Topics:   Corporate Governance,Featured,Strategy,Technology

Topics:   Corporate Governance,Featured,Strategy,Technology

August 2, 2018

Oversight of Workplace Dynamics: The Impact of Technology

August 2, 2018

Talent is every organization’s lifeblood. Coupled with demographic and social trends, the technologies of the digital age are transforming the workplace. My previous blog discussed how shifts in workplace dynamics are forcing companies to transition the traditional labor model into a talent ecosystem in which non-employees complete much (if not most) of the organization’s work. This month’s blog discusses the implications of digital labor, in which automation, robotics, machine learning, and artificial intelligence (AI) capabilities replace human workers (as so-called electronic workers), and the related impact of those implications on board oversight. Specifically, the prior blog emphasizes two of the three dimensions of the evolving labor model—skills and scale—whereas this blog discusses digital labor, which is the third dimension.

As the era of physical locations, workforces, and infrastructure transitions to the digital age, technology-enabled “digital labor” offers powerful, hyper-scalable enhancements to the scalability offered by outside contractors and part-time help. It also adds more capabilities, as well as a higher level of performance that is faster, more reliable, and less costly.

The bottom line is that new and emerging technologies will greatly influence how companies design and manage their labor models. Sometimes that influence will simplify labor models, and at other times it will make them far more complex. Simply stated, technology—if applied intelligently—has a role in supporting and shaping the workforce by offering additional capabilities that will increase quality, compress elapsed time, reduce costs, and enhance scalability.

Constructive board engagement with management is needed in this area because this change could make the traditional human resources model obsolete in the future. As directors focus on the realities of a workplace in transition and the implications of digital labor for that transformation, they should consider the following questions:

  1. What are we doing to stay abreast of the technological trends affecting work and the workplace? The effect of digital labor opportunities on the workplace—particularly within your industry—should be assessed continuously over time. The board should be briefed periodically about the impact of such technologies on the business.
  2. Given evolving technological trends, how are we evaluating their impact on our workforce? Directors should consider questions such as: What’s the goal of automating work—that is, what are we seeking to accomplish and why? What are the benefits and costs to the organization, what are the likely implications of automation on the industry, and what are possible actions by competitors? Which technologies should we embrace now versus later? This evaluation should be conducted about the business as a whole and not be focused only on technology matters.
  3. Are we automating the right processes? There are two categories of tasks that are more susceptible to human error and require a lot of time to execute: the analysis of large amounts of data and processes that are heavily dependent on people to accurately carry out routine, methodical tasks. These data-intensive and manual processes are ideal candidates for automation. Directors should press management to ensure that a compelling purpose and return on investment is driving the automation of processes.
  4. Are we avoiding automation of poorly designed processes? The organization should not automate a broken process. Sometimes, it is necessary to alter a process or change a step—with an eye toward making it more efficient and effective and improving its relevance to the customer—before automation is appropriate. Challenge your management team to think critically and act to make the necessary changes.
  5. Is the organization effective at managing automation? Innovation in automating work must be considered a key success factor on a strategic level so that employees believe the organization is capable of it and is agile in making it happen. As management’s understanding of machine learning and AI concepts progresses—including speech recognition and natural language recognition—more time and greater care is needed in the implementation process. These technologies are advancing faster than people can acquire the skillsets and expertise to manage them.
  6. Is the organization effective at managing change due to automation? Managing shifts in workplace dynamics requires a clear view as to what the organization might look like several years down the road. Getting there requires management to take the steps that it is comfortable pursuing now. As technology automates work activities, management needs to:
    • Integrate the new capabilities in a manner seamless to the customer experience. That includes effective integration with all relevant customer-facing and regulatory compliance touchpoints and systems.
    • Retrain, reskill, and redeploy members of the workforce whose jobs have been eliminated.
    • Manage people’s perceptions of change, particularly when they perceive a threat to their continued employment. Management must be forthright in explaining the reasoning behind the change, its benefits, the strategic imperative of making it happen, and the potential opportunities for employees.
  7. How does the organization maximize its chances of success? Companies must embrace digital capabilities as a core competence that is assessed on a regular basis and improved upon continuously enhance work performance. The entity should be positioned as a learning organization, investing in training, education, and development on the digital front. Digital tools should facilitate social collaboration and work, empowering teams and employees with better interaction and communication, with the objectives of raising staff motivation, increasing efficiency and agility, and generating faster work

Directors should engage with management in understanding the impact of digital technologies on work and its near- and long-term ramifications for the enterprise’s workforce. As executives transition the workforce to the digital age, they need to be aware of and embrace enabling technologies that will help the enterprise better serve its customers and create value. The board has an important role in assessing management’s thinking as the company’s talent and labor model strategy evolves and is impacted by digital technologies.

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