Automation failing to improve productivity – employees an afterthought | Capgemini

Automation failing to improve productivity – employees an afterthought | Capgemini

A new report from the Capgemini Research Institute finds that, in a majority of companies (58 percent), automation has yet to meet executives’ goal for increased productivity.

The study reveals that while automation technologies do increase productivity to an extent, the key to reaching their full potential lies in retraining and ‘up-skilling’ the workforce.

However, in most organisations, the impact of automation on workers is a strategic afterthought, found Capgemini. Almost 60 percent of HR and general management executives admitted that it is not a key consideration in their automation strategies.

The full report, ‘Upskilling your people for the age of the machine’, is available here.

Retraining is key to tech success

The research was based on a survey of 800 executives and 1,200 employees worldwide from over 400 large organisations.

It found that enterprises with a 50,000-plus workforce who have advanced up-skilling programmes in place can expect to save about $90 million more a year than companies that don’t retrain workers or who have yet to up-skill them.

When asked to name their main reasons for undertaking automation projects, 37 percent of respondents said the aim was to improve workforce productivity – the most popular motivation after improving quality (43 percent).

Yet 58 percent of all executives and 54 percent of employees said that automation has failed to have an impact on productivity. The findings were especially marked in Sweden, the US and China, cited by 66 percent, 64 percent, and 61 percent of executives, respectively.

Employee morale

Up-skilling unlocks the benefits of automation and boosts employee morale and retention, says Capgemini.

Among organisations that combine automation efforts with a clear up-skilling programme, there is certainly more optimism about the impact of the technology, found the survey.

In these cases, a majority of employees (52 percent) and a high proportion of executives (46 percent) said that automation is improving productivity. That’s compared to just 42 percent of employees and 35 percent of executives in organisations that have yet to start full-scale retraining.

In enterprises that are midway through a retraining programme, employees are more positive about: career progression than those in the initial phases (76 percent vs 60 percent); boosted morale (48 percent against 33 percent); and carrying out new responsibilities (57 percent vs 46 percent).

Yet despite the evident importance of up-skilling programmes, few organisations have mature initiatives in place, according to Capgemini.

While 91 percent of the organisations surveyed are working on a skills programme to some degree, 35 percent have yet to begin establishing relevant infrastructures and partnerships, while 73 percent have still not started a pilot run.

To date, just 10 percent have begun a full-scale up-skilling programme for their workforce.

Employees were critical of some aspects of new learning initiatives. A clear majority (61 percent) said such programmes had not helped them develop the skills to do their work more efficiently, while 54 percent said they had not made them more employable.

By contrast, 62 percent and 54 percent, respectively, said the programmes “helped me to avoid being laid off” and “get rid of repetitive activities”.

Not a simple challenge

The report finds that analysing the impact of automation on people is a key consideration that many organisations struggle with, but it is nevertheless an important first step.

However, business leaders are not talking enough to their employees about automation initiatives, up-skilling plans, and/or emerging roles, says Capgemini.

Less than half of the senior executives (45 percent) surveyed communicate with their workforces on the organisations’ automation initiatives, their importance, and/or the potential impact on the workforce.

Eberhard Schroder, director of HR services at German car parts manufacturer ZF Friedrichshafen, said, “I believe that change management in adapting the workforce to automation plays at least half the role in making a success of an automation strategy.

“And communication is a key pillar that change management rests on. Leaders have to come out and communicate from an organisation perspective what are we doing, why are we doing it, and to what extent.”

Claudia Crummenerl, managing director of the People and Organisation practice at Capgemini Invent, said, “Automation offers significant benefits to large organisations, but only if the implementation of technology is matched by the up-skilling of people.

“Too many big companies are lagging in developing training programmes and, as this research shows, are not realising full productivity benefits as a result.

“There is no question that automation is going to transform the workforce and existing job roles, but the crucial factor is that companies make faster progress to prepare themselves, and their employees, to realise the benefits of automation.”

Internet of Business says

Overall, the Capgemini report adds to the recent chorus of disapproval over how many organisations are implementing Industry 4.0 technologies such as AI, robotics, and automation, with a number of analysts warning that many are deploying the technologies tactically to cut costs rather than strategically to make their businesses smarter and more agile.

Many such reports have also suggested an emerging culture of ‘automate first, ask questions later’, with the World Economic Forum among those saying that long-term success comes from investing in employees, not casting them aside.

The Capgemini study follows hot on the heels on a Microsoft report on the strategic application of AI in the UK, which also found that a human-centric approach and investment in employees are key to project success, rather than adopting a facile, technology-led approach for short-term tactical gain.