Skill shift: Automation and the future of the workforce PART II
IN PART I THE
FOLLOWING COVERED
1. How will demand for workforce skills change with
automation?
2. Shifting skill requirements in five sectors
IN PART II THE FOLLOWING GETS COVERED
3. How will organizations adapt?
4. Building
the workforce of the future
3. How will organizations adapt?
To harness the new
technologies to their full effect, companies will need to retool their
corporate structures and their approaches to work. That change will require
redesigned business processes and a new focus on the talent they have—and the
talent they need.
About 77 percent of the
respondents in our survey expect no net change in the size of their workforces
in either Europe or the United States as a result of adopting automation and AI
technologies. Indeed, more than 17 percent expect their workforces on both
sides of the Atlantic to grow. The composition of jobs and skills will shift,
however. Some jobs will shrink after automation, while others will expand. And
about 6 percent of companies foresee an overall decline in the size of their
European and US workforces.
Our findings suggest
that organizations will change in five key areas—mind-set, organizational
setup, work-activity allocation, workforce composition, and C-suite and HR
understanding and functions.
Companies will undergo a mind-set shift
A key to companies’
future success will be in providing continuous learning options and instilling
a culture of lifelong learning throughout the organization. In our survey, this
cultural change was ranked by companies across most sectors as the change most
needed for developing the workforce of the future.
Basic organizational setup will change, with
a strong shift toward cross-functional and team-based work and an emphasis on
agility
More than one in five
survey respondents said that introducing more agile ways of working will be a
high-priority organizational change, and a similar proportion described more
cross-functional collaboration as a key going forward. Unlike traditional
hierarchies, which are mainly designed for stability, agile organizations are
designed for both stability and dynamism. They typically consist of a network
of teams and are notable for rapid learning and fast decision cycles.
Allocation of work activities will be
altered, with work being “unbundled” and “rebundled”
Altering work
allocation will allow companies to make the most effective use of different
qualification levels in their workforce. In our survey, 40 percent of companies
describing themselves as extensive adopters of automation and AI expect to
shift tasks currently performed by high-skill workers to lower-skill ones.
Unbundling and rebundling work raises company efficiency and can also create a
new set of middle-skill, “new-collar” jobs. For example, registered nurses and
physician assistants now do some of the tasks that primary care physicians once
carried out, such as administering vaccinations and examining patients with
routine illnesses.
Workforce composition will shift
More work will be done
by freelancers and other contractors, a shift that will boost the
emerging “gig” or “sharing” economy. In our survey, greater use of various types of
freelancers and temporary workers is one of the top organizational changes; 61
percent of respondents expect to hire more temporary employees.
Changes will occur in C-suite and HR areas
In our survey, 19
percent of respondents said their top executives lacked sufficient
understanding of technologies to lead the organization through the adoption of
automation and AI. In addition, HR will need to change as technology alters the way organizations work as
well as the size and nature of the workforce. Nearly all business leaders we
surveyed (88 percent) said they believe HR functions will need to adapt at
least moderately.
4. Building the workforce of the future
Companies will need to
choose from the following five main types of action as they build their future
workforce:
·
Retraining. Retraining involves raising
the skill capacity of current employees by teaching them new or qualitatively
different skills and hiring entry-level employees with the goal of training
them in the new skills needed. These actions ensure that in-house functional
knowledge, experience, and understanding of company culture are preserved as
employees acquire the skills they need. A key choice for companies will be
whether to pursue training using in-house resources and programs tailored to
the company or to partner with an educational institution that will provide
external learning opportunities for employees. Responses to our executive
survey show that companies plan to focus retraining efforts on skills that are
deemed to be of strategic importance to the company, such as advanced IT skills
and programming, advanced literacy skills, critical thinking, and problem
solving. They are more likely to hire from outside the company for less-complex
skills.
·
Redeployment. Companies can redeploy
workers with specific skills to make better use of the skill capacity already
available to them. They can do this by unbundling the tasks within a job and
then rebundling them in different ways, by shifting parts of the workforce to
other tasks that are of higher importance or to other entities, or by
redesigning work processes. In a McKinsey survey of company leaders in February
2018, 55 percent of respondents from companies with $1 billion or more in
annual revenue said they would laterally move more people into different or
brand-new roles than they would release.
·
Hiring. Acquiring individuals or
entire teams of people with required skill sets is another option—although the
supply of talent in the market might be insufficient for all companies to
pursue this strategy. The total cost of hiring might be lower than some of the
other options, including retraining, depending on the skills needed. However,
hiring is always a risk as to how a person will perform on the job.
Additionally, it is susceptible to talent shortages in the market. To succeed
at hiring key talent, companies need to offer an attractive culture and
benefits as well as consider hiring from nontraditional sources. New digital
tools can vastly improve the ability to source, assess, and recruit new talent.
·
Contracting. Companies can deploy skills
brought in from outside the organization; for example, they can use
contractors, freelancers, and temporary workers from staffing agencies.
Contracting allows companies to acquire rapidly the skills they need (if such
talent is available). Its downsides include potential loss of proprietary
knowledge and intellectual property as well as poor fit with the company
culture. Our survey respondents plan to use contracting to fill mainly noncore
or low-skill roles rather than using it to find high-skill talent.
·
Releasing. Releasing employees might be
necessary in some companies, particularly those in industries that are not
growing very rapidly and in which automation can substitute for labor in a
significant way. Often, this strategy can be accomplished by reducing or
freezing new hiring while allowing normal attrition and retirement to proceed
or by reducing the work hours of some employees. But sometimes, it may require
laying off workers. Releasing workers can be an opportunity to accelerate
workforce transformations, with potentially significant cost savings. However,
the risk is a potential loss of knowledge of the company, culture, and
operations. Layoffs can also diminish employee productivity and satisfaction,
and they can be difficult and costly to carry out. In our survey, about 90
percent of respondents say they have “some” or even “significant”
responsibility to help laid-off employees learn new skills or find new jobs.
Skill shift: Automation
and the future of the workforce
Geography also plays a
role in determining which workforce-skill decisions to make, with a net
difference between European and US companies. In Europe, just fewer than half
of the companies we surveyed aim to focus primarily on retraining the existing
workforce, whereas in the United States, that proportion is just over
one-quarter. In the United States, by contrast, hiring is an attractive choice,
with 35 percent of companies planning to improve workforce skills only or
mainly by hiring versus just 7 percent in Europe .
From the results of our
survey, we can already see the beginnings of intensified competition for top
talent. About one in four respondents said they would try to use connections to
industry associations, offer more attractive wages than competitors, directly
hire from other companies, or broaden their talent sources to attract the
talent they need.
Respondents also said
that individuals with a college degree are more likely to be hired or
contracted, more likely to receive retraining, and less likely to be displaced.
Other stakeholders also have a role to play
in building the workforce of the future
Companies can do much
to shape the workforce of the future, but other stakeholders also have an
active role to play.
Educational institutions
For now, many companies
tend to think in isolation about their retraining programs. For example, in our
survey, only 37 percent of respondents considered it important to build
partnerships with educational institutions for effective retraining, compared
with 47 percent who planned to perform retraining internally. At the same time,
a range of higher-education institutions and other experts have called for
universities, colleges, and other educators to play a more active role in
filling the needs of the labor market, including by increasing data-science and
other high-tech courses.
Industry associations and organized labor
Working together as
social partners, associations and unions have traditionally played central
roles in training efforts in several European countries. Both sets of
stakeholders have potentially significant roles to play in addressing shortages
of certain skills and retraining in the automation era.
In Sweden, job-security
councils funded by companies and unions coach individuals who become
unemployed. They provide temporary financial support, transition services, and
retraining to help the unemployed quickly find new jobs.
Policy makers
Policy makers will need
to clarify the roles of individuals, companies, and state agencies. Examples of
such action include revamping labor agencies; several European countries,
including Germany, have changed the way their national labor agencies operate
by shifting public-employment policy from “passive” (unemployment compensation)
to “active” (employment agencies becoming job centers that manage and
facilitate retraining of the unemployed). Other initiatives include boosting
mobility by moving to portable benefits, which are not tied to a particular job
or company and are owned by workers.
Not-for-profit organizations and foundations
Not for profits have
the flexibility to develop innovative approaches to issues relating to skills,
and some have been testing novel approaches. Markle, for example, is piloting a
program called Skillful that aims to help workers
without a college degree upgrade and market their skills.
Some companies have
launched philanthropic initiatives or work with foundations on skills-related
issues. For example, Generation is an
independent, not-for-profit youth-unemployment initiative that seeks to close
the skills gap for young people by providing them with training for one of 20
professions across four sectors.
Skills are a key challenge of this era
A well-trained
workforce equipped with the skills required to adopt automation and AI
technologies will ensure that our economies enjoy strengthened productivity
growth and that the talents of all workers are harnessed. Failure to address
the demands of shifting skills could exacerbate social tensions and lead to
rising skill-and-wage bifurcation. The ability to ensure the former
scenario—and ward off the latter—will depend in large part on how well the
workforce is trained and how adaptable companies and workers will prove to be
in the face of multiple new challenges from automation adoption.
By Jacques Bughin, Eric Hazan, Susan Lund, Peter Dahlström, Anna Wiesinger, and Amresh Subramaniam
https://www.mckinsey.com/featured-insights/future-of-organizations-and-work/skill-shift-automation-and-the-future-of-the-workforce?cid=other-eml-alt-mgi-mck-oth-1805&hlkid=6a9083cbf01c489f99cb27f01fc460b2&hctky=1627601&hdpid=d6385eca-6247-4604-8ae6-e8ad7d081f73
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