil Canada Latin America The Netherlands New Zealand Norway South Africa USA 09 About BDO’s research 10 How BDO can help

12%

56%

01 Construction

Promoting new science involved e.g. green building materials, energy efficient construction materials, etc

Navigating the talent crisis 02 Employment growth

56%

Other areas where Gen Z believes the industry needs to do more to attract new talent into the sector include highlighting the digital skills and technological innovations at the heart of the industry, emphasising the role the industry plays in the green transition and promoting equality of opportunity and diversity in the workplace through more open corporate structures. for example the design and installation of green, circular and energy efficient building materials – see Figure 7. of students say they would encourage construction industry companies to focus on promoting the new science involved in the industry,

Highlighting the digital skills and the technological innovation required

34%

Contributing to the overall energy transition

34%

Developing less traditional corporate structures to encourage equal opportunities and career progression

31%

Refreshing the industry’s approach to recruitment, retention and diversity

Advertising the positive sustainable changes happening in the sectors, e.g. on social media

29%

07 Conclusion

BDO’s message to Gen Z Practical lessons for construction executives 08 Countries in focus

Improving the business thinking around ESG

26%

Australia Belgium Brazil Canada Latin America The Netherlands New Zealand Norway South Africa USA 09 About BDO’s research 10 How BDO can help

Better diversity including gender balance in boardrooms, senior roles, etc

26%

Improving the business thinking around HSE (Health, Safety and Environment)

25%

Students

Figure 7: In which of these areas should the construction sector focus to encourage more young talent to join? Select up to three. Figure 7: In which of these areas should the construction sector focus to encourage more young talent to join? Select up to three.

RECRUITMENT CHANNELS: A WARNING ON DIGITAL When engaging with potential employers about job opportunities, by far the most favoured channel by Gen Z is email: 63% of students select this as their preferred method of contact. Surprisingly, fewer Gen Z said they preferred the use of social media platforms like LinkedIn (26% preferred), SMS (25%) or specialist recruitment platforms such as Indeed (17%). Our research shows that corporates tend to favour social media outreach with 54% of decision-makers saying they are utilising these channels, and 46% utilising recruitment platforms. These channels can play a significant role in raising the profile of the construction industry as potential employers, through communication of key messages about the industry and dispelling of industry myths. However, they are less effective in establishing one-on-one communication with Gen Z about specific career opportunities.

01 Construction

Navigating the talent crisis 02 Employment growth

What steps are you taking to tackle this skills shortage? What strategies does your organisation have in place for attracting young talent? LEARNING LESSONS FROM PEERS

“Hiring employees that qualify for the job seems easy but it is hard work and it definitely takes time. So we’ve started to recruit people and train them on site - most people adapt to learning hands on.” - USA

Refreshing the industry’s approach to recruitment, retention and diversity

“Participation in job fairs and careers events to show the company and the sector to young talent. Effective communication of company culture and career opportunities.” - LATAM (Mexico)

07 Conclusion

BDO’s message to Gen Z Practical lessons for construction executives 08 Countries in focus

“…to tackle the shortage we will as a company give bursaries to students who are interested in doing engineering studies, then after they finish the degree we hire them to work for us as interns.” - South Africa

Australia Belgium Brazil Canada Latin America The Netherlands New Zealand Norway South Africa USA 09 About BDO’s research 10 How BDO can help

“Increased compensation and benefits and also attempt to take the time to show them what a future in this field can lead to.” - Australia

“We have been more flexible on working from home and have had to negotiate starting salaries and hiring bonuses with younger staff.” - USA

Conclusion BDO’s message to Gen Z

01 Construction

Navigating the talent crisis 02 Employment growth

The industry is becoming more inclusive. Most construction companies are taking active steps to appeal to a more diverse and inclusive workforce. They are shaking off stereotypes that the industry is male-dominated, and are improving gender balance and well-being in the workplace.

The construction industry is calling out for fresh talent to help it address some of the biggest challenges facing society today. A career in construction provides an opportunity to be a genuine change-maker. It offers the opportunity to work at the cutting edge of new developments in science, technology and social impact. Will you be the one to respond to the industry’s call? Here are five reasons why Gen Z should take a second look at a career in the construction industry.

The industry is actively recruiting. Most companies in the sector tell us they have plans to expand their workforce. As demand rebounds off the pandemic, the industry is actively hiring and seeking fresh graduates and early career professionals.

The opportunity to deliver genuine social and environmental impact is high. By joining the construction industry there is an opportunity to be a genuine change-maker, working on projects at the forefront of green building, community infrastructure and social impact.

The roles on offer are diverse. A career in construction is about much more than engineering or project management. While these skills are in high demand, the construction industry is also looking for talent with a wide range of skills, degree subjects and experiences.

Australia Belgium Brazil Canada Latin America The Netherlands New Zealand Norway South Africa USA 09 About BDO’s research 10 How BDO can help

The sector offers long-term career prospects. With demand in construction high,

construction companies are investing more in skills development to offer long-term growth opportunities for early career professionals.

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