Need to know:
- Increased automation is likely to disrupt established ways of working and individuals’ relationship with employers.
- Organisations will need to tap into new skill sets, either through reskilling or the attraction of digital and non-traditional talent.
- As the profile of the workforce diversifies, a more targeted, flexible approach to reward and the broader employee experience will be required.
There are varying predictions as to the speed and extent to which automation technologies, robotics and artificial intelligence (AI) will affect jobs and the world of work. McKinsey Global Institute’s January 2017 report, A future that works: automation, employment, and productivity, estimates that less than 5% of occupations can be automated entirely using demonstrated technologies, and approximately 60% of occupations have at least 30% of constituent activities that could be automated.
While there will be differences in the impact these technologies have across organisations, industries, and countries, the acceleration of automation is likely to lead to a shift in required skills, ways of working, and the very makeup of the workforce. To gain and maintain a competitive edge in this changing landscape, employers will need to rethink how they engage, motivate, and reward employees.
Support during times of change
Although automation could result in job losses and redeployment in some cases, it could also create new roles, augment the work currently carried out by employees, and provide opportunities for professional development. Communicating these opportunities, as well as real-life examples, could boost employees’ engagement with these technologies and with the organisation’s goals. Aimee Higgins, director, people consulting at KPMG, says: “Automation should reduce the administrative and process-driven work, which inevitably then frees up some time for employees to perhaps focus on some of the more creative or strategic value-add pieces of work. As that process is underway, any kind of success stories that come from that should be repeated across the business so that [employees] can see the benefits [of automation].”
At an organisational level, good change management practices, and open and honest communication can help to assuage uncertainty. David D’Souza, head of London at the Chartered Institute of Personnel and Development (CIPD), says: “If an organisation is planning a large-scale shift over time to more automated work, it needs to be clear about those plans for two reasons: one, to allow for possible redeployment of [employees] and, two, to allow [employees] to retrain, reskill and make different decisions around their careers.”
In order to give staff the time and space they need to reskill, organisations may need to adapt reward strategies that are centred on individual performance and realign these with wider organisational aims, says Higgins. This might include embedding organisational values into the performance management process and associated rewards, or enabling staff to share the fruits of improved business performance through all-employee share schemes, for example.
Linking reward to business values could also help organisations to foster a culture of innovation by encouraging the new skills and behaviours organisations require in this changing environment. Anthony Bruce, HR consulting partner at PricewaterhouseCoopers (PWC), says: “[Employers] would need to segment their workforce and then target the benefit types and the way they deliver those benefits to people […] in a way that is driving towards the things that matter, rather than the things that mattered in the past.”
Professional development and the reinforcement of new behaviours through reward is particularly pertinent for managers. Andy Campbell, HCM strategy director at Oracle, says: “We’re asking more and more of [middle managers] and perhaps not giving them the skills and capabilities to execute.”
Increased automation could require new management approaches, including the management of virtual teams or blended teams comprising automated processes, AI and people, adds Mike Falvey partner at KPMG.
Where automation leads to downsized teams, and potentially reduces interaction with other people, further support mechanisms may be needed to ensure that individuals continue to have access to an engaging workplace environment. Developing cross-locational employee networks is one way of motivating individuals in this situation, says Julia Howes, principal at Mercer.
A broader proposition
As a result of business model disruptions, including technological disruptions such as robotics and machine learning, by 2020, on average, more than a third of the desired core skill sets of most occupations will be made up of skills that are not yet considered crucial to the job today, according to the World Economic Forum’s The future of jobs report, published in January 2016. And this is not just a future issue; the competition for in-demand digital talent and the recruitment of non-traditional talent is challenging established reward strategies.
Howes says: “There is a broader value set that some of these employees have that may be beyond the traditional ‘what is my base salary’. We are seeing that for this [digital talent] population there is a lot of concern around financial wellness, so we are seeing a lot of organisations helping with that broader perspective of affordability.”
As competition for their skills increases, these potential recruits may also attach greater importance to the overall employee experience, including the value that they can obtain while with an organisation, such as learning and development opportunities, and the value that they can contribute to and through an organisation, such as involvement in an employer’s corporate social responsibility (CSR) agenda.
However, recruitment is not the only challenge. “For me retention is the biggest issue,” says Oracle’s Campbell. “If [employers] don’t provide the right work environment and the right tools, if [they] don’t make it fun, enjoyable, and valuable for people to work in the organisation then they’ll leave, especially if they’re quite attractive [talent].”
This not only requires alignment of pay and benefits to an organisation’s innovation agenda, but also better understanding among leaders and line managers about the different approaches and ways of working among incoming digital talent, says Howes.
The changing shape of work
The advancement and adoption of automation technologies could also disrupt the make-up of the workforce. Falvey says: “The impact of [automation] will probably enable the acceleration of the move towards a gig economy, which of course starts to call into question who [organisations’] people strategies are aiming at.”
As well as employees, and perhaps a greater proportion of contractors, associates and temporary workers, this could also include a combination of staff in physical offices and virtual teams across multiple locations, and a mix of the human and robotic.
George Zarkadakis, senior consultant at Willis Towers Watson, says: “It’s no longer relevant to talk about an employee value proposition (EVP). We need to talk about worker value proposition and include everybody who is somehow engaged with the organisation in the production of work.”
This raises further questions around the concept of a cohesive workplace culture and core organisational values. “Now what becomes more important is how organisations use all the tools at their disposal to create a common sense of purpose in the way they share information, the deployment of digital engagement platforms that connect those people together so that they feel part of what the organisation is trying to do, and then also the incentivisation and performance of those people,” explains PWC’s Bruce.
The rise of portfolio work could also result in a shift towards employee benefits that focus on future employability. “[Employers would] need to think [about] what training investment looks like for people who are there for a short amount of time, how simple [they] make it to move in and out of pension schemes, to move things from one place to another, and also how attractive [their] benefits mix is to people who will only be with [them] for a really small window in their career,” says D’Souza.
Benefits such as a free CV review after six months with the organisation could be highly valuable to those workers, he adds.
Short-term project work could also call for short-term incentives. Falvey says: “I think there’s an opportunity for HR, reward and benefits professionals to be quite creative and targeted in some of those incentives, and some of this comes at an interesting time when more broadly people are looking for greater personalisation.”
A targeted approach to reward, combined with a higher degree of flexibility, could also provide employers with the agility to engage different segments of an increasingly varied workforce.
Underpinning this approach with data analytics can help to boost engagement further by ensuring that the benefits package an organisation offers is truly valued by existing and potential workers. “Use data, use analytics, and don’t just do it once,” says Bruce. “In this area get it more regularly refreshed; it’s not just an annual exercise, it’s much more real time than that because of the turnover of staff and talent.”
Planning ahead
To navigate this future landscape, HR and benefits professionals will need to work closely with different areas of the business to understand how it is likely to be affected by automation, and conduct scenario planning to assess the possible impact on the workforce and required skill sets.
Falvey says: “Starting to predict in an unpredictable world [is] really critical as organisations start to think through ‘what is the ultimate impact going to be’, and then that allows [them] to pin some of [their] retention strategies against timelines as they become clearer.”
Working now to develop an understanding of the potential future implications of these technologies could put organisations in a stronger position to support their workforce as automation accelerates, placing them a step ahead of competitors.
“The message here is that it’s not the rise of the machines but the rise of the humans,” says Zarkadakis. “That for me is the most exciting thing about the HR function in the 21st century, because this new way of automation will make human beings even more valuable to organisations than before.”
Employers, supported by HR and benefits professionals, have a key role in steering the way in which technology shapes the future of work. As the CIPD’s D’Souza says: “The future of work is human; we want to see technology augmenting and freeing up people to do higher value work rather than just replacing jobs. Every employer has a choice as to how it approaches the next decade, but what we would like to see [employers] do is the thing that’s best societally because we believe long term that’s the right thing for business as well.”
Viewpoint: Enough of the pessimism about the rise of the robots
Will all our jobs soon be replaced by robots? Recent headlines suggest so. But historical experience casts doubt on such sensationalism. Indeed there are reasons for us to encourage more automation, rather than worry about the harm it will do.
It is common now to hear theories about how new technologies are leading us towards a rapidly approaching future of low employment. A lot of this debate stems from the US, which has seen a worrying fall in labour market participation. But this is not true in the UK, where employment is at a record high. In fact, we have the opposite problem; business investment in new technology is low and productivity growth, which ultimately determines how well off we all are, has been almost non-existent in recent years. If we want wages and living standards to rise, we need more technology, not less.
Of course, technological change will have a greater impact on some jobs and industries than others, and we should be mindful of the disruption this can bring. Routine jobs, from assembly lines in factories to call centres, have declined the most in recent decades, driven by automation, offshoring and better education. However, new jobs have emerged in their place, from business services to social care. It is important that governments provide a strong safety net for those displaced by these labour market shifts, along with skills policies to help people move into new occupations.
If past experience is anything to go by, even the greatest advances in artificial intelligence (AI) and robotics will likely see as many jobs created as are made obsolete. So enough of the pessimism about the rise of the robots. Worry instead about a lack of progress across UK industry in embracing new technology, and how we can share the gains that productivity-enhancing automation can bring fairly across the workforce.
Adam Corlett is economic analyst at the Resolution Foundation
Viewpoint: Organisational culture is key to getting the most out of technology
Dealing with the impact of technology on the workplace is, to a large extent, a matter of mindset. We can choose to adopt either one of the two scenarios: the first one is to get drawn into a fear-based and fixed mindset and worry that technology might take away our jobs, make us redundant and win the war with humans. The other scenario is that we adopt the growth mindset, adapt continuously (which the neuroplasticity of our brains enables us to do), and use technological advancement to our advantage, as technology is, and should be, about enhancing our lives.
Adopting the latter scenario has many advantages. The future is about people and machines collaborating in harmony, with complementary strengths and weaknesses in the context of intelligent organisational design. Machines are better at processing a large quantity of interpretable data and improving decision making, but they are not good at asking the right questions, they cannot explain why they made a certain decision, they cannot make sense of unstructured data, and they do not have intuition.
While technology should be supporting what employees are doing in workplaces, there is a discrepancy between what technology can do and what mindset, organisational culture, and organisational processes the majority of organisations have. To get the most out of technology, and to motivate the workforce to give a high level of performance, organisations need to foster the development of organisational cultures that are based on people, collaboration, purpose, transparency, openness, communities, interaction, and ubiquitous communication. Power and decision making should be distributed and employees should have the autonomy to experiment with new ideas and new technology. Organisations that get this will get the most out of technology while creating high-performing, supportive and purposeful workplaces.
In traditionally managed organisations, based on hierarchical command and control, and top-down communication and decision making, technology will not be fully utilised. People will use it as they are told by their managers to do so, communication will be mainly top down, trust and transparency will be low, and the full potential of technology will not be realised.
To get the best out of technology, organisations need to get the best out of people. We have not always modernised our management approaches in line with advances in technology, leading to intelligent IT, but unintelligent organisational design and outdated management practices. That leads to low performance, engagement, productivity that no technology can compensate for. After all, it is all about people.
Vlatka Hlupic is professor of business and management at the University of Westminster, chief executive officer at The Management Shift Consulting, and author of The Management Shift.
Viewpoint: Potential artificial intelligence and automation employment law issues in 2017
In January this year, a Japanese insurance company announced plans to replace 34 employees with robots. Automation is likely to affect labour markets worldwide and the reality is drawing nearer; RBS and NatWest announced in 2016 that they will be using a virtual chatbot to deal with UK customer queries and several US hospitals are already using artificial intelligence (AI) platforms for treatment advice.
In the short term, automation will lead to business restructurings (moving humans to functions that robots cannot fulfil) and redundancies. Health and safety concerns about robots or automated systems failing could lead to industrial action. Employers will need to consider negative PR caused by redundancies and fears of the consequences if AI goes wrong.
AI is likely to depress wages for lower-skilled work and individuals may retrain in areas where robots cannot replace humans. Traditional office jobs will decline and the gig economy, where individuals supplying services are matched with market demand, will continue to develop apace. As a result, and following Employment Tribunal rulings that Uber drivers and a CitySprint courier are workers in October 2016 and January 2017 respectively, we are likely to see more litigation on worker status and organisations should consider this when reviewing their business models.
Employers will also need to think about whether their policies and procedures are suitable for a mixed workforce of humans and robots. For example, a chatbot developed by Microsoft was removed from Twitter after learning and tweeting racist remarks; so employers may have to deal with grievances and employee engagement issues. If data regarding job applicants’ facial expressions and body language is captured by robots during recruitment processes, employers will also need to consider data protection and discrimination issues concerning the storage and use of this information.
Last year, the European Parliament proposed a motion for robot workers to be classed as ‘electronic persons’; although this seems improbable, in January, its legal affairs committee passed a report outlining a robotics regulation framework (proposing reporting requirements, mandatory insurance schemes and a general basic income to counter the damage that robotics could wreak on employment markets) and we may see employment law adapting to accommodate AI in the workplace in future.
Kate Hurn is associate at law firm Bird and Bird, and Penny Hunt is legal director at Bird and Bird
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Statistics:
- 25% of a CEO’s daily activities could be automated using currently demonstrated technology (Source: McKinsey Global Institute, January 2017)
- 49% of business leader respondents cite better work-life balance as a benefit that robotic automation would have on their business (Source: Genfour, July 2016)
- 83% of business leader respondents see the correct balance of human and automation practices as a key competitive differentiator (Source: Capita Resourcing, November 2016)
Main image: hitandrun