# Financial Tips to Lower Construction Employee Turnover

For many construction firms, finding skilled workers is just the first challenge. Once hired, how do you keep them engaged, satisfied and on your payroll for the long term? Financial stability and agility play big roles in employee retention. Here’s how Cat Financial solutions can help you reduce high turnover for your small business.

Do the latest construction employee turnover numbers have you concerned? Are you seeing the effects in your own business? It’s a good idea to begin tracking your own turnover rate to keep an eye on your retention numbers.

1. To get this figure, divide the number of employees who have left your company during a specific time period by the average number of employees during that period, then times by 100.

2. First, calculate to find the average number of employees for the quarter. For example, if you started the quarter with 15 and ended with 12: (15+12)/2 = 13.5, you have an average number of 13.5 employees for the quarter.

3. Let's assume five employees left that quarter.

4. To calculate the turnover rate, divide the number of employees who left during the quarter (5) by the average number of employees (13.5) for that same period and multiply by 100: (5/13.5)*100 = 37%.

5. For this example, there is a 37% turnover rate for the quarter.

The cost of replacing an employee could be up to twice their salary. This is why high turnover rates can be costly for companies of all sizes. It’s not just that you spend time and money finding and training replacement workers. When you lose talent or wind up short-staffed, you also may struggle to meet deadlines, hit production targets, deliver high-quality work and maintain safety standards. All that can damage your reputation and your bottom line.

Let’s take a closer look at what’s behind employee turnover in the construction industry. We’ll explore the key factors — financial stability and agility — that can help you improve labor retention and address small business labor shortages.

## WHAT’S DRIVING CONSTRUCTION EMPLOYEE TURNOVER?

Construction workers leave their jobs for all kinds of reasons. In some cases, they’re seeking higher pay or better benefits at another construction firm or in a different industry. There are also other, more intangible factors that may lead employees to seek employment elsewhere. These include:

• Training: Does the company help employees develop their skills, both when they’re new and over time?

• Safety: Is the work environment safe? Does the company place a high value on employee health and well-being?

• Growth: What opportunities are available for advancement? Are top performers recognized and rewarded?

• Hours: How long and grueling are work shifts? Are flexible work arrangements an option?

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## FINANCIAL STABILITY SUPPORTS EMPLOYEE STABILITY

How do you reduce high turnover and create a workplace where employees want to stay for the long term? Company culture matters, and financial stability is at the foundation of building an environment that supports labor retention. Construction companies that have the cash on hand to meet business needs — and the financial flexibility to adjust quickly to setbacks — often feel more comfortable. Here are some ways financial flexibility makes an impact on retention:

• Increasing starting wages, handing out regular raises, offering bonuses and expanding employee benefits

• Providing long-term contracts that help workers feel more secure in their employment

• Allotting sufficient time for new employee orientation, safety programs and ongoing training as equipment, technology and jobsite conditions change

• Reducing hours or shortening workdays to help alleviate employee fatigue and burnout

• Acquiring newer, more comfortable construction equipment with the latest technology

## 3 WAYS CAT FINANCIAL CAN HELP REDUCE HIGH TURNOVER

If you’re struggling with how to manage during high turnover, Cat Financial can help. We do more than simply finance Cat® equipment. We’re here to support you for the life of your business and offer solutions to help you overcome financial obstacles. This allows you to stay agile and adapt to changing business needs.

1. Acquire equipment while saving cash for other needs.

Ready to add new or used equipment to your fleet? Our leasing options can help you obtain what you need with less capital investment required. A lease from Cat Financial gives you the option of equipment ownership at a lower monthly payment than a loan. An operating lease spreads out payments over time for the lowest monthly payment. Both types of leases may allow you to allocate cash for other priorities, such as employee wages, benefits or training.

Also, remember that renting is another option that can offer financial flexibility, especially when you only need equipment for the short term. This comparison of loan, lease and rental options from Cat Financial provides a quick look at the advantages of each solution.

2. Pay for parts and services when your finances allow.

When you need a replacement part for a machine or a repair on a component, there’s usually no time to wait. You want your equipment on the job, so your employees can keep working and your business can keep earning money. The Cat Card gives you the financial flexibility to purchase the parts and services you need when you need them — and then make low monthly payments over time.

You can use this unsecured line of credit to pay for parts, rentals, attachments, repairs and rebuilds, along with protection and service plans for your equipment. Cat Card holders also get access to exclusive financing offers and earn Cat Vantage Points on every purchase — which may result in even more money-saving opportunities. (Visit cat.com/catcardrewards for eligibility, terms and conditions.)

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1. Keep maintenance and repair costs stable and predictable.

Regular maintenance offers all sorts of financial benefits: It can help extend component and equipment life, potentially saving you money on replacements. It can improve productivity by keeping your equipment working as efficiently as possible. It can help you avoid unplanned repairs and downtime, and even support resale value.

The Cat Customer Value Agreement (CVA) by Cat Financial helps make maintenance hassle-free. You receive planned maintenance kits for your equipment right on time for service. And you can lock in planned maintenance costs for the length of your contract — making it a predictable expense for easier budgeting. You can also request a CVA quote online. Once you’ve customized your plan, easy account management is available online at MyCatFinancial. You can check your CVA status, pay bills and sign documents 24/7 — whenever it fits into your busy schedule.

An Equipment Protection Plan (EPP) is another way to reduce the financial risk associated with unplanned repair costs and downtime. EPP adds coverage beyond the standard machine warranty, offering protection from covered defects in Cat material or workmanship. Again, you can lock in parts and labor costs upfront and convert the variable cost of repairs into a standard budget item.

## TAKE STEPS NOW TO TACKLE TURNOVER

Consider your financing options and work proactively to retain your crew and help tackle turnover. Take, for instance, the cost of a Cat Mini Excavator. When you take advantage of 0% financing for 36 months, your expected monthly payment could be \$1-2.5K. Factoring in labor costs, fuel, maintenance, parts and labor, that’s upwards to \$7.5K in costs for one machine. Though it’s easy to lock your cash up with the demands of your job, you retain employees when you demonstrate profitability and reliability. Leveraging options like flexible Cat leasing options, The Cat Card, CVAs and EPPs make that possible.

Don’t let small business labor shortages affect your profitability. Work with us to stay financially nimble so you can reduce turnover and retain the talent your business needs to succeed. Explore our financing solutions and discover how Cat Financial can help you plan ahead. When you find the right solutions for your jobsite, you’ll be able to recover more quickly from setbacks and keep your team busy and satisfied.

## EXPLORE CAT FINANCIAL SOLUTIONS

From loans, leases and lines of credit to extended protection, see how we can support your business.

## What can the Cat Card do for me?

The Cat Card is the smart way to get what you need to get the job done. Use your Cat Card on Parts.Cat.Com or at participating Cat dealers and Cat Rental Stores to get what you need and get back to work.