Automation, augmentation, and the future of HR: The business case for Digital HR
The digital revolution of our workplaces is accelerating. This year alone, companies worldwide are planning to spend as much as $656 billion on new technology to upgrade for the new era of work. And while much of the talk is focused on technology facilitating remote working, HR should equally pay attention to how our work – and their own departments – are getting increasingly digitalized through automation and AI.
Digitalization of the world of work is inevitable. In 2020, The World Economic Forum predicted that global AI jobs will increase from 78 to 123 per 10,000 from 2020 to 2022 and data shows that the use of AI in sectors across the board has grown by 270% in the last four years.
Inevitable as it may be, what matters more is that digitalization is largely beneficial. Automation and the use of AI in the workplace bring efficiency and effectiveness and they free up people’s valuable time to move from mundane and repetitive tasks to more productive and added value ones.
For instance, in the APAC countries, office workers waste close to 57 minutes of their workday due to outdated technology and processes and more than 30% of global employees feel they waste half of their day or more performing tasks better suited to AI.
In the UK alone, the volume of work that could be automated is equivalent to 1.4 million full-time roles which account for 4.8% of work currently undertaken across the country – conclusions that can be in a similar way drawn from all developed economies.
Three benefits of digitized HR
But what of HR? The introduction of technology into our workplaces has major consequences for human resources. Not only will the function itself have to undergo digitalization, but once digitalized, its role within its respective organization will shift.
Thus the first question any CHRO needs to answer has to do with the kind and extent of digitalization of HR tasks themselves.
While a lot has been said about the automation of jobs, truth be told, it’s not jobs that get automated. Tasks do. According to McKinsey, while nearly all occupations will be affected by automation, only about 5 percent of occupations will be fully automated. HR will likewise be affected by this trend.
Many of HR professionals’ tasks, in particular in areas such as reporting, administrative tasks and predictable analysis should and will be done by digital assistants and automated software (the McKinsey analysis of over 2000 work activities across more than 800 occupations shows that these repetitive tasks account for roughly half of all activities that people do across all sectors). This will drive additional efficiency and effectiveness. And free up HR’s time for more strategic and value-adding activities.
But beyond automation, much of HR’s remaining work should be augmented by machines or systems that can reason, learn, and interact naturally with people. This will further free up people’s time to focus on more creative tasks that machines cannot do.
One area ripe for augmentation is the area of people analytics. By deploying cognitive technologies that leverage AI in people analytics, HR will be able to identify new business insights for better strategic decisions and create additional value.
#3. Amplification of human functions
Last but not least, AI technology has the capacity to help organizations re-design work processes and workflows within the HR department and beyond. By upgrading existing processes and policies, HR will be able to boost human activities and improve decision-making.
Will digitalization be the end of HR?
Not if CHROs make the business case for it. Digitalizing HR is just the beginning. That’s because once digitalized, HR will need to answer the second question related to digitalization of the workplaces: what is the reason for the HR department to exist now that HR tasks have been largely automated?
To many HR professionals, the answer will be instinctively obvious: While many tasks will indeed be automated, many more will be created anew and others will be augmented and amplified and those will still need to be undertaken by HR.
But obvious as it may seem to those immersed in the HR profession, the case will still need to be made in the company at large and with the board members and C-suite leaders in particular.
Digitalized HR is crucial for your company’s success
The best way to make the business case is to position HR as key to driving business value and to solving business problems.
For instance, in the era of talent shortages, businesses struggle to both retain and find skilled employees. Digital HR, through the power of AI, can be extremely helpful in addressing this problem in your organization.
Companies such as Unilever, Walmart, Accenture and SkyHive have joined forces to test the use of AI in closing the skills gaps by giving a truer picture of just how talented their current workers are, and how they could transition into emerging job roles. The AI-driven skills assessment gives these companies a better view of the skills their existing employees have, and the skills gaps that they could plug through upskilling and reskilling.
Similarly, last year’s survey into global talent trends found that when it comes to hiring new external employees, 55 percent of HR leaders in the U.S. use predictive algorithms (with 52 percent in Brazil and Germany) and 61% of global executives say using talent analytics to inform decision-making is the number one HR trend that has delivered an impact.
Furthermore, HR’s role in the digital era is not just to drive efficiency up and costs down. In a world where our work – to a larger or lesser extent – will be digitalized, our systems will need to switch from managing jobs to managing tasks instead. HR will be the only department that will be able to help re-design these systems so that companies can hire and remunerate people based on these tasks rather than job descriptions.
It is time to elevate HR
Without convincing the C-suite leaders and their organizations that HR can and does bring added value in tackling the increasingly complex business challenges such as talent scarcity, CHROs’ influence will fall by the wayside. And HR itself will be perceived as redundant – partly because some of what it does can now be done by AI.
In a tight labor market like this, however, cutting back on HR is the last thing companies should do. Yes, many are reluctant to invest in new HR technology (with a full 87% of HR leaders indicating that they experience budget “challenges” when it comes to investing in HR tech) but without this investment and without the strategic role this digitalized HR can play, companies will not succeed in the new era of work.
This means that HR will not only need to digitalize itself, help companies switch from the job mindset to the tasks mindset but also make the case for its added value in this new reality. CHROs have their work cut out for them, but if we learnt anything from the past couple of years it is that they can deliver.