Blog Post

Learning Corner with Jeffrey Pfeffer: As AI Enters the Workplace, Organizations Have to Get Active

Jeffrey Pfeffer

Professor of Organizational Behavior, Stanford University

The general consensus is clear: automation is poised to transform (or disrupt, if you prefer) present work arrangements in profound ways. Where the jury's still out is just how many jobs will be lost to automation.

One artificial intelligence expert forecasted that 40 percent of the world's jobs could be replaced by robots in 15 years. Meanwhile, the World Economic Forum predicted that robots will displace 75 million jobs globally by 2022, simultaneously creating 133 million new ones. What seems clear is that all of the numbers, even the most optimistic, suggest that unemployment risks exist and extensive retraining, re-skilling and job movement will be required in a world of work where automation plays a key role.

I believe that current trends in training by both governments and employers are inadequate to cope with the coming labor market dislocations. Employers should focus on training, investing in human capital and taking responsibility for the changes coming our way in order to remain relevant and reap the benefits that both people and technology have to offer—together.

1) Increase Your Training Efforts—And Implore Buy-In From the Public Sector

A February 2019 Brookings report shows that while in 1996 employers paid for 19.4 percent of workers' formal training, a comparable figure in 2008 was 11.2 percent—a decline of 42 percent in just 12 years. If training is going to help with the transition to a more automated workplace, long-standing trends toward less training will need to change.

That same Brookings report also compared what the United States government spends on "active labor market policies" that train people and match them to jobs to what other industrialized countries spend. The U.S. ranked 31 out of 32 total countries evaluated for public expenditure on labor market policies as a proportion of GDP. And between 1985 and 2015, U.S. government cut labor market spending in half. The implication? Our government needs to invest more in training, job matching and other efforts that help labor markets work more effectively.

An administration that relies on employees to acquire training and transition to new occupations on their own almost certainly will leave too many people in dire straits. Just as government has tried to mitigate the effects of jobs lost to foreign trade, public policy should seek to mute the economic effects of automation through training and other policies.

2) Focus on Human Sustainability

Employers should embrace the issue of human sustainability and stewardship of the work environment with the same vigor they've brought to environmental sustainability—and for many of the same reasons. Just as companies today tout their physical environmental bona fides, in the future they may want (or need) to tout their human sustainability accomplishments. Things like high retention rates and internal growth are all things for companies to highlight. We see this already in competition for good ratings on sites like Glassdoor and in rankings like those put out by Great Place to Work.

Despite this, over the past decade I've seen the relationship between companies and their employees become much more transactional. And that will need to change if companies are to embrace the task of getting their people ready for coming workplace transitions and dislocations.

Multi-year careers at one company have transitioned to jobs of shorter duration—"gigs." With limited attachment between employers and employees, neither party has an interest in investing in the relationship, which provides one explanation for why training has declined in the U.S. and is lower here than in countries with less "flexible" labor markets. This is a good time for companies to recognize the trend and reinvest in their people through training.

3) Take Responsibility for AI and Employees

If employers don't accept some responsibility for helping their workforce adjust to a world with more automation and artificial intelligence, employees will likely falter, but many companies have no intention of providing them a lifeline. Technology columnist Kevin Roose's observations of discussions at the recent World Economic Forum meetings are instructive of the attitude of the moment: "In public, many executives wring their hands over the negative consequences that artificial intelligence and automation could have for workers. But in private meetings, these executives tell a different story: They are racing to automate their own work forces with little regard for the impact on workers."

Companies face the problem of collective action—few firms want to be the only ones to provide training while other firms free-ride on those efforts. Therefore, it may fall to industry associations, local associations of businesses and national organizations such as the Chamber of Commerce and the National Association of Manufacturers to promulgate and possibly enforce guidelines for retraining and upskilling employees.

It's almost impossible to predict what will happen as automation and artificial intelligence increasingly penetrate workplaces. But it seems fair to forecast that it will not be possible for companies—or governments—to simply continue on the same path. The labor market transformations and their economic consequences are simply too large to believe that continuing a relatively hands-off, laissez-faire approach will be politically or economically viable.

Photo: Creative Commons

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