Rise of the machines... and the HR dilemma

Concern over the influence of ICT on jobs and wages demands a new role for HR managers. Doing nothing is not an option.

In the late 1990s, I was the Manager of the Information for Development program at The World Bank. Those were the early days of the Internet "revolution," and conferences about the dramatic changes being fostered by information and communication technologies were all the rage. Common themes for debate ranged from the implications of e-publishing for conventional books to the future of labour in the information age and the dangers of a digital divide.

With respect to the first theme, when asked whether I thought printed books would disappear in the future my response – in jest – was: No, since as any Star Trek fan knew, Captain Jean-Luc Picard (played by Patrick Stewart) would still go to bed holding a conventional book in the 24th century and even Data (the android crew member played by Brent Spiner) understood the (emotional?!) value of a book, in spite of his capacity to store a whole library in his "electronic" brain.

On the second issue, however, I was more tentative. First, one could already see the negative impact of ICTs on the employment opportunities for transaction workers such as telephone operators, bank tellers and secretaries. Second, ICTs were enabling international competition in sectors that used to be considered the realm of non-tradable activities (eg professional services), impacting wages and fostering additional dislocation, particularly in the industrialised world. Would robots come next and play havoc with employment for semi-skilled workers? This was a scary thought, but we could take comfort by arguing that, even given the logic of Moore's law (the exponential growth of computational power), software development still imposed constraints on the rise of robots. In short, this would be, at best, a problem for our great-grandchildren!

The debate on the future of labour, however, is now in vogue again. This is in part driven by the question of whether technology is somehow to blame for the high unemployment and growing inequality in many industrialised nations. The conventional wisdom remains that high unemployment is mainly a cyclical phenomenon associated with inadequate demand and mistaken economic policies in the aftermath of the Great Recession. Some analysts, however, have been arguing that we may be entering an era of secular stagnation in which mediocre growth and structural unemployment will be the new normal. ICTs are often listed as part of the problem, as they are perceived to be fostering significant changes in the structure of employment and contributing not only to growing earning differentials between skilled and unskilled workers, but also to stagnation in the median income.

And there are those who argue that we have not seen anything yet. Progress in digital technologies continues at such speed that people/workers and firms/organisations often find it difficult to keep up or even to adjust in an efficient manner. The rise of intelligent machines raises the spectre of further technologically-led unemployment not only in industrialised countries, but even in developing nations. This is illustrated by the announcement by the Foxconn Technology Group that it intends to invest in a "million robot army," and by the fact that many call centre workers are now being displaced by automated voice response systems. 

Memo to HR managers: Doing nothing is not an option!

What does all this mean for human resources managers around the world? Some would argue "not much," since they cannot directly influence these broad macro trends or manage their complex social dimensions outside the boundaries of companies. But in a rapidly changing world where skilled labour is in high demand and most of the workforce is increasingly concerned about relative wage stagnation, this approach is a recipe for disaster (not to mention growing irrelevance of the HR function). Prospective employees are nowdays much better informed about the culture, managerial practices, and career opportunities in any large company owing to information disseminated via social networks or specialised websites such as glassdoor.com. As a consequence, a proactive HR strategy is a requirement for companies that want to be competitive in the acquisition of new talent.

Such a strategy needs to put greater emphasis on promoting lifelong learning for all segments of the labour force, as the skills "half-life" declines faster amid rapid technological change. The development of flexible working structures mediated by ICTs to counteract negative demographic trends (e.g., by facilitating a more family-friendly working environment) is also becoming a must. In short, the social role of enterprises will become even more relevant as we enter the era of growing automation of knowledge work and advanced robotics.

These efforts, however, provide only some of the pieces of the solution to the puzzle. In the race "against the machines," companies need to integrate their HR functions at the very core of their strategic decisions. Success will be determined to a large extent by each company's organisational structure and its capacity to either foster or impair the adoption of disruptive technologies.

In the first scenario, innovation will empower workers and become a source of competitive advantage and job creation. Partnerships between humans and artificial intelligence will accelerate the production of new ideas which, in turn, will generate jobs that we cannot even imagine at this stage (who would have dreamed of careers in cybersecurity three decades ago?). In the second scenario, fears of dislocation will dominate, fostering winner-takes-all outcomes that can lead to a technological dystopia marked by further hollowing-out of middle-income jobs and increasing social tensions. Pick your scenario, but I know I would rather have Data as a member of my team.

Carlos A. Primo Braga is Professor of International Political Economy at IMD, and Director of the Evian Group@IMD. He teaches on the Orchestrating Winning Performance program.

This article was originally published on imd.org. Reproduced with permission.