Are Costly HR Solutions Making Employees Too Expensive? (The Business Case For Replacing Them With Robots)

Labor costs are up 4.2%, the biggest gain in 20 years, so employees are becoming an expensive option. 

This think piece is designed to get you to reconsider your “who does the work” options

Yes, we are experiencing an extremely rare event where employee costs are soaring while, at the same time, workforce productivity is actually decreasing. Employee costs have been increasing rapidly over the last two years for various reasons. Including pay raises, increased vacation and family leaves, added benefits including mental health and the reduced work hours resulting from work/life balance, and reduced workweek initiatives.

Unfortunately for human employees, when we become more expensive, the available alternative work substitutes like robots and software apps become much more attractive options. Rather than ignoring rising employee costs, smart HR leaders should declare a “productivity emergency.” Begin with a laser focus on getting HR involved in the increasingly common “who does the work” decisions. In addition to the obvious “hire an employee” option, the alternative options of using robots or software applications also now gets equal consideration.

ACTION ITEM – Begin Considering Technology Replacements For Employees 

Yes, employees are now much more expensive. Fortunately for employers, technology solutions have become cheaper, more available, more capable, and more efficient at the same time. So, if you were to think like an executive, now would be ideal for you to expect HR to lose its historical bias toward “people first” and “having employees do all work.” Instead, periodically re-examine each of your job families to determine which of the three “getting work done options” (employee/hardware/software app) currently has the highest ROI. 

Key learning – “putting people first” can be a costly HR mistake. In the ever-increasing number of cases where technology can do better work, faster at a lower cost.

Understand Why Technology Solutions Can Be A Superior Way To Get Work Done

Because of the current worker shortage, few human employees are even available at any reasonable cost. Many firms are being forced into considering technology solutions simply to maintain their current production levels. So, in this “new world of work.” Technology solutions will have to be compared side-by-side to the advantages and disadvantages of the “have an employee do the work” option. Here are the reasons why technology or a robot solution may be a superior choice.

  • Technology can do work that employees can’t – robots can do work in difficult weather environments and hazardous situations. They can also do high-precision work that an employee couldn’t even attempt. For example, they can lift and move amazing weights. And software apps can sort through reams of data and produce an answer in seconds.
  • Technology can do higher-quality work – technology solutions can do much faster and higher-quality work at a measurably lower error rate. Apps and robots can even measure the quality of their work outputs.
  • Robots will work more hours – technology solutions can literally work 24/7 all 365 days. They don’t call in sick, come in late, take holidays off or go on vacation. Also, they don’t get bored and loaf. Finally, they can do repetitive work without getting hurt, tired, or needing breaks.
  • Technology can be easily upgraded – upgrading employee skills can be slow and expensive. However, when the work changes, robots and technology can be easily and quickly updated to add new skills and capabilities.
  • They can be cheaper – robots and apps don’t demand pay, overtime, retirement, or employee benefits. Even though historically, many managers have resisted shifting to robots because of the high initial purchase price. However, you can now lease a robot from a company like Formic. You can effectively replace a $15 an hour employee with a fully programmed $8 per hour robot and not have the heavy initial investment. 
  • Technology solutions can do a broad array of tasks that humans now do – software apps have an array of capabilities, including voice, production, inventory, supply chain, quality control, and decision-making. Technology solutions can also answer questions and communicate information to a user. With AI, they can even improve their answers over time.
  • Technology doesn’t require a direct supervisor – robots or apps don’t require an expensive supervisor to handle the personal and team issues that an employee would have.
The New “Who Does The Work Paradigm”(An ES versus SHE model comparison)Employee/Software – this old ES “people-first model” relies on employees to do a majority of the work. And only periodically is that work supplemented with limited capability software.
Software/Hardware/Employee – the goal of this more modern SHE approach is to select the highest ROI option without any biases for or against humans. This emerging model begins with a focus on sophisticated “complete job software” to do new work. Because, unlike robots and employees, software solutions can be easily duplicated and distributed worldwide. The second option is to consider hardware options (robots or machines). And then finally, under the third option, you rely on permanent employees only when they provide superior performance and capabilities.

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Implementation Steps For Getting Involved In “Who Does The Work Decisions” 

Once you have decided that HR must be heavily involved in all “who does the work decisions.” Here are the implementation steps that will increase your credibility with executives.

  • HR must benchmark “next practice” companies – rather than starting from scratch. I recommend that HR learn from benchmark companies like Amazon and Google. Leaders in the advanced use of technology both within HR and throughout their business.
  • HR must become more data-driven – once smart HR leaders understand that one of the foundation factors that make robotics and software apps so successful is that they are 100% data-driven. So, if HR hasn’t already done so, it needs to shift away from its reliance on making decisions based on intuition and past practices. And towards a more objective scientific data-driven decision model. That will help them understand the new technologies. While at the same time building their credibility with other business leaders in finance, supply chain, and marketing that have long ago shifted to data-driven decision-making.
  • HR must gather data on when employees are the superior option –unlike those that champion the use of technology. HR seldom has any data to support the superiority of having employees do the work. That means that HR must develop the internal capability of quantifying the advantages of human labor in a compelling business case format. HR must, of course, also become experts on the advantages and disadvantages that come with the use of the other options, robotic and software solutions. Finally, HR must reject its historical “people always come first” stance and realize that HR shouldn’t serve in the job protection role.
  • HR must be involved in determining the criteria for selecting humans versus technology – HR managers must develop a partnership with IT, technology, production, supply chain, and customer service to ensure that we are involved in these decisions. Then, we can ensure those objective criteria are used when decisions are to be made on whether to use technology or humans. Obviously, those selection criteria should include performance and the range of capabilities. Also, the danger of the work, the required reliability and accuracy rate, and even technology vendor reliability will need to be considered. 
  • Nudge hiring managers to focus on technology skills – at the operational level, HR must do its part in ensuring that all new hires have basic technology skills. They can do that by training their recruiters to nudge hiring managers. So that they include in all job descriptions the technology skills that are (or soon will be) required company-wide. For retention purposes, HR should also help to prioritize those employees with the most needed technology skills.
  • Develop productivity metrics – HR should work with the COO to develop a set of assessment metrics that can be used to assess whether the implemented “who does the work decision” actually results in high productivity so that the decision process can be continually tweaked.
  • Increase HR’s internal use of technology – when HR is involved in “who does the work” decisions. Our arguments often have little impact because many business leaders view us as technology lightweights because we are slow to adopt technology within HR. The best way to increase our technology credibility is to become a “technology first” function, which means that we consider technology solutions first for any new HR work that is to be done. An example of full technology use in HR could occur in recruiting, where you would have AI written job descriptions and the use of AI to select job posting sites. All sourcing would be automated, as would ATS application screening and preliminary interviews. Finally, there will be online skills testing.

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If you can only do one thing© commit to becoming an expert in software app/robot/employee decision-making by benchmarking and reading about what the leading firms (that operate in parallel industries) are doing and planning in the area of technology replacements for employee work. And then show off that knowledge by raising awareness and making recommendations during your discussions with your strategic business unit heads. 

Final Thoughts

Innovative business leaders like Elon Musk predicted years ago that as many as 40% of our current jobs would go away and be replaced by technology. So rather than being surprised when it occurs. I recommend that HR leaders begin planning now for both lowering employee costs and the new technology-driven workplace. “Hiring employees” to do new work will no longer be the primary option. And incidentally, if you’re concerned about whether your job will be replaced. There is already a calculator that can be found here that allows you to determine the probability that your current job is at risk.

Author’s Note 

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About Dr John Sullivan

Dr John Sullivan is an internationally known HR thought-leader from the Silicon Valley who specializes in providing bold and high business impact; strategic Talent Management solutions to large corporations.

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