HR departments lack 'good understanding' of automation impact on skills

According to a new study, around a third of global companies with revenues over $100 million are planning to upgrade their HR infrastructure. However, four in every ten in the US, and a quarter of those Europe said that they currently lack a “good understanding” of how automated processes could impact their skills requirements.

A colossal process of digital transformation is set to sweep global industry, as automation makes increasing numbers of jobs redundant. Recent research found that most types of work will be impacted, with certain types, seeing up to 60% of their normal workday displaced by more efficient robotic or software processes.

The impact on everyday workers, and the wider economy, remain key unknowns. The long-term trend for workers’ wage growth, around two thirds in the US haven’t seen a pay increase in 40 years when adjusting for inflation, suggests that workers are unlikely to be compensated, even while available work dwindles.

Reskilling workers with a wider or broader skillset, compensating for changes in in-demand skills, is cited as one way to reduce the impact of changes in the work environment. However, given the potential scale of changes, as well as the speed of implementation – key questions remain around whether retooling people at scale is achievable, or even desirable.

Wider conversations around the future of work, and why we exist, will need to broached, as economic activity and a right to exist, which remains deeply ingrained in a wide range of religious and ideological sensibilities, become estranged from each other. The role of businesses in wider society, too might need to shift, with society trumping business – with the fruits of the latter increasingly shared, even among those whom do not work – providing space for freed arts and science.

New analysis from McKinsey & Company considers how businesses might initially invest heavily in reskilling their current workforce, as well as the wider impact of such changes on the work world. The analysis involved data from 300 executives at companies with more than $100 million in annual revenues.

Businesses surveyed are beginning to perceive importance in addressing potential skill gaps related to automation and/or digitalisation within their organisation’s workforce. This is particularly the case in the US and Europe, compared to the global response, in part due to the more advanced nature of the respective economies, and their focus on automation and digitalisation.

Across all companies and economies surveyed, 7% cited addressing potential skill gaps related to automation and/or digitalisation within their organisation’s workforce as their top priority, with similar numbers to the US, also 7%, and Europe, 6%. However, the numbers begin to spread when considered within the top 5 priorities, to 20% globally, 22% in the US and 23% in Europe.

A key driver for the change, the consultancy noted, is due to increased urgency for enterprise-wide transformations, which, has seen around a third of executives seek to retrain or replace more than a quarter of their employees. However, the next five years are set to see increased focus on transformations, which will, in turn, impact on staff.

Skills gap

When asked who should take the lead on addressing any potential skill gap related to automation and/or digitalisation over the next five years, respondents, by a wide margin, believe it should be corporations themselves, with 64% saying so in the US and 59% across Europe. Educational institutions are largely not seen as key, with their remit the development of human potential in its widest sense, not economic agents (human resources).

While retraining is on the minds of executives, the research also shows that large number of people may need to find a new job – if one still exists for their skillset. The research found that in the US, 27% of respondents who have the skillgap in their top 10 priorities, will focus mainly on retraining, while 35% say they will look to retraining and hiring, with a further 30% mainly focused on hiring.In Europe, meanwhile, 45% say that they will mainly focus on retraining and 49% on a mix of hiring and retraining.

According to recent research, the digital skills gap is set to grow as employers are presently failing to meet the expectations of their employees for retraining. Almost six in every ten organisations in Britain alone say they are currently working to respond to such a skills gap, as they bid to successfully transform their business models. However, high numbers of staff feel that their company’s training efforts are not enough, meaning that the gap may continue to grow.

However, this report notes that, while automation and digitalisation is likely to create considerable impact on wider economies and the social fabric itself, business leaders too find themselves in the dark as to the actual impact of the changes, as well as the kinds of skills that will be needed over the coming decade. With around a third planning to upgrade their HR infrastructure, while 42% in the United States, 24% in Europe, said that they currently lack a “good understanding of how automation and/or digitisation will affect our future skills needs.”

Companies are also increasingly concerned about their right to exist, with for-profit motives, key to the very definition of business, increasingly seen parasitic, rather than cohesive to society.