Construction companies often begin a perpetual cycle of project-based debt — secure and finance a project, invest in its execution, manage the day-to-day costs, generate cash flow, pay off debt, and repeat.

While this pattern helps keep businesses afloat in their early years, it forces tactical decision-making which inhibits long-term success. The reactive cycle encourages short-term choices over scalable growth and sustained profitability.

Even as construction companies build their reputations and capabilities project by project, the habit of constant short-term thinking becomes deeply ingrained, slowing their ability to evolve into true industry leaders.

Breaking that cycle requires a shift: companies that build a strong human resource (HR) infrastructure — driven by data and supported by efficient tools — can evolve from tactical planning to true strategic operations, delivering stronger return on investment (ROI) (Exhibit 1).

The Never-Ending Talent Crisis

When companies lack a dedicated HR infrastructure, every project becomes a staffing emergency.

Rather than building long-term workforce stability, they scramble to fill immediate needs. Instead of developing talent between projects, they lose skilled workers to competitors. In place of creating systems for consistent onboarding and training, they reinvent the wheel with each new hire. Meanwhile, every minute is spent on low-level administrative tasks that competitors are increasingly automating.

These inefficiencies undoubtedly compound over time, draining resources that could be invested in growth and innovation.

Construction companies have spent years fighting project delays and abandonments that eat up profit margins and scalability. While multiple factors contribute to these challenges, inadequate HR systems amplify the problem by keeping companies locked in survival mode.

Conversations about construction labor shortages continue to dominate industry headlines and boardroom discussions precisely because so many companies lack the foundational structures needed to build workforce stability.

Hiring more people to support the work is simply a short-term patch. Sustainable solutions require investing in systems, processes, and technology that enable strategic planning by strengthening the company’s workforce.

Construction-Tailored HR

According to the 2024 Workforce Survey Analysis by the Associated General Contractors of America and Arcoro, 21.95% of construction companies operate without a dedicated HR team.¹ This raises critical questions: Who is handling recruiting? Employee onboarding? How about the company’s retention strategies?

Knowledge Gaps

For years, HR in construction meant the office manager wearing multiple hats: CEO assistant, payroll clerk, hiring administrator, and part-time HR professional.

Today, workplaces have shifted to prioritize more formalized roles, which has led to a wave of trained HR professionals entering construction. However, many of them are coming from outside of the industry, leading to a growing need for construction-specific HR expertise.

Generic HR solutions often fall short because the construction industry’s hiring culture differs fundamentally from other sectors. Instead of steady corporate headcount growth or seasonal hiring cycles like retail, construction operates on project-driven surges — rapidly hiring sometimes hundreds of tradespeople and often offboarding and rehiring the same workers multiple times throughout the year.

Manual Processes

Too many construction companies still rely on a massive spreadsheet to manage every aspect of the HR process — from tracking paid time off and changing qualifying life events to coordinating job postings, interviews, and offer letters.

Union hiring adds even more complexity — often managed through equally manual, disjointed processes.

Strategic vs. Tactical ROI

Tactical HR management manifests in time and material costs, including hours spent on low-level administrative tasks such as filing and searching for paper documents.

A more strategic plan embraces dedicated HR professionals equipped with construction-tailored HR software that streamlines the HR process and creates opportunities for companies to invest in their long-term success.

Under these circumstances, the HR department can shift to focus on priorities such as:

• Developing employee engagement and culture-building programs.
• Acting on feedback from employee groups and committees.
• Revamping recruiting and onboarding strategies.

Increasing engagement with unique career development opportunities.²

The scale of these challenges is amplified in construction, where instead of hiring one person every few months, companies are onboarding rooms full of employees — often directly from trailers on active jobsites.

For example, an electrical contractor in California onboarded over 5,000 union workers in one year. Without automation, HR teams may spend countless hours shuttling paperwork between offices and jobsites. With streamlined HR systems, the contractor successfully reduced both HR and payroll processing time.