Sep 01, 2016

The Robotic Revolution and its Impact on HR

We’re at the brink of another technological revolution – the revolution of robotics. History tells us that anytime there is a technological revolution, there are clear winners and losers. Due to technology, workers in fields like elevator operations and ice-cutting had to retire or find new work because technology made their jobs obsolete. Clean energy has caused oil, gas, wind, and solar companies and their workers to be winners, but also created losers in the form of coal miners.

A survey by the Pew Research Center reveals that 65 percent of respondents believe that robots would take over most jobs in 50 years. And 10 percent are workers about losing their jobs to an automated workforce. A separate report by the World Economic Forum predicts that robots in the workplace will cause the loss of 5.1 million jobs worldwide over the next five years. The report predicts that mobile Internet and cloud technology, along with big data analytics and the Internet of Things (IoT) will render many office and administrative jobs redundant.

Yet another report from Citigroup and Carl Benedikt Frey and Michael Osborne estimates that almost half of U.S. jobs are at risk, with household service robot workers and automation expected to drastically reduce the need for human workers. The report notes “the bulk of service occupations, where the most U.S. job growth has occurred over the past decades, are now at risk. Already the market for personal and household service robots is growing by about 20 percent annually – a trend that is likely to continue.” The Boston Consulting Group also recently reported that investment in industrial robots would grow 10 percent per year through 2025 in the world’s 25 biggest export countries, leading to lower costs and higher efficiency. Replacing manufacturing workers with machines could cut labor costs by up to 90 percent. Today, there are an average of 66 robots per 10,000 workers worldwide.

Global Robotics Market

Global Robotics Market

Source: The Boston Consulting Group

Early indicators suggest that big business stand to reap the most rewards from the robotics revolution, through cost savings, efficiency, and the reduction of human errors. But it also will cause losers in the form of employees losing their jobs to new technology. For instance, truck driver is one of the most common occupations in over half of American states. There are currently about 1.8 million truck drivers in the country, earning a median annual salary of approximately $40,000. These jobs are typically available to individuals who lack skills or college degrees. Yet some industry analysts predict that the robot revolution will cause truck drivers to disappear.

The impact of the robotic revolution is not just applicable to blue collar work. Already, several white collar professions are losing out to robotics. For example, the Washington Post is using robots and algorithms to write tweets and snippets about the 2016 Summer Olympics. And robot doctors are being tested all over the world to take over routine surgeries such as tonsil removal or appendectomies; in 2015 approximately 570,000 “robo-surgery” operations were performed. A report from McKinsey Global Institute found that up to $9 trillion in global wage costs could be saved if automation took over knowledge-intensive tasks such as analyzing consumers’ credit ratings and providing financial advice.

The rise of robotics and the upcoming robotic revolution pose a variety of questions for the American economy as a whole, and particularly for HR professionals who will have to deal with a whole new type of workforce.

What Will HR Need to Consider?

Human resources has traditionally been the department of the business whose whole purpose is to manage a company’s arguably biggest asset – it’s workforce. But now with the workforce poised to consist of not only humans but also robots, we envision that there will be some necessary changes needed for the HR function.

HR professionals, along with other management executives, will need to consider various questions and issues that will arise due to the robotic revolution. For example, what will U.S. businesses do in the face of this trend? Will they reinvest some of their cost savings due to robotics back in the business to create new jobs for human workers, or will they just be added to their bottom line?

Also for the humans whose jobs disappear, what will they do? Will they require government support or need to reinvent themselves to meet job requirements in different fields or industries? And how will the robotic revolution impact education for the upcoming generation of workers? Will students need to focus on Science, Technology, Engineering, and Match (STEM) or will they find more use in vocational training and technical skills.

 “It is simply not possible to weather the current technological revolution by waiting for the next generation’s workforce to become better prepared. Instead it is critical that businesses take an active role in supporting their current workforces through re-training, that individuals take a proactive approach to their own lifelong learning.” ~Klaus Schwab, Founder of the World Economic Forum

Also worth considering for HR departments is which jobs are less likely to be replaced by robots and automation. For example, occupations that require intensive social and creative skills, such as management, business and finance, education, healthcare, arts and media, and engineering are less at risk of being eliminated. As such, the demand for workers with skills and experiences in this field will increase, and HR departments have to be prepared to recruit skilled candidates.

And finally, what can HR do to help their companies prepare for this upcoming technological change?

“As entire industries adjust, most occupations are undergoing a fundamental transformation. While some jobs are threatened by redundancy and others grow rapidly, existing jobs are also going through a change in the skill sets required to do them.” ~Klaus Schwab, Founder of the World Economic Forum