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U.S. Employers Not Prepared for Talent Challenges from Expected Surge in Work Automation

Work automation, including the use of artificial intelligence (AI) and robotics, is expected to surge in the next three years in companies throughout the United States, according to a survey by Willis Towers Watson, a leading global advisory, broking, and solutions company. However, the survey finds very few companies and HR functions are fully prepared to address the organizational change requirements related to automation, which includes less reliance on full-time employees and greater reliance on contingent talent.

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Speed of Change Accelerates

The Global Future of Work Survey from Willis Towers Watson, which is based on responses from 909 companies worldwide, including 119 from the United States, finds that U.S. companies expect automation will account for on average 17 percent of work being done in the next three years. That compares with 9 percent of work companies say is being done using AI and robotics today, and just 5 percent three years ago. Additionally, 94 percent of U.S. companies that are already using AI and robotics will expand their use of automation in the next three years.

“Corporate America clearly sees work automation gaining momentum, with little signs of slowing down anytime soon,” said Tracey Malcolm, global leader, Future of Work at Willis Towers Watson. “The implications for HR and talent strategies are immediate. On one hand, the growing use of AI, robotics, free agent workers, contractors, consultants, and part-time employees brings with it HR challenges that only few organizations are prepared to tackle. On the other hand, many companies recognize the need for breakthrough and innovative approaches – and are reinventing work and how talent and skills combine.”

Striving to Keep Up

Indeed, according to the survey, less than 5 percent say their HR functions are fully prepared for the changing requirements of digitalization, although a third are somewhat prepared and have already taken some action to prepare for the future. For example, 44 percent of companies have taken steps to address talent deficits through workforce planning and actions, while 34 percent of companies have taken action to identify the emerging skills required for their business; 34 percent have taken action to match talent to the new work requirements, and 35 percent have taken action to enable careers based on a more agile and flattened organization structure.

Additionally, many survey respondents are either planning to take action this year or considering measures to prepare for the future, such as deconstructing jobs and identifying which tasks can be automated (51 percent), and identifying reskilling pathways for talent whose work is being subsumed by automation (41 percent). Employers are also taking action to identify “skill and will” gaps as automation changes skill premiums (49 percent), and reconfigures total rewards and benefits to fit a radically different workforce (49 percent).

Other Findings

In a reminder of the complexities associated with automation, the survey also points to some interesting dichotomies. For example, the percentage of employers automating work and seeing an increase in skill premiums is expected to double from 23 percent currently to 46 percent in the next three years. Conversely, more than a third of respondents (38 percent) expect to apply automation and redesign jobs to lower skill premiums over the next three years.

The impact of automation on the utilization of nonemployee talent is also noteworthy. While 13 percent of respondents say automation currently enables or requires them to use more nonemployee talent, such as free agents or contractors, 43 percent expect that to be the case in the next three years.

Roughly half of employers (51 percent) believe they will require fewer employees in the next three years as a result of automation compared with 28 percent of organizations that say that is true today.

“Most companies believe automation will have a significant impact on leaders and managers in the next three years,” said Renée Smith, director and North America leader, Future of Work at Willis Towers Watson.

This is underscored by the percentage of companies that say automation will change how managers educate workers on the impact of automation on their jobs in the next three years (30 percent this year versus 62 percent in 2020).  Additionally, more than three-quarters (78 percent) say leaders will need to think differently about the requirements and skills for successors and succession management as a result of automation.

“Management and leadership development will be a critical issue for companies of all sizes over the next three years. We know strong leadership is a key driver of employee engagement and retention. But in the face of rapidly changing work automation, companies will need to develop leaders and managers who can orchestrate a radically different work ecosystem while keeping all of the talent in their workplaces fully engaged,” said Ravin Jesuthasan, managing director, Talent and Rewards at Willis Towers Watson.