Employee retention in the construction industry: Metrics and tips

The construction industry is facing major shortages with 70% of companies struggling to hire qualified workers. The industry will need 1.9 million more employees over the next decade just to keep up with projected exits and retirements. And this is without taking growth into account. Associated Builders and Contractors projects that the industry will require an additional 350,000 workers in 2026 alone. 

This turnover and growth affects more than head count – it impacts job quality, team morale, and project timelines. When construction companies use the right strategies, they create an atmosphere that attracts new hires and maintains a steady workforce.

In this guide, we break down employee retention in the construction industry, including why workers leave, how turnover impacts operations and profitability, and which practical strategies contractors can apply to build a stable, long-term workforce.

Why is employee retention important in the construction industry?

Employee retention directly affects project costs, profitability, and outcomes. Here’s how a rising construction turnover rate impacts your entire operation.

Influences work quality

Losing team members throws off your processes. With fewer hands on deck, the remaining crew may overstretch themselves and make mistakes. And when a veteran worker walks off a job, they take years of accumulated know-how with them. 

Even highly skilled replacements need time to adjust to new processes and team dynamics. Those early weeks are often less productive and, if poorly managed, may result in delays that affect client and general contractor relationships.

The longer you retain satisfied employees, the stronger your team becomes. Long-tenured workers have the time to build institutional knowledge, and retaining them means you’ll have people in the field you can trust to do their jobs well.

Affects timely completion

When people leave mid-project, progress often slows until replacements get up to speed. This issue compounds when experienced workers leave. For instance, a new electrical foreman won’t have project-specific cost codes memorized, and new excavation workers may be less familiar with sloping, foundation, and soil analysis requirements than tenured employees. These gaps in operational knowledge create delays that trickle down through the schedule, pushing back subsequent phases.

Impacts profitability

The cost of replacing a construction worker can be 50–200% of their annual salary. If an employee leaves after onboarding, the investment made to get them productive is wiped out, and companies must start over – doubling recruiting and onboarding costs while pushing productivity further out.

But hiring and training fees are only part of the picture. Churn reduces the overall experience and productivity of your team, negatively impacting project outcomes and timelines. 

New workers lack job-specific knowledge, and while they’ll eventually ramp up, the introductory period introduces delays. This forces companies to choose between accepting late completion penalties or paying premium rates to accelerate work. Either option cuts into already thin margins on competitively bid projects, making retention challenges a direct threat to profitability.

10 employee retention strategies for the construction industry

Turnover is closely tied to how companies organize work and support employees. If you’re looking to keep people on board longer, focus on the following 10 employee retention factors.

1. Offer competitive compensation

Gallup reports show that the top reason people left their previous job was to search for better pay and benefits. Companies keep their best people on board by compensating them fairly for their hard work.

Focus on offering fair wages for each role. Check salary websites and government data for industry standards, and adjust pay based on employee experience and location. Beyond base pay, offer bonuses, cost of living increases, and clear growth paths to further encourage retention. 

2. Create comprehensive benefits packages

By nature, construction is a risky industry. Injuries like falls, electric shock, and power tool slips threaten workers every day. Responsible companies offer comprehensive health benefits to support their people when injuries occur. Top plans cover bigger deductible percentages, emergency care, and prescriptions. 

Benefits also extend beyond healthcare – 401(k)s, health savings accounts, and fitness plans all promote employee well-being. Comprehensive packages are worth the investment: 73% of employees report being more likely to stay with a company that offers good benefits. 

3. Provide fair per diems

Sometimes, field crews need to drive across or out of town to reach jobsites. When they do, make sure you provide per diems to support them. In construction, this often translates to gas and mileage costs, and reimbursements can scale as distances increase. 

Miter makes per diem management easy, calculating payments based on the distance between an employee’s home address and the jobsite. Per diems and approvals are triggered automatically based on policy rules that can be tied to distance, union status, and work performed.

4. Ensure accurate, timely payroll

In an industry with complex pay structures, you need effective payroll practices to offer accurate, timely compensation. Platforms like Miter manage it effortlessly, including direct deposit and multi-state taxes. And compliance is built in, making it easy to follow state and federal tax laws, prevailing wage requirements, and union rules. We provide you with the comprehensive control that helps you pay workers quickly and fairly, giving them confidence in your company.

5. Strengthen onboarding and early support

Turnover can spike in employees’ first weeks or months if new hires feel overwhelmed and unsupported. Companies under pressure to keep projects moving may push new hires onto jobsites before onboarding is complete, skipping critical training and leaving workers to figure things out on their own. Early investment in new team members makes a difference – research shows that prompt onboarding boosts retention in an employee’s first year by 60%.

Miter simplifies this process at every stage. Our HRIS digitizes onboarding so new hires can complete paperwork, upload and track certifications, and sign forms from their phones, while giving employers visibility into completion status and readiness before workers ever step onto the jobsite.  

Once the paperwork is out of the way, new team members can get up to speed with Miter’s learning management system. Custom and out-of-the-box courses cover everything from OSHA requirements to company policies, and management can track employee progress and send reminders as needed.

6.Prioritize safety initiatives

Construction ranks among the most dangerous professions – nearly 1 in 5 workplace deaths take place on jobsites. A lack of training and supervision causes major safety issues across projects. Comprehensive compliance training and safety manuals provide people with much-needed information and ensure they take the proper steps at each jobsite.

Beyond physical safety protocols, employers also need to manage the workload and stress that come with high-risk work. Physically demanding tasks and sustained long hours can lead to fatigue and burnout, both of which increase the risk of mistakes and turnover. Employee assistance programs, reasonable overtime limits, and regular training help protect workers’ well-being while supporting safer, more sustainable project execution.

7. Facilitate great communication

Effective communication keeps construction teams aligned, productive, and engaged. From schedule updates and shift reassignments to material delays and safety notices, crews rely on accurate information to do their jobs well. 

Miter makes it easy to communicate with field teams. Send SMS messages to individuals, groups, or entire crews, with automatic translation for employees who prefer Spanish. And automatically notify employees via text when schedule updates impact their assignments. 

8. Develop and communicate a company mission

A company mission acts as a North Star, setting the standard for how work gets done and why it matters. Defining who your company serves, what you do, and why you do it gives employees a shared sense of purpose that goes beyond completing tasks or earning a paycheck.

To make that mission stick, it needs to show up early and often, especially during onboarding. Introducing new hires to your mission from day one helps them understand how their role fits into something bigger than a single project. When leaders consistently model that mission, employees are more likely to internalize it, stay engaged, and commit to the company for the long term. 

9. Build clear career and advancement paths

Employees stay when they can see a future with the company. Clear progression paths — from laborer to foreman to superintendent — give field workers a concrete reason to grow internally rather than leave for advancement. 

Develop your team with skill-based training and certifications. Platforms like Miter make this easy. Workers can access essential courses from wherever they are, and leadership can monitor their progress and provide targeted feedback. 

10. Use modern tools to reduce friction and admin work

Outdated systems quietly wear down your workforce. Many teams juggle several (or even dozens) of tools, which leads to frustration, siloed data, and scattered processes. Manual processes also sap valuable time and invite mistakes.

It can save companies hours per week to manage multiple workflows with a centralized system like Miter that handles HR, payroll, time tracking, and expense management. All from the same app, field employees can: 

• Check the schedule
• Clock in
• Update HR information
• View paystubs
• Submit expenses
• Submit time off requests
• Enroll in benefits
• Check PTO balances

Great Falls Construction experienced these benefits first-hand. Their processes were disconnected, with separate systems for time tracking, payroll, benefits enrollment, and HR documents.  Manual data entry and constant tool switching consumed hours every week. With Miter, Great Falls cut payroll processing time in half and streamlined onboarding and compliance, freeing their administrative team to focus on workforce development and support 45% headcount growth in less than a year.

Understanding retention data and metrics in the construction industry

Even after following the strategies listed above, you should monitor retention metrics to see if your tactics work. Here are a few key performance indicators that tell you why workers leave and when to intervene.

Turnover rate 

The average turnover rate in the construction industry measures the percentage of workers who leave within a year. It separates inevitable exits, like layoffs and project completions, from voluntary departures, which you may be able to address. Here’s how to calculate it: 

(Number of employees who left) / [(Beginning employee count + ending employee count) / 2] x 100 = Turnover rate percentage

Average tenure 

This tracks how long workers typically stay with your company. To find your average tenure, start by identifying the tenure of each individual employee. You’ll do so by following this formula: 

(Current date − Employee start date + 1)

Once calculated, find the average of the tenures as a whole. Add them all up, then divide by the number of employees. You can also track tenure patterns by role to see whether you’re losing new laborers or experienced foremen, then respond appropriately.

Time-to-productivity 

This measures the time it takes employees to work effectively without regular supervision. It’s an important metric to track – construction’s learning curve for safety protocols and equipment operation is lengthy, and if hires leave before they finish training, companies waste investment before reaping any benefits.

Some businesses measure this by how quickly employees exit probationary periods. This is an easier metric to monitor, as it has clearly contracted start and end dates. 

Others work backward from a clear definition of field productivity. For construction teams, this often means an employee can follow safety protocols consistently, use tools and equipment correctly, code time to the right jobs, and complete assigned work at the expected pace and quality for their role. Once leaders define these standards, they can measure how long it typically takes new hires to reach them. All of this culminates into a simple formula: 

(Date employee is considered productive) − (Date employee started) = Time to productivity

Retention by job role 

This metric reveals where turnover actually concentrates. High resignation risks in specific roles indicate different retention challenges. For instance, low retention rates for entry-level laborers may signal limited growth opportunities, while similar patterns among more senior employees can indicate compensation or benefits gaps. Follow this formula to calculate retention: 

(Total headcount − Number of employees who leave) / Total headcount x 100 = Retention rate percentage

Finding these figures for specific job roles is simple – split employees into groups based on their positions, and calculate the percentage for each category.

Attendance trends 

Changes in attendance expose early warning signs, showing that you may not be properly engaging and supporting workers. If you want to monitor an individual’s attendance, follow this formula:

(Number of days present) / (Total number of working days) x 100 = Attendance percentage

While Excel is often used to manually track missed workdays, Miter’s attendance tracking automatically provides clearer insight into attendance patterns across your workforce. In addition to absences, teams can track no call no shows, late clock-ins, and late clock-outs. With attendance rules and alerts built into scheduling, emerging issues are flagged automatically, helping managers take action early – before attendance problems affect retention or project timelines.

Overtime trends 

Excessive overtime hours can indicate staffing gaps and drive burnout. Many construction teams view sustained overtime above 10–15% as a warning sign that workloads may be unsustainable. Use the following formula to monitor trends:

(Overtime hours) / (Regular hours) x 100 = Overtime percentage

Keeping an eye on this metric tells you whether you should adjust workloads and hire new people before someone walks off the job.

Keep your best people with Miter.

People are your most important asset, and investing in them pays off. Competitive compensation, thoughtful onboarding, and clear growth paths help workers feel supported and see a future with your company. While labor is often a construction company’s largest expense, high turnover is far more costly, making retention a worthwhile investment. When employees feel valued and supported, they’re far more likely to stay.

Miter helps companies improve retention by simplifying the fundamentals – accurate and timely pay, benefits administration, and tools that are easy for both office teams and field crews to use. Simple features like digital onboarding, SMS communication, and built-in training, go a long way toward reducing everyday friction, strengthening trust, and building loyalty over time.

Connect people, projects, and payments effortlessly with Miter.