Solving the Talent Shortage

By most surveys the revenue growth rate in the AE industry is around 10%. However, according to the U.S. Bureau of Labor Statistics the workforce is only increasing at a net rate of 2%. This creates a tremendous challenge to produce more work without the workforce to support it.

The labor shortage has led firms to compete fiercely for talent, resulting in high turnover rates, increased labor costs, and soaring recruitment expenses. However, there is a more sustainable and cost-effective alternative to simply poaching employees from competitors.

Revenue per employee trend

Employee productivity has exhibited consistent growth over the preceding two decades. As illustrated by the accompanying graph, individual productivity, quantified by revenue per employee (net of inflation), has registered an impressive cumulative rise of 34%. Reviewing the factors that have contributed to this trend will lead to strategies to perpetuate and amplify this momentum. Presented below are four pivotal factors that warrant careful consideration and targeted focus:

1. Embracing and Investing in Technology: Over the past two decades, technology has advanced at an unprecedented rate. Tools like computer-aided design, database management, and spreadsheet analyses have been major contributors to increased revenue per employee. This trend is likely to continue, making investments in emerging technologies such as artificial intelligence a wise choice for firms looking to stay competitive and efficient.

2. Accelerating Employee Development: Traditionally, employee development has been measured in time segments. However, expediting development through enhanced mentoring, internal training systems, and third-party support can create a more skilled workforce in a shorter amount of time. Firms that fast-track their employee development will be capable of delivering at higher production rates.

3. Prioritizing Management Training: Management training programs have steadily increased in priority. According to a 2022 Deltek survey 49% of the architects and engineers identify investing in training as their number one priority for project management. This is a significant upward trend from 2019 when it was the fourth priority with 36% of the firms intending to invest in training. These programs continue to evolve and focus on equipping leaders with the business skills and efficiency-enhancing abilities required to increase revenue per employee.

4. Balancing In-Office and Remote Work: The post-COVID workforce has embraced remote working, potentially trading commuting time for increased production time. However, a recent roundtable discussion with 30 industry leaders confirmed that this has been a significant challenge to manage. It is clear from the discussion that firms that are able to find the right balance between in-office and remote work will be poised to maximize their productivity. While this shift may take time to settle, the group was convinced that solid leadership and creating a defined culture will lead the way to balancing the workforce.

Firms that only focus on finding and hiring talent without measuring and investing in productivity, will ultimately be left behind by more innovative and efficient competitors.