Topics:   Risk Management,Strategy,Technology

Topics:   Risk Management,Strategy,Technology

November 19, 2019

Directors Discuss the Implications of AI for the Workforce

November 19, 2019

Ready or not, artificial intelligence (AI) is already permeating the business world, posing a host of opportunities and—if AI isn’t approached intelligently—an accompanying host of risks. AI’s lure may be in its capacity to collect and learn from data, which is indeed revolutionary, but AI’s implications extend well beyond having the right data at the right time and deploying it well.

NACD, in partnership with Grant Thornton, hosted an October 29 roundtable discussion in Naples, Florida for directors wanting to better understand the implications of this rapidly expanding technology and the board’s role overseeing how it is implemented and managed within an organization. Over the next two weeks, the NACD BoardTalk blog will feature highlights from this discussion.

Nichole Jordan, Grant Thornton’s national managing partner of markets, clients, and industry, led the conversation by breaking down the concept of AI into three questions boards should consider:

  1. What is our understanding of our company’s digital transformation strategy?
  2. Are we leveraging technology for our board work?
  3. How is our company staying ahead of regulations?

A digital transformation strategy hinges on the people that a company has to deliver on that strategy, according to Jordan, and AI can be a differentiator in a marketplace clamoring to attract and retain top talent. For example, some companies are using artificial emotional intelligence to monitor employee engagement and to make better-informed decisions and better drive business value.

In the financial services industry, for instance, the responsible company must pay financial penalties when trading errors occur, but these errors are common—and understandable—because the people responsible for executing trades are constantly operating under high-stress conditions. Innovations in wearable technology could be used to notify an employee when they are under a heightened state of stress and encourage them to slow down or wait to make a decision in the interest of avoiding making an error.

That same wearable technology could be used to monitor an employee’s facial expressions and vocal cadence—which could result in better business outcomes and, as one director observed, coaching and feedback in a call-center context. Other directors observed that AI could be used for employee safety and compliance—such as using AI technology to monitor time on the road in the trucking industry, in which drivers are required to drive no more than 11 hours per day.

These possibilities do raise ethics and compliance issues, though. For example, these potential advantages could also be seen as invasions of privacy. Many of the AI programs being piloted now to help employee performance are opt-in only, meaning the employee must consent for the company to collect their personal information in this way. Multiple attendees also expressed concerns about the hiring phase, in which AI could ostensibly be used to screen for people that fit the company’s current mold—potentially perpetuating or introducing discriminatory hiring practices, as well as denying a company of the game-changing talent it might have hoped to attract.

Here, it’s critical to remember that AI is only as good as the algorithms that underpin the system. “This is the risk here—and also one of the reasons why these systems are in pilot mode,” Jordan said. “But it’s also why the combination of the human and the machine leads to the very best outcome.”

Jordan emphasized the need to mindfully temper technology with human discretion and judgment:

“AI provides data points for a hiring manager to consider or can reduce a significant volume of applications—and those industries where there is a high job application volume is where we see this technology being tested right now.”

“But,” as one director observed, “there are so many mom-and-pop shops that don’t bring enough sophistication to the table that they run a huge risk of making some significant errors.”

“And it’s not just hiring,” another director added. “It’s promotions from within and making judgment calls. I’m concerned about biases and missed opportunities.”

Jordan noted that at the board level, an AI strategy is required because of that risk. “While the company may not be engaging with AI today, there should be a discussion about when it will be incorporated into the strategy,” Jordan said, “or, at least have some outside organizations come in and talk with you, because it’s good for boards to get that outside perspective.”

Visit the NACD BoardTalk blog next week for additional coverage of this discussion, including insights on how boards are using AI to approach their work and the regulatory concerns around this rapidly evolving technology.