Good News/Bad News

July/August 2015

IN FOCUS: EMPLOYMENT
Good News/Bad News

How you view the state of engineering employment may depend on whether you’re a professional making a move or an employer scrambling for talent.

BY EVA KAPLAN-LEISERSON

Amajor change in US companies’ economic outlook has big implications for engineering employment. This year, for the first time since the recession, economic considerations are not top of mind for firms. Instead, marketplace competition has taken over as the chief concern, according to staffing company Randstad Engineering.

But to compete in this recovering economy, companies need people. And employers report a desperate need for talent that could affect their ability to get work done. Bad news for them; good news for engineers looking for new opportunities.

Jay Rogers is Randstad Engineering’s vice president of recruiting. He explains that the company’s clients are moving away from business as usual to a growth mindset. But every day the number of candidates available for Randstad to submit for a job is decreasing. “It’s harder and harder for us to source candidates that are qualified and ready to go,” he says.

Or as Dave Burstein, P.E., director of client services for AEC management consulting firm PSMJ Resources, Inc., put it in “Outlook: Optimism and Opportunity” (March PE), “Good [engineers] with experience are almost impossible to find. The biggest threat involves not being responsive to clients, not getting work done on time, and not doing quality work due to a shortage of professionals.”

It’s definitely a candidate’s market, says Rogers. In fact, NSPE’s 2015 Engineering Outlook Survey found increased optimism among engineers about the job market and advancement opportunities. Seventy-seven percent of participants in the survey said that the job market was good, up from 62% two years earlier (see June PE). In addition, 71% of this year’s respondents reported satisfaction with opportunities for professional advancement in the field.

“It’s a good time to be an engineer,” notes Rogers.

Missing Candidates
The talent crunch exists across the board, but the strongest activity, according to Randstad, is in manufacturing, procurement, and construction. Electrical, mechanical, and quality engineers are especially in demand.

Rogers notes several geographic areas that are particularly hot: Detroit, as the automotive industry recovers; Houston, due to oil and gas and other industries; and Los Angeles, with aerospace and medical device manufacturing.

NSPE member Jeff Roman, P.E., is seeing a lack of quality mechanical, electrical, and plumbing (MEP) engineers for the building industry as well as structural engineers. “We have plenty of work right now,” says the national director of engineering for design firm Little, which has offices in North Carolina, California, Florida, and the Washington, DC, area, as well as Beijing. “The thing holding me back is the ability to hire people. We just can’t find them.”

In talking to colleagues at other firms, he hears similar stories. “We’re all getting busier, we all want to grow teams, we’re all fighting for the three people available.”

Roman explains that when the company posts ads, it hears from recruiters presenting candidates rather than engineers looking for opportunities. “It’s a new reality to get used to,” he says. And it means Little now has to plan for and budget recruiter fees. The company has had to pay such fees for twice as many people in the last year and a half than in the last 10 years total (six versus three).

The types of candidates that recruiters are shopping around has changed as well. “It used to be you’d only deal with recruiters for senior [or] leadership openings,” Roman says. “Now we’re getting recruiters presenting us with three-year EIs and CAD designers.”

Roman is trying to figure out why candidates aren’t answering ads on their own. “We lost some really good people out of the industry during the recession,” he says. “I watched licensed engineers get laid off. I think some people left the profession and haven’t come back.”

He hypothesizes about other reasons for the dearth of applicants: engineers’ loyalty to companies that kept them on during the tight times, employees who work in leaner companies and don’t have time to look, or people finding themselves underwater in the housing market with an inability to move.

Roman has tried many different methods to source candidates. He’s reached out to friends and to people in other areas of the industry, such as developers, contractors, and vendors. “Have you heard of anyone looking?” he asks. But even when he contacts a lead, he hears that the person isn’t interested.

“When did a great culture, great projects, and competitive compensation become not enough?” he asks.

Pay’s Importance
Despite the increasing difficulty of finding talent, companies have been slow to raise salaries. “The only thing holding back some of the engineers from going out and looking is that salaries haven’t increased as much as candidates would like to see,” says Rogers. And employees who are in line for a promotion may not want to start over as the new person somewhere else.

Only about a third of the engineering executives and hiring managers responding to Randstad’s trends survey said they were offering higher salaries than a year ago.

Randstad expects pay will continue to rise as the economy recovers and companies compete more for people. According to Rogers, firms that realize a bidding war is occurring are starting to increase pay.

He emphasizes the importance of not low-balling candidates on their salary requirements, noting that Randstad is seeing more rejected offers. “The price is the price,” he says.

But Roman explains that his company is already offering competitive salaries, and two years ago had no trouble landing people. Now when he asks for feedback from people who turned down offers, the issue hasn’t been salary. “Job offers are turned down for surprisingly minor reasons,” he says, like the city the position is in. And candidates aren’t countering the company’s salary offers, just declining them.

“The few [engineers] on the market are finding [a lot of] opportunities and can wait longer and find something in the area they’d like to move to, or be pickier about opportunities,” he says.

That even goes for new college graduates who are asking a lot more questions and doing more research before selecting an opportunity, Roman adds.

Trying Everything
Little is attempting “everything and anything” to find people interested in open positions. Roman explains the company is using LinkedIn (both postings and keyword searches) and recruitment bonuses for current employees, as well as simply asking people at industry events if they’re looking.

Expanded recruitment channels, such as social media, is the top strategy engineering companies are using to improve recruitment, according to Randstad (51% of survey respondents said they were using this technique). Rogers points to LinkedIn and Twitter as the most important options, and notes the usefulness of blogs. But he quotes the adage “Content is king.” People won’t visit a blog or a website without it, he points out. “Make sure you put good content in that’s relevant. Relevancy is key.”

Another primary method for companies is developing relationships at local colleges and universities (45% of engineering respondents in Randstad’s trends study have done so). Rogers says companies are fighting for interviewing space on campuses. And they’re talking to students earlier, such as at the end of the junior year, and offering paid internships and cooperative opportunities.

Andrew Rhodes, P.E., senior design engineer at MEP building systems company Southland Industries, says the company’s biggest strategy is to target key colleges and universities to recruit interns. “We integrate ourselves into the schools by attending events, guest lecturing in classes, and exposing students to the company early in their college careers,” he says. That lets company representatives identify key candidates and demonstrate what Southland has to offer before internship interviews, he adds.

The strategy has been successful, the PE says. And hiring full-time candidates from within the internship program has increased retention rates.

Process Improvement
Companies should also look at their overall practices and make improvements. Southland has a formal recruiting plan that’s updated annually. “This process gives us a great opportunity to review our efforts, refocus where needed, and continually improve our recruiting,” Rhodes says. He also advises tracking recruiting costs in order to spend money on the activities and events that provide the best return.

Rogers says companies need to work on their hiring timelines. Busy and understaffed, they may be slow in reviewing applications and hiring. But candidates are receiving multiple offers, he emphasizes, and the longer the process, the greater the chance that the candidate will either accept another offer or take a counter offer from their current employer.

“[Companies] need to know what they’re looking for, have the interview process defined, and make decisions quickly,” he says. That includes knowing the needs versus wants for candidate qualifications, so if a firm finds a candidate who meets some but not all requirements, the interview process isn’t delayed.

For retention, engagement surveys can help determine what engineers want and what’s important to them, says Rogers.

These discussions can also occur in the performance management process. Anika Moore is the HR business partner at civil engineering and surveying firm Gewalt Hamilton Associates Inc. One of her first steps in starting in the role in January was to meet with employees to discuss career goals, work satisfaction, and retention. She is also taking a five-month employee engagement class.

When Lou Bilancia, P.E., was director of design validation at a domestic biomedical electronics manufacturer, he managed a team of 25. An analysis found that his department had the lowest turnover in the company, and the HR director asked him how.

Many of the tips the NSPE member offered were about supporting the employees’ own development. “Find out what the engineers want to do with their jobs and careers, then give them one or more productive and relevant tasks that support both those goals and the company goals,” he says.

He also suggests training that’s relevant to company work and new techniques or tools as well as training requested by employees. And he says that workers should be required to update resumes annually; this forces them to think about and recognize progress they’ve made.

Although employers may fear that some of these steps would speed their people out the door, Bilancia disagrees. “I think one of the reasons engineers leave is when a job becomes mundane. They leave because they want to learn and grow—if they are [doing so in their current position], that takes away the restlessness.”

Talent Acquisition
For companies having trouble finding people, mergers and acquisitions can be an option to explore.

Al Lautenslager is managing partner at Stonemill Partners Inc., an M&A advisory firm focusing on engineering and architectural companies. Stonemill represents both buyers and sellers and manages steps all along the process such as marketing, matchmaking, due diligence, purchase agreements, contract development, and financing.

Lautenslager explains that companies can use a merger or acquisition to add both capacity and skills instead of turning away business due to lack of staff, which is something he’s seeing more and more.

Engineering firms whose clients have returned to request services post-recession may have cut back on employees and not yet have the capacity to do the work, he says. “No one likes to turn down business.”

The numbers can be in favor of an M&A approach, Lautenslager explains. A company might pay an engineer $100,000 plus spend another $75,000 for benefits, training, computer equipment, and so forth. A business selling for $1.75 million might be bought with 10% down, and, for that same $175,000, come with 25 people along with client lists and relationships.

But it’s important to investigate “fit, focus, and culture,” he says. “You [need to] like each other if you want to join forces.”

Whatever the methods that companies use to add and keep talent, these will continue to be critical tasks for the future. The need for talent is only going to increase as more baby boomers exit the workforce.

For more from Lautenslager, see “Meeting the Talent Challenge: Growth by Acquisition.”