Unleash their potential. Most transformations fail. They provide temporary financial support, transition services, and retraining to help the unemployed quickly find new jobs. These include: a push towards automation; the shift to remote work or hybrid remote … From the results of our survey, we can already see the beginnings of intensified competition for top talent. Not for profits have the flexibility to develop innovative approaches to issues relating to skills, and some have been testing novel approaches. Please email us at: McKinsey Insights - Get our latest thinking on your iPhone, iPad, or Android device. If you would like information about this content we will be happy to work with you. We strive to provide individuals with disabilities equal access to our website. This makes it even more important to understand the factors that enable success. Something went wrong. 6. As with large companies, respondents at smaller organizations are much more likely than others to consider the entire organization under the scope of automation efforts. Forty-six percent of respondents who report automation success at larger companies say their leaders understand very well or completely the total cost of ownership for their automation efforts. collaboration with select social media and trusted analytics partners Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more. Jacques Bughin is a senior partner in McKinsey’s Brussels office, Eric Hazan is a senior partner in the Paris office, Susan Lund is a partner in the Washington, DC, office, Peter Dahlström is a senior partner in the London office, where Amresh Subramaniam is a consultant, and Anna Wiesinger is an associate partner in the Dusseldorf office. Demand for all physical and manual skills and for basic data input and processing will decline, while growth will be strong in demand for interpersonal skills, creativity, and empathy. 3 The most commonly deployed technologies, according to respondents, are business-process-management platforms and robotic process automation (Exhibit 2). This question was asked only of respondents who said their organizations either had fully automated a process in at least one function or business unit or had set up an automation program and are scaling automation technologies across multiple parts of the business. Fifty-five percent of respondents at successful smaller companies say their organizations have established key perfor­mance indicators to track the impact of automation efforts, compared with 37 percent of respondents at other smaller companies. Using analytics into lead-generation helps identify leads with the best conversion potential. Smart automation and AI will continue to reshape the revenue and margins of retailers as self-checkout machines replace cashiers, robots restock shelves, machine learning improves prediction of customer demand, and sensors help inventory management. More work will be done by freelancers and other contractors, a shift that will boost the emerging “gig” or “sharing” economy. Higher cognitive skills and social and emotional skills will also be more in demand, while the need for physical and manual skills, particularly for gross motor skills and strength needed for occupations such as moving, machine feeding, and warehouse packing, will likely decline. While the 2018 findings showed that organizations with successful automation efforts were focused The need for finely tuned social and emotional skills will rapidly grow. For example, using bots in contact centers allows employees to trigger automated data retrieval from different systems, thereby allowing them to focus on building relationships with customers. A recent McKinsey & Co. global survey of 800 executives in a range of industries reveals key trends. For example, while social and emotional skills will be in growing demand across all five sectors, the need for basic cognitive skills will decline in banking and manufacturing, stay flat in healthcare, and only fall back slightly in retail. McKinsey found that after more than a decade lagging the industrial sector, packaging solutions improved operational performance with a 2 percent EBITDA margin expansion. Executive Briefing - McKinsey Global Institute. Of those who report that their organizations have not begun to automate, nearly half say there are plans to do so within the next year. Companies can do much to shape the workforce of the future, but other stakeholders also have an active role to play. Please use UP and DOWN arrow keys to review autocomplete results. Subscribed to {PRACTICE_NAME} email alerts. Download Skill shift: Automation and the future of the workforce, the full discussion paper on which this article is based (PDF–2.55MB). These respondents are also more than twice as likely as others to identify employee training and capability building as one of the primary reasons for their organization’s automation success. While the demand for technological skills has been growing since 2002, it will gather pace in the 2016 to 2030 period. Indeed, more than 17 percent expect their workforces on both sides of the Atlantic to grow. Ruben Schaubroeck, Felicita Holsztejn Tarczewski, and Rob Theunissen, “Making collaboration across functions a reality,” McKinsey Quarterly, March 2016; Julie Goran, Laura LaBerge, and Ramesh Srinivasan, “Culture for a digital age,” McKinsey Quarterly, July 2017. Most transformations fail. We define “large companies” as those with annual revenues of $1 billion or more, according to respondents. We define “large companies” as those with annual revenues of $1 billion or more, according to respondents. As operating models become more complex, the findings suggest it’s also important for leaders to have a full view of the costs of automation programs that may span across the organization. At smaller organizations, 26 percent of respondents say the same. Companies should promote a culture of continuous learning while incorporating new technologies and should deter­mine what skills people will need to help the organization meet its automation goals. At smaller organizations, 26 percent of respondents say the same. tab. In aggregate, between 2016 and 2030, demand for social and emotional skills will grow across all industries by 26 percent in the United States and by 22 percent in Europe. Flip the odds. The need for a workforce that uses only basic cognitive skills, such as data input and processing, basic literacy, and basic numeracy, will likely decline, while the number of technology experts and other professionals will grow, as will the number of occupations that require customer interaction and management. We define business-process automation as the use of general-purpose technologies (for example, bots and algorithms) to perform work that was previously done manually, in order to improve the functionality of a company’s underlying systems. Some companies have launched philanthropic initiatives or work with foundations on skills-related issues. As we look ahead, leaders can take the following steps to capitalize on the potential of automation. tab, Engineering, Construction & Building Materials, Travel, Logistics & Transport Infrastructure, McKinsey Institute for Black Economic Mobility. Please click "Accept" to help us improve its usefulness with additional cookies. The need for technological skills, both advanced IT skills and basic digital skills, will increase as more technology professionals are required. Some jobs will shrink after automation, while others will expand. In fact, a new McKinsey study found that 85% of C-suite executives reported a significant acceleration of digitization and automation during the pandemic in an effort to stay agile and maintain … We'll email you when new articles are published on this topic. but those that have done so are seeing a higher success rate than larger organizations. The findings suggest that successful companies’ operating models—their structures for coordinating activities across the organization—allow their automation programs to properly manage the complexity of deploying automation technologies, which makes it easier for those programs to scale. The findings of the latest McKinsey Global Survey on the subject show a nearly 25 percent year-over-year increase in the use of AI 2 We define AI use in standard business processes as … Automation could widen geographic disparities across America's local economies, a report from McKinsey Global Institute predicted. Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. Digital upends old models. This variation reflects the gross motor skills and strength needed for occupations such as elder care and physical therapy and the fine motor skills required of registered nurses. Automation and AI will change the interaction among patients and healthcare professionals. In 2018, 56 percent of respondents said their efforts were successful or very successful at meeting their targets. McKinsey’s research shows that automation could cause 23 million job losses by 2030, but create 10 million new jobs. The responses show that large companies have automated at least one business process in an average of four functions, such as finance, IT, and customer service. Automation and AI are enabling companies to tap into new reserves as well as increase extraction and production efficiency. Among respondents at large companies, 41 percent say their organizations are using automation across the organization or have fully automated processes in at least one function or business unit. A survey of more than 3,000 C-suite executives in seven countries—Canada, France, Germany, Italy, Spain, the United Kingdom, and the United States—that we conducted as part of our research confirms our quantitative findings. However, there is also a significant need for everyone to develop basic digital skills for the new age of automation. Respondents from companies that haven’t succeeded with automation most commonly say their companies are pursuing automation programs for long-term cost savings, to keep pace with competitors, or to address concerns about the effectiveness of their business processes. Economic Conditions Snapshot, June 2019: McKinsey Global Survey results June 27, 2019 – Executives’ sentiments on the global economy are the lowest in years, amid growing concerns over trade conflicts. While the smaller companies meeting their automa­tion targets exhibit several of the same success factors as successful large organizations, one addi­tional factor appears to be a marker of success for smaller organizations. These functions include data analytics; IT, mobile, and web design; and research and development (Exhibit 2). This has been emphasized by a recent survey from McKinsey, which showed that whilst many companies are dabbling with AI and automation, a relatively small number are actually achieving … 3. Failure to address the demands of shifting skills could exacerbate social tensions and lead to rising skill-and-wage bifurcation. Also, explore how to get small companies on board. The increase in the need for social and emotional skills will similarly accelerate. Learn about This question was asked only of respondents who said their organizations either had fully automated a process in at least one function or business unit or had set up an automation program and are scaling automation technologies across multiple parts of the business. hereLearn more about cookies, Opens in new tab. McKinsey & Company Economic Conditions Snapshot, March 2018: McKinsey Global Survey results Global respondents see trade-policy changes as rising risks to growth, and those in … Economic Conditions Snapshot, March 2020: McKinsey Global Survey results March 20, 2020 – As the coronavirus outbreak unfolded at the beginning of March, the survey elicited sobering … The demand for physical and manual skills has been declining for 15 to 20 years, and this decline will continue with automation. tab, Engineering, Construction & Building Materials, Travel, Logistics & Transport Infrastructure, McKinsey Institute for Black Economic Mobility. Physical and manual skills will nonetheless continue to be the single largest category of skills (measured by time spent), shrinking from 31 percent of workers’ time in 2016 to 25 percent in 2030 across the United States and Western Europe. A recent McKinsey Global Institute survey of 800 executives from a wide range of industries in eight countries noted, "They have accelerated the deployment of digitization and automation during … The online survey was in the field from February 4 to February 14, 2020, and garnered responses from 1,179 participants representing the full range of regions, industries, company sizes, functional specialties, and tenures. The consulting firm now estimates that … The demand for care providers, such as nurses, will continue to see growth, while the demand for office-support staff will see decreases because of automation of tasks related to record keeping and administration. At a time when companies are increasingly embracing technologies such as robotic process automation, natural language processing, and artificial intelligence, and as companies’ automation efforts mature, findings from our second McKinsey Global Survey on the topic show that the imperatives for automation success are shifting. In the survey, automation did not include the use of automation that was custom built (for example, Excel macros and custom scripts) for organizations. Among respondents at large companies, 41 percent say their organizations are using automation across the organization or have fully automated processes in at least one function or business unit. Skill shifts have accompanied the introduction of new technologies in the workplace since at least the Industrial Revolution, but adoption of automation and artificial intelligence (AI) will mark an acceleration over the shifts of even the recent past. People create and sustain change. The mix of physical and manual skills required in occupations will change depending on the extent to which work activities can be automated. The overall need for physical and manual skills in the sector is decreasing at more than twice the rate of that for the whole economy. Indeed, respondents at successful companies are more likely than others to say that coordination across business units or functions is one of the elements that will have the greatest influence on automation efforts’ outcomes in the coming years (Exhibit 6). A recent McKinsey survey found that heavy industry companies tend to rely most heavily on RPA for their automation initiatives; 44 percent of heavy industry uses this technology. Markle, for example, is piloting a program called Skillful that aims to help workers without a college degree upgrade and market their skills. Respondents from com­panies with successful efforts are seven times more likely than others to say they formally involve the communications function while implementing automation efforts, and they are more than twice as likely to say the HR function is involved. The demand for technology skills will rise by 55% by 2030, according to the 2018 McKinsey Global Institute (MGI) report, Skill Shift: Automation and the future of the workforce. The need for basic cognitive skills is also declining as office support functions are automated. Encourage cross-functional collaboration. The aforementioned McKinsey survey identified that a fundamental challenge is finding skilled people to implement AI effectively. By contrast, the need for both basic cognitive skills and physical and manual skills will decline (Exhibit 1). The share of predictable manual jobs, such as driving, packing, and shelf stocking, will substantially decline. Looking at respondents from larger companies (with $1 billion or more in annual revenues) that are meeting their automation targets, The online survey was in the field from February 4 to February 14, 2020, and garnered responses from 1,179 participants representing the full range of regions, industries, company sizes, functional specialties, and tenures. If you would like information about this content we will be happy to work with you. Just 10 percent of respondents at other companies say the same. To gain its insights, researchers conducted surveys … In the survey, automation did not include the use of automation that was custom built (for example, Excel macros and custom scripts) for organizations. Automating a process can require expertise in customer experience, digitization, analytics, and organizational design. The rise in demand for entrepreneurship and initiative taking will be the fastest growing in this category, with a 33 percent increase in the United States and a 32 percent rise in Europe. Those with annual revenues of less than $1 billion are classified as “smaller companies.”, Ruben Schaubroeck, Felicita Holsztejn Tarczewski, and Rob Theunissen, “. These conclusions rest on our detailed analysis of 2,000-plus work activities for more than 800 occupations. For example, operating vehicles or stocking and packaging products are more susceptible to automation than are assisting patients in a hospital or some types of cleaning. Between 2016 and 2030, demand for these skills will fall by 11 percent overall in the United States and by 16 percent overall in Europe. Companies can therefore benefit from adopting an operating model that brings together capabilities from across the organization—in collaboration with third-party service providers and vendors, as needed—to reinvent critical processes with automation. The McKinsey Global Institute has been conducting an ongoing research program on automation … For example, registered nurses and physician assistants now do some of the tasks that primary care physicians once carried out, such as administering vaccinations and examining patients with routine illnesses. The composition of jobs and skills will shift, however. The decline will be in nearly all sectors as machines increasingly take over straightforward data-input tasks. The findings indicate that smaller companies are less likely than large companies to have automated any of their processes, Financial services have been at the forefront of digital adoption, and the banking and insurance sector is likely to see significantly shifting demand for skills through 2030. That change will require redesigned business processes and a new focus on the talent they have—and the talent they need. At the same time, a range of higher-education institutions and other experts have called for universities, colleges, and other educators to play a more active role in filling the needs of the labor market, including by increasing data-science and other high-tech courses. We use cookies essential for this site to function well. Learn more about cookies, Opens in new Reinvent your business. Altering work allocation will allow companies to make the most effective use of different qualification levels in their workforce. As organizations think about incorporating automation, they should identify the processes that, if automated, will best support their strategy. McKinsey & Company 3 Last 50 years of growth, 1964-2014 CAGR for G19+Nigeria % Next 50 years of growth CAGR for G19+Nigeria, % … Nearly all business leaders we surveyed (88 percent) said they believe HR functions will need to adapt at least moderately. Both sets of stakeholders have potentially significant roles to play in addressing shortages of certain skills and retraining in the automation era. This increase will drive strong growth in the demand for social and emotional skills. To measure skill shifts from automation and AI, we modeled skill shifts going forward to 2030—and found that they accelerated. In a 2019 survey of global executives, McKinsey found that only 58% said their companies had incorporated AI into at least one process or product. MGI estimates … As much as one-third of the United States workforce could be out of a job by 2030 thanks to automation, according to new research from McKinsey. In 2018, 56 percent of respondents said their efforts were successful or very successful at meeting their targets. McKinsey & Company: Private autonomous vehicles: The other side of the robo-taxi story Although private self-driving cars attract less attention than robo-taxis do, our new market model … And McKinsey research shows that organizations that meet automation goals are far less likely to view automation as a means to reducing costs and more likely to see it as a strategic lever. What’s more, among respondents reporting success, 72 percent credit making auto­mation a strategic priority with being one of the most important factors in their companies’ achieve­ments with automation. Something went wrong. 6 Policy makers will need to clarify the roles of individuals, companies, and state agencies. Use minimal essential Please try again later. 4 About one in four respondents said they would try to use connections to industry associations, offer more attractive wages than competitors, directly hire from other companies, or broaden their talent sources to attract the talent they need. Demand for advanced IT skills, basic digital skills, entrepreneurship, and adaptability will see the largest double-digit cumulative growth. Across regions and industries, the survey results suggest that automating businesses is a global phenomenon (Exhibit 1). Companies will need to choose from the following five main types of action as they build their future workforce: Geography also plays a role in determining which workforce-skill decisions to make, with a net difference between European and US companies. A key to companies’ future success will be in providing continuous learning options and instilling a culture of lifelong learning throughout the organization. These technologies, and that human-machine interaction, will bring numerous benefits in the form of higher productivity, GDP growth, improved corporate performance, and new prosperity, but they will also change the skills required of human workers. The demand for physical and manual skills along with basic cognitive skills are expected to decrease, while demand for higher cognitive, social and emotional, and technological skills should grow. Unbundling and rebundling work raises company efficiency and can also create a new set of middle-skill, “new-collar” jobs. Executives also expect declines in the need for basic cognitive skills, particularly the basic data-input and -processing skills used by data-entry clerks and typists and in a range of back-office functions. This will lead to growth in the need for social and emotional skills, especially advanced communication and negotiation, leadership, management, and adaptability. Our flagship business publication has been defining and informing the senior-management agenda since 1964. To adjust for differences in response rates, the data are weighted by the contribution of each respondent’s nation to global GDP. The next wave of automation and AI in manufacturing will disrupt production functions in factories through better analytics and increased human-machine collaboration. The contributors to the development and analysis of this survey include Gary Herzberg, a consultant in McKinsey’s New Jersey office; Rohit Panikkar and Rob Whiteman, both partners in the Chicago office; and Anand Sahu, a consultant in the Silicon Valley office. Over the next ten to 15 years, the adoption of automation and AI technologies will transform the workplace as people increasingly interact with ever-smarter machines. 1 We also see successful companies scaling automation across the organization. Use minimal essential Leaders’ understanding of automation programs’ costs also distinguishes smaller successful companies. There will be a shift in demand toward higher cognitive skills. Two-thirds of respondents say their organizations are at least piloting the automation of business processes in one or more business units or functions, compared with 57 percent who said so in the previous survey (Exhibit 1). Reinvent your business. We also see evidence of adoption of conversation-automation technologies such as voice assistants and chatbots. Other initiatives include boosting mobility by moving to portable benefits, which are not tied to a particular job or company and are owned by workers. Healthcare is the only sector in our analysis in which the need for physical and manual skills will grow in the years leading to 2030. Please use UP and DOWN arrow keys to review autocomplete results. In our survey, 40 percent of companies describing themselves as extensive adopters of automation and AI expect to shift tasks currently performed by high-skill workers to lower-skill ones. Never miss an insight. McKinsey found that 49 percent of the activities people are paid to do in the global economy can be automated with “currently demonstrated technology.” That involves US$15.8 trillion in … Let's take a look at the progress with automation according to a new McKinsey survey. Respondents also said that individuals with a college degree are more likely to be hired or contracted, more likely to receive retraining, and less likely to be displaced. Many didn’t fully grasp the potential … Two years ago our survey found that making business-process automation a strategic priority was conducive to success beyond the piloting stage. Demand for higher cognitive skills will grow, driven by the need for greater creativity and complex information processing. As automation programs expand and grow more complex, silos within the organization can hinder performance if business areas do not coordinate closely with one another. our use of cookies, and McKinsey Global Institute Skill shift: Automation and the future of the workforce 3 ALREADY, THERE IS EVIDENCE OF SKILL MISMATCHES IN THE UNITED STATES AND EUROPE A growing body of evidence … A well-trained workforce equipped with the skills required to adopt automation and AI technologies will ensure that our economies enjoy strengthened productivity growth and that the talents of all workers are harnessed. Second, successful organizations also gather individuals’ expertise and embed it in the design of automation solutions. 18.05.2017 - McKinsey Global Institute | Innovations in digitization, analytics, artificial intelligence, and automation are creating performance and productivity opportunities for business and … In addition, HR will need to change as technology alters the way organizations work as well as the size and nature of the workforce. Examples of such action include revamping labor agencies; several European countries, including Germany, have changed the way their national labor agencies operate by shifting public-employment policy from “passive” (unemployment compensation) to “active” (employment agencies becoming job centers that manage and facilitate retraining of the unemployed). How will demand for workforce skills change with automation? Automation benefits per MuleSoft 2021 digital transformation trends report McKinsey estimates that automation could raise productivity in the global economy by up to 1.4% annually. Unleash their potential. McKinsey, the management consulting firm, yesterday published “The Road Ahead for e-Mobility,” a major 2020 study about EV adoption. Learn more about cookies, Opens in new Another 38 percent say their organizations have not begun to automate business processes, but nearly half of them say their organizations plan to do so within the next year.33. 3 Analysis of “ The automation … McKinsey & Company further states that automation is possible in 30% of sales activities. When we asked respondents the primary reasons their companies are pursuing automation, 38 percent of those reporting success say their companies defined automation as a priority during their strategic planning process—nearly four times the share from other companies (Exhibit 3). Those with annual revenues of less than $1 billion are classified as “smaller companies.” The survey, conducted just before the COVID-19 pan­demic, suggests that while more companies are pursuing automation, there hasn’t been a significant change in the share achieving success over the Strong growth in demand toward higher cognitive skills will inevitably be a in... Automation has become even more important to enable success viewed as the most automated are experiencing largest. To clarify the roles of individuals, companies, too, will see largest. Contrast, the data are weighted by the contribution of each respondent s... Leaders can take the following steps to capitalize on the potential of.! Success rate than larger organizations roles of individuals, companies will need to rethink how work organized... Ai are enabling companies to tap into new reserves as well as modification of ones. 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