The Great Automation is Here

Amid a worldwide labor shortage, companies are spending record sums this year on automation. What has been the impact so far?

Retailers are doing it. Logistics companies are doing it. And China is doing it—faster than all of the other countries in the world combined. 

In a bid to maintain productivity amid a worldwide labor shortage, companies across industries and countries are accelerating the shift to automation. Robotics sales to US companies have hit a record high in each of the last three quarters. Through June of this year, robot manufacturers generated $1.2 billion in revenue, a 29% increase over the same period in 2021. Last year China installed 243,000 new robots in warehouses and factories across the country, a 45% increase from 2020 and nearly double the number installed in the US and Europe combined. 

While the shift to automation has been underway for years, the pandemic and subsequent Great Resignation have clearly hastened the need for organizations to turn to automation to maintain productivity, says Nathan Blain, global lead for optimizing people costs at Korn Ferry. “Automation has allowed leaders to organize work better to increase output and grow the economy despite the labor shortage,” he says. 

Critics worry that the trend will mean a greater loss of jobs, which has happened for some roles. But leaders have long countered that automating mundane manual tasks will free up workers for more creative, strategic, knowledge-based roles. Think of it as moving from a pyramid-shaped org chart to a diamond-shaped one. Companies are increasingly turning to chatbots to handle simple customer interactions, for instance, and hiring more experienced managers to resolve complex issues. Most recently, some large coffee companies have announced plans to rely more on machines to brew and serve coffee.

All these efforts, experts say, are reshaping jobs, not eliminating them, by reducing mundane tasks in favor of those requiring more skills. For example, in marketing, as television and digital ad-buying becomes more automated, lower- and mid-level roles are evolving to analyze data for demographic targeting, emotional behavior, purchase intent, and other more strategic tasks. “The prediction that jobs will get bigger sooner and that employees will take on bigger jobs faster is playing out,” says Jamen Graves, global co-leader of CEO and enterprise leadership development at Korn Ferry. 

The flip side, however, is that workers will be competing for jobs that require greater skill sets than they currently possess. Even before the current labor shortage, studies showed that around 85 million jobs could go unfilled by 2030, costing companies about $8.5 trillion in unrealized annual revenues—simply because there aren’t enough skilled people to fill them. Chris Cantarella, global sector leader for software in Korn Ferry’s Global Technology Market practice, says that the challenge for leaders is to reconcile the natural tension between digital acceleration and the purpose movement. The former, by its very nature, is going to reduce the number of jobs available. But the latter is founded on the principle that people are an organization’s most valuable asset and that their well-being is vital to success. “The question isn’t about automation,” says Cantarella. “It is about what percentage of people are going to graduate to bigger jobs.”

The answer, say experts, involves a concerted commitment from both organizations and employees. To make investments in automation pay off on the organizational side, they must be balanced with increased training, education, and development of employees. Similarly, employees have to be willing and motivated to learn new skills and systems and take on broader responsibilities and more challenging roles. 

Right now one of the biggest obstacles to faster adoption of automation is the return on investment. Leaders aren’t automating roles just to automate them, Cantarella says. Rather, the goal is to reduce the overall cost structure while increasing productivity. From a people perspective, upskilling is beneficial for both organizations and employees.

Going out onto the open market and hiring a bunch of new workers is not as cost-effective for an organization as having its existing employees learn new technologies, which can in turn help them earn higher compensation and gain more upward mobility. “What leaders want to avoid is taking on significant restructuring costs and having to rapidly acquire new talent at the same time,” says Graves.