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Saturday, June 9, 2018

MANAGEMENT SPECIAL..... Skill shift: Automation and the future of the workforce PART II

Skill shift: Automation and the future of the workforce PART II

1. How will demand for workforce skills change with automation?
2. Shifting skill requirements in five sectors


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 BughinEric HazanSusan LundPeter Dahlström, Anna Wiesinger, and Amresh Subramaniam

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