Why construction SMEs need different workforce strategies to tier 1s

One of construction’s biggest mistakes is assuming that the people strategies used by a multinational can simply be scaled down to fit an SME. Simply put, they cannot.

The issues may sound familiar: recruitment, retention, succession, skills shortages and workforce planning. The processes used by larger organisations can understandably look attractive and ‘professional’ to adopt. But the impact of those issues is very different depending on the size and structure of the business – and that difference should not be underestimated.

That matters because construction is overwhelmingly an SME sector. At the start of 2025, around 885,000 UK SMEs were operating in construction, more than in any other industry sector. Yet much of the conversation around workforce strategy still tends to reflect the structures and resources of larger organisations.

At a time when skills shortages, wage pressure and business viability are all under scrutiny, those structural differences matter more than ever. A tier 1 contractor or multinational consultancy will often have dedicated HR and talent acquisition teams, structured graduate programmes, learning and development budgets, succession frameworks and several layers of management beneath key roles.

An SME, more often than not, has none of those things.

I have seen this first-hand in my own work. Take the loss of a commercial manager. At a multinational contractor, that can create a vacancy. In a regional SME, that person may be ‘the’ commercial manager, carrying oversight across several projects, subcontractor procurement, client relationships, reporting and years of commercial and intangible business knowledge.

When that person leaves, particularly unexpectedly, the pressure is immediate and immense. The business is not simply trying to recruit a replacement; it is simultaneously dealing with the operational gap that person has left behind. That can mean directors absorbing additional commercial responsibility, project teams losing support, knowledge becoming harder to recover, and recruitment suddenly becoming urgent rather than planned.

Their departure therefore becomes much more than a recruitment problem. It can become a project delivery, knowledge, succession and business continuity problem almost overnight.

The evidence shows just how tangible those pressures are. The Federation of Master Builders and The CIOB’s latest State of Trade Survey found that 72% of SME construction firms surveyed were affected by shortages of skilled tradespeople. Almost half, 49%, experienced project delays, 30% halted expansion plans, and 22% reported jobs being cancelled as a result. 

Against that backdrop, telling SMEs simply to “invest more in recruitment”, build graduate schemes or replicate the talent strategies of large employers misses the point. They are often operating with tighter margins, greater cashflow pressure, fewer management layers and much less internal resource.

The same survey found 51% of firms reporting lower than expected profits or losses, while one in five said their business viability was under threat. 

But SMEs should not be positioned simply as disadvantaged versions of larger organisations. They have strengths of their own. They can often make decisions faster, offer broader roles, provide direct access to business owners and directors, give people greater visibility, exposure and responsibility, and allow talented individuals to make a much more noticeable impact. For the right person, that can be an extremely attractive proposition.

The challenge is making those strengths part of a deliberate workforce strategy rather than relying on them informally.

The need for that thinking is only becoming greater. The CITB forecasts that construction will require an additional 47,860 workers a year between 2025 and 2029, equivalent to 239,300 extra workers over five years. It also estimates that the industry needs to replace around 8% of its workforce in a typical year through natural churn.

That means recruitment alone cannot be the answer.

For SMEs in particular, retention, succession planning, knowledge transfer and identifying transferable capability within the existing workforce are just as important as filling the next vacancy.

The answer is not to ask SMEs to behave more like multinationals. It is to help them become more deliberate about people in a way that reflects the businesses they actually are.

For a large organisation, losing one person may create a vacancy. For an SME, losing the wrong person can expose an entire part of the business.

The risks are structurally different, and therefore the solution should be different too. Workforce planning should not sit at the edge of business strategy. For many construction SMEs, it is not simply part of the strategy, it is fundamental to whether the business succeeds.