Check-in kiosks at the airport are helping to reduce lines. In fact, in many cases, you can even check in before you get to the airport using your smartphone. Once you board the plane, your pilot takes off and then has the ability to put the plane on autopilot. When the lines are too long at the department store, you may go looking for a self-checkout. Automation is making it possible to unload semi-trucks without the worry over injuries due to lifting. Alexa, Siri and Google use natural language processing for voice-activated activities. According to Forbes, 2019 was the year that companies began to combine artificial intelligence (AI) with other technologies like the internet of things (IoT), enterprise resource planning (ERP) solutions, blockchain and analytics to open up even more opportunities to use automation.
Automation is changing the way that we live, work and play, as more and more companies find ways to use it. Automation is eliminating some jobs and it’s redefining others. As automation becomes the norm, boards will have to consider how it affects their strategic plan and their talent management.
The Effect of Automation on Jobs
No matter what form it takes, automation will have an effect on companies, but perhaps not the way that most people think it will. When we think of automation, we tend to think of robots taking the place of human workers. While that’s true in some cases, it’s misleading to place too much of a focus on the elimination of jobs. In the near term, it’s more likely that certain activities may be automated rather than entire jobs or occupations. This means that new activities will open up to assist automation processes and fill the gaps in activities that only humans can do.
The automated teller machine (ATM) has transformed the bank teller’s job. As more people use ATMs, it frees up tellers to handle other important banking activities that require human intelligence. As the banking industry has shown, it’s not just low-wage jobs that automation is affecting. Retail customers can certainly check themselves out, but certain tasks, like approving purchases for alcohol or controlled substances or getting a price check, still require the assistance of a human being. Amazon employs a fleet of Kiva robots that use automation to synchronize robots to fill warehouse orders in a quarter of the time that humans can do it. There are humans that work at the warehouse to complete the jobs that robots can’t do.
In nearly every occupation, including higher-paid occupations such as finance managers, physicians and executives, there are portions of the job that could easily be automated.
An article by McKinsey states that around 45% of the work activities that are currently being performed by humans could be automated using current technologies. This percentage represents $2 trillion in annual wages.
How Automation Affects Corporate Leadership
With automation creating so many changes, it changes how things work in the boardroom. Automation and AI require new teams that understand this technology, but AI teams will also need the assistance of the board. These developments require changes in human resources, capital allocation and more.
Automation essentially involves all segments of the company. Starting at the top, boards need to understand the full impact of automation on activities to create efficiency, but also how new activities affect other parts of the business process. Companies will be trending in this direction in the near future.
Perhaps the biggest impact of automation will be on human resources. Some jobs will be created; some will need to be modified; and some will be eliminated entirely. For these reasons, management will need to make AI and automation priorities. Primarily, companies will need to focus on retraining to make the most of the changes as well as how they can best automate activities within automation and how best to redefine roles and processes.
The McKinsey article notes four specific issues that should be getting board and leadership attention now — automation, redefining jobs and processes, the impact of higher-wage jobs and the future of creativity.
Boards should recognize that about 45% of work activities could be automated using technology that we already have. If technology should advance to a point where it can better understand natural language, an additional 13% of work activities could be automated in the United States.
McKinsey also notes that their analysis shows that less than 5% of occupations could be replaced entirely by automation using current technology. About 60% of occupations could automate 30% or more of their constituent activities. This percentage is significant enough to cause managers to have to redefine jobs and transform business processes. Consider the job of a mortgage lender. Automation could manage much of the rote paperwork, which would free up loan officers to review and approve exceptions and to advise their clients. This is just one example of how automation and AI can complement human capabilities to a high degree and magnify the value of expertise by increasing a worker’s capacity, freeing them up to focus on work that has higher value.
Consider the research activities of a lawyer. Lawyers can now use automated text-mining programs to peruse thousands of documents in minutes, highlighting the most relevant documents that pertain to their cases.
Drones are being used in many different types of occupations. Farmers use them to fertilize their crops or to photograph their fields so they can assess the health of the crops without having to walk the fields. Realtors make use of drones to take aerial shots of properties. Amazon is still working on processes to have drones deliver packages, reducing the need for trucking freight.
Technology has also become sophisticated enough to address many of the activities of higher-paid occupations. Current technology could be used to analyze reports and data to inform operational decisions and to prepare staff assignments. While technology can assist most professions, there are some lower-wage occupations that will always require the human touch, such as caregivers, landscapers and maintenance workers.
Boards will also have to consider how automation will affect creative fields. Automated drawing programs and photoshop programs have come a long way, but there are certain facets of the creative process that will always require the talent of a skilled artist who can still draw by hand. McKinsey notes that about 4% of work activities will require a human level of performance and 20% of work activities will require employees who exhibit such human qualities as caregiving, compassion and emotion.
Automation also brings new concerns for boards, such as how to handle issues like privacy as automation increases the amount of data that companies can collect and disperse. Boards also must be aware of the quality and safety risks that automation brings, which could have significant legal and liability implications. For example, what if a drone drops a heavy box on an automobile and damages it? What if a falling package injures a small child?
These are the types of questions that will signal which companies get ahead of their competition as boards consider the risks and opportunities of automation in the workplace.