Are you ready for the future of work?
It’s hardly visionary to point out that technological progress has resulted in the automation of many tasks that previously required humans. Nor is it groundbreaking to suggest that this automation revolution will have a significant impact on employment in the future. Changing job requirements is one of the key problems facing organisations, but are they ready to address them?
COVID-19 has drastically altered the state of work and central to this is increasing automation and digitisation. As companies emerge from the crisis, they find a world very different to that which existed before. Physical distancing is required in the workplace and customer behaviours and preferences have drastically shifted, forcing companies to reimagine their operations: manufacturing companies are racing to reconfigure their supply chains and production line; service-based businesses are implementing ‘digital-first’ customer journeys and contactless operations. All these changes across all these industries will significantly alter the skills and capabilities required of the workforce, from remote working to mastering new tools and urgent health and safety requirements.
The future of work, therefore, will require two categories of change: up-skilling (in which employees learn new skills to aid in their current roles) and re-skilling (in which staff are given the capabilities to take on different or new roles). New research by McKinsey suggests that the need to re-skill staff will be particularly noticeable in operationally intensive sectors such as manufacturing, transportation and retail, along with operations-aligned occupations such as maintenance, claim processing, and warehouse order picking. The predictable and repetitive nature of many tasks, combined with large employment numbers make these occupations particularly suitable for either automation or digitisation.
Far more important than the scale of these changes, however, is their nature. The shifting skills required for jobs of the future will have ramifications for both employees and employers. For example, demand for physical and manual skills in repeatable and predictable tasks in Europe and the USA is expected to decline by almost 30% over the next decade whilst the demand for technological skills such as coding is expected to rise by more than 50%
So how prepared are business leaders?
Research would suggest not enough. In a 2017 McKinsey survey of 116 executives at large organisations, whilst almost two-thirds of respondents said skills were a top ten issue for their company, only 7% believed they were fully prepared to address the skill gaps they expected over the following five years.
According to respondents, this incongruence is due to three key barriers:
The lack of a clear understanding of the impact that future automation and digitisation will have on skill requirements (more than 1 in 4).
The lack of tools or knowledge to quantify the business case for reskilling their employees (almost 1 in 4).
The inability of their current HR infrastructure to execute a new strategy designed to address emerging skill gaps (almost 1 in 3).
So how can companies address skill gaps? There are several different approaches:
External - hiring new staff with the right skills.
Internal - re-training current employees for new roles.
Hybrid - using a skilled contract workforce to meet short-term requirements whilst simultaneously developing the required skills.
Assuming that most companies are likely to adopt a combination of these models, they will need to drastically increase their employee training efforts. Indeed, some businesses have already begun to do so. Amazon, for example, has pledged to spend $700 million on technology training by 2025 to help employees move to higher-skill jobs.
Admittedly, reskilling initiatives may not see a payback for several years but nevertheless they remain a vital investment, not least of all because changing societal attitudes are increasingly expecting that companies invest in this kind or retaining and retraining. Some companies, however, are already seeing returns: Tata Steel’s advanced analytics academy in Ijmuiden, the Netherlands, has already seen significant returns.
In short, preparing for the future of work needs to become an integral part of your business strategy and whilst the need for action is particularly acute in operationally intensive companies and sectors, it’s likely to affect all businesses in some way. Are you ready?
