16th November 2018

Invest In People: The Real Drivers of the 4th Industrial Revolution

The rapid pace of technology adoption in business is changing the workplace as we know it.

Artificial Intelligence, automation, robots and cloud technology are all bringing significant benefits to businesses but improvement cannot be achieved and sustained by technology alone – it also needs people.

The Fourth Industrial Revolution can only succeed if the right workforce is there to drive it along. The two go hand-in-hand, and companies need to be more aware of this and start putting strategies and plans in place to ensure they have a fully-equipped and engaged workforce of the future.

Workers also need to accept that change is coming and that they must become more adaptable if they are to have a future role in the workforce.

McKinskey Global Institute has produced a number of reports assessing the impact and needs on the global workforce as a result of the Fourth Industrial Revolution. Its latest, Skill Shift: Automation and the Future of the Workforce, published in May this year, indicated that the growth in demand will be for technological skills and by 2030 it will represent 17 percent of hours worked, up from 11 percent in 2016.

Therefore, meeting this demand falls upon executives and HR departments to use the right tactics to upskill existing employees and to also have the right recruitment mechanisms to secure the best talent.

Fundamental changes in the workplace will see a shift to more project-based work, meaning employees will need to have a range of skills rather than being an out-and-out specialist. Those businesses that are early adopters of AI and automation and other Fourth Industrial Revolution technologies will also need to people to maintain and develop these.

The report states that early adopters will get a significant edge in having the right workforce to prosper having noted that companies view lack of talent and skill mismatches as barriers to reaping the benefits of automation.

So, if the people you hire and employee are going to drive your business to greater success, how do you achieve this?

There are five main types of actions, according to the report, that companies can take to build the workforce of the future. These are: retrain, redeploy, hire, contract and release.

Retrain

Take a proactive step and raise the skills capacity of your current employees by teaching them skills that are new or qualitatively different. Look at raising the existing skills of an employee to a higher level or to keep pace with technological change, while also consider hiring entry-level employees with the goal of training them in the new skills needed. Additional advantages of this is employees will be more motivated, more productive and feel more valued.

Redeploy

Evidence shows that some employees have skills that are either overlooked or businesses are unaware of. Employees whose skillset is not utilised fully feel less motivated, so reassess what skills all employees have and then redeploy workers with specific skills around the firm, which makes better use of the skills capacity available inside the business.

Hire

Hiring the right people may be more cost effective than some of the other options, including retraining, depending on the skills needed. Hiring does come with risks and is also dependent on the talent available – but the right hire can bring significant benefits. HR teams need to examine their recruitment techniques and sources, while businesses have to offer an attractive culture and benefits.

Contract

Companies should consider bringing in skilled workers from outside the organisation – on a short-term hire, if they are not readily available. Freelancers, contract workers and staff from specialist agencies can plug a gap, while long-term plans are ongoing. Strategic partnerships or outsourcing is also an option. Contracting allows companies to rapidly acquire the skills they need (if such talent is available).

Release

This may seem a drastic option in securing talent, but releasing employees may be necessary in some companies, particularly in industries that are not growing very rapidly and where automation can make a significant impact. This can release costs to enable workforce transformations, such as retraining or new hires. However, there is the risk of potentially lower productivity, lower morale amongst the workforce and higher-than-expected costs – if not handled properly.

Whichever option you take, the one option that businesses can’t afford to take is to do nothing at all if they want to capitalise on the Fourth Industrial Revolution.

For further insight into the McKinskey report click here.