Future-ready leaders for the Fourth Industrial Revolution
- 8 Min Read
As the Fourth Industrial Revolution tightens its grip on the corporate world, leaders must duly adapt. However, it is the responsibility of organizations to ensure that its leaders are equipped with the skills and the know-how. Renowned thought leaders Landry Signé, Nicholas Davis, Mark Esposito and Sanjeev Khagram outline this process.
- Author: Landry Signe, Nicholas Davis, Mark Esposito & Sanjeev Khagram
- Date published: Sep 29, 2020
The future of work is often cast as a scary subject, and speculation tends to percolate down the misinformation wind tunnel. Pessimistic headlines highlight the potential disappearance of jobs and careers thanks to the rise of automation and digitalization, overshadowing the contributions to wellbeing and economic output that the innovations and solutions of the Fourth Industrial Revolution will facilitate.
What’s more, the disruptions caused by the COVID-19 pandemic have only exacerbated fears and equally transformed labor and its workforce.
What do we really know about how labor markets are evolving, and how can we prepare leaders to guide organizations through an increasingly volatile and uncertain global business environment?
The challenges workers face
First, it is undeniable that workforce disruptions are underway. Using a task-focused perspective, the OECD estimates that one-third of jobs globally are likely to be significantly altered in the coming decade. In addition, while few occupations are likely to disappear entirely at the hands of automation by 2030, it is possible that 800 million workers could be displaced by 2030, with 375 million required to switch occupational categories entirely.
Second, the COVID-19 pandemic is accelerating trends toward automation and affecting demand for workers. In fact, 63% of companies surveyed across the globe by McKinsey in June 2020 had increased remote work in the wake of the pandemic.
Around half of surveyed companies reported an acceleration in their timeline for the adoption of new technologies such as artificial intelligence, automation, and digitization in response to COVID-19. As a result, the inevitable Fourth Industrial Revolution workforce transformations are occurring much faster, ultimately threatening job security.
Third, digital technologies have fueled the expansion of the gig economy. Greater flexibility for workers and contracting firms is being offset by work that can be more precarious, fragmented, and isolated. For instance, in 2019, over half of a sample of 18-22 year olds, and almost a third of baby boomers participated in freelance work of some kind.
A more optimistic take
These three aspects alone can seem depressing, but there is a much more optimistic story to be told.
Contrary to widespread assumptions that job disruption figures will result in fewer jobs, the Fourth Industrial Revolution is supposedly poised to create more jobs than it will eliminate. Many studies suggest there will be twice as many new jobs as those rendered unnecessary by automation.
Moreover, adopting automation increases efficiency and profitability for businesses. Data developed by AlphaBeta in Australia shows that workforce shifts toward embracing automation can generate 2.2 trillion AUS dollars of value.. For Australian workers, the impact of automation on wages, job satisfaction, and safety in the last decade has been overwhelmingly positive.
Therefore, what do we need to do to realize the promise of the Fourth Industrial Revolution and to ensure that the vast majority of workers experience this more optimistic vision for the future?
We argue that three important shifts are required: a mindset change for everyone; a commitment to investment from both the private and public sectors in collaboration with education providers; and a new, strategic, and technology-driven role for HR leaders.
The key change in mindset for workers, policy makers, and organizations alike will be a shift in our focus from jobs and tasks to capabilities and people.
The shift toward more technology-intensive tasks is increasing demand for functional skills (such as those related to problem solving or managing processes, such as marketing), technical skills (for example, the ability to analyze data using machine learning or to implement a specific solution), and so-called ‘people skills’ (such as empathy and the abilities to self-manage or to be creative).
Focusing on ‘new jobs’ distracts from the wealth of evidence indicating that reskilling existing employees is more cost-effective than hiring new ones. Therefore, the core challenge here is to ensure that appropriate investments are being made in workers to develop these capabilities across all levels of experience and capability.
Furthermore, shifting the focus to people also allows leaders to appreciate that preparing workers for the Fourth Industrial Revolution goes beyond reskilling. To offset the public and private costs of rising inequality, worker-focused programs should be designed holistically to support productivity and workforce engagement.
Such services as childcare, career counseling, and financial aid can support low-wage workers — who are among the most vulnerable to job displacement — to grow professionally in a way that strategically reduces the systematic bias and racism such workers have faced for so long.
Collaborative investment in people, not jobs
Appropriate reskilling and improving worker conditions will require significant investment from both the private and public sectors. Remarkably, the investments involved are relatively modest and represent solid returns.
According to a World Economic Forum 2019 report, the U.S. private sector could invest $4.7bn in reskilling a quarter of its displaced workers and still remain profitable. The U.S. Bureau of Labor Statistics reports that most of the 1.7 million workers who are projected to lose their current jobs may be retrained to perform new, similar, or higher-paying roles at an affordable cost of $24,800 per worker, which represents good value for money when compared to the costs of hiring and training workers.
On the public sector side, the U.S. government has the potential to invest in reskilling 77% of displaced workers using a budget just under $20bn. This can lower the government’s welfare payments burden and increase tax revenue.
Acting alone, neither governments nor the private sector will be able to solve the problems of Fourth Industrial Revolution-related workforce disruption. Partnership-focused collaborations are essential across all sectors, particularly between educational institutions and the private sector. A solid redesign of educational offers—focusing on critical competencies, current needs, and flexible skills—is long overdue.
A new role for human resource leaders
All of these aspects suggest that HR leaders will need to play a fundamentally new role in the Fourth Industrial Revolution.
Rather than being a siloed division, the HR function needs to be the most connected node in the workplace network. To achieve this, HR will need to evolve to become a technologically-driven, integrated, employee-centric, comprehensive role that goes well beyond simply recruitment, workplace wellness, and administration. HR leaders will exceedingly take responsibility for workforce strategy, new partnerships, security, culture, and workplace transformation.
The disruptions and opportunities that the Fourth Industrial Revolution will require all organizations to develop new interfaces, where human capital can be augmented and expanded for the skills required in the new labor market. Boards and management committees that want to actively shape and facilitate a new and inclusive narrative around the future of work will have no choice but to turn to HR professionals to define, test, and realize new workforce strategies in a turbulent environment. Are you ready to take on this role?
Landry Signé: Senior Director and Full Professor at the Thunderbird School of Global Management, where he co-founded and is leading the Fourth Industrial Revolution and Globalization 4.0 Center and co-leading the Washington DC Regional Center of Excellence, is a Senior Fellow at the Brookings Institution and Distinguished Fellow at Stanford University. He is also a World Economic Forum (WEF) Young Global Leader, a member of the WEF Global Future Council on Agile Governance and WEF Regional Action Group for Africa, and was a visiting scholar at the University of Oxford. He is the author, most recently, of Unlocking Africa’s Business Potential.
Nicholas Davis: Professor of Practice at the Thunderbird School of Global Management, is the Managing Partner at SWIFT Partners, a Geneva-based consultancy focused on helping companies harness emerging technologies to create sustainable value. He was formerly head of society and innovation and a member of the Executive Committee at the World Economic Forum and is co-author with Klaus Schwab of Shaping the Fourth Industrial Revolution.
Mark Esposito: Clinical Professor at the Thunderbird School of Global Management and Co-Director of the Thunderbird Fourth Industrial Revolution and Globalization 4.0 Center, is a Co-Founder of Nexus FrontierTech and has held appointments and fellowships at the Hult International Business School, Harvard University, and the University of Cambridge. He is the co-author, most recently, of The AI Republic: Building the Nexus Between Humans and Intelligent Automation.
Sanjeev Khagram: Director General and Dean of the Thunderbird School of Global Management at Arizona State University and the Foundation Professor of Global Leadership and Global Political Economy, as well as Founder of the Fourth Industrial Revolution and Globalization 4.0 Center and of the Washington DC Regional Center of Excellence. Professor Khagram most recently led the establishment of the cross-sectoral Global Partnership for Sustainable Development Data and International Open Data Charter. He is the author, most recently, of Global Climate Restoration for People, Prosperity, and Planet: $Trillions in Market Opportunities and Economics, Social, Environmental Benefits.