Labor Shortage Automation in 2024: How Firms Can Adapt
With widespread labor shortages, companies today face a dilemma – how to get work done with fewer available workers. The solution for many forward-thinking firms lies in "labor shortage automation" – leveraging technologies like AI and RPA to digitize processes and reduce reliance on human labor.
In this comprehensive guide, we‘ll explore how intelligent automation enables businesses to thrive amidst current labor shortages. You‘ll learn:
- What‘s driving the shortages and resignation trends
- How automation cuts costs compared to hiring more staff
- Which repetitive tasks are best suited for automation
- What new human roles are emerging from automation
- Expert tips for rolling out automation successfully
Let‘s get started and uncover how automation can be a competitive advantage for your business in 2024 and beyond.
Understanding Today‘s Tough Labor Market
The current job market is certainly paradoxical. On one hand, available job openings remain very high. There were 10.46 million job openings in the US as of October 2022 according to Labor Department data. Yet major companies like Amazon, Salesforce, and Goldman Sachs have recently announced large layoffs.
This dichotomy is driven by economic conditions that incentivize firms to cut costs, including:
- High inflation – 8.3% in the US annually as of October
- Rising interest rates – The US Federal Reserve‘s rates now stand at 3.75% to 4%
- Declining consumer demand and risk of recession
- Ongoing supply chain disruptions, e.g. in China
Deloitte‘s survey of 122 executives found 77% have already reduced operating costs in response. One of the biggest expenses for companies is labor.
At the same time, workers today hold more leverage and are quitting jobs at elevated rates – part of the "Great Resignation" phenomenon. Employees are seeking:
- Higher pay to offset inflation
- More workplace flexibility
- A better sense of purpose and culture
This makes hiring and retaining talent extremely difficult for employers. In response, forward-looking companies are turning to automation to reduce their reliance on human work.
Intelligent Automation Slashes Labor Costs
Let‘s look at how implementing automation technologies compares to hiring additional employees to handle the same workload.
| Cost Factor | Human Worker | Automation |
|---|---|---|
| Salary | $60,000/year | One-time ~$50,000 for software licenses and implementation |
| Benefits | ~30% of salary = $18,000/year | None |
| Pay raises | ~3% annually | None |
| Recruiting & hiring | $4,000 per hire | Minimal implementation costs |
| Training | $1,200 average per employee | Training modules included |
| Equipment & tools | Varies | Included with automation software |
| Turnover costs | Average of 33% annual salary ($20,000) | No turnover issues |
Clearly automation delivers massive cost reductions compared to human workers. Bots don‘t require salaries, benefits, training or other ancillary costs.
The World Economic Forum predicts automation could lower payroll expenses by 22-44% by 2025. Automation Anywhere‘s customers have saved an average of $50,000 per employee replaced by bots.
With upfront investments recovered in under a year, automation pays for itself quickly and starts generating net cost savings. This frees up resources to invest in other parts of the business.
Automating Repetitive, Mind-Numbing Tasks
Many office and clerical roles involve predictable but tedious responsibilities like:
- Copying and pasting data
- Filling out forms
- Writing routine emails and reports
- Transferring data between systems
- Managing calendars and appointments
- Collecting data from documents or websites
A survey by DMG Consulting found over 70% of desktop roles consist of such repetitive work. While human employees can certainly perform these activities, they are unfulfilling responsibilities that lead to burnout and boredom over time.
Intelligent automation including robotic process automation (RPA), conversational AI, and computer vision excels at taking over repetitive, rules-based work. Software bots can:
- Work 24/7 without rest
- Rapidly process high volumes of data
- Integrate seamlessly with existing enterprise software
- Automate workflows across departments
This frees up human employees from drudgery so they can focus on more satisfying work that leverages their skills and judgement:
- Salespeople can spend more time interacting with prospects rather than deskwork
- IT teams focus on complex issues rather than password resets
- Finance staff analyze data rather than prepare reports
- Agents handle complex customer inquiries rather than routine calls
The World Economic Forum predicts over 50% of task hours will be automated by 2025. This massive productivity injection will transform currently overburdened roles.
New Human Roles Emerge From Automation
It‘s a misconception that automation always destroys jobs. Implemented strategically, automation creates new specialized roles too.
As part of digital transformation, companies need dedicated talent to manage emerging technologies:
| Role | Responsibilities |
|---|---|
| RPA Developer | Build, test, and maintain software bots |
| Automation Engineer | Design and implement automation roadmap |
| AI Specialist | Develop and train machine learning models |
| Analytics Engineer | Build data pipelines, dashboards |
| Change Manager | Lead organizational change initiatives |
| Cybersecurity Analyst | Ensure automation complies with data policies |
These new jobs tend to pay well. The average salary for an RPA developer is $108,000 in the US according to PayScale. AI specialists earn $112,000 on average.
Companies investing in automation can achieve major productivity gains while still maintaining good jobs. The World Economic Forum predicts a net gain of 58 million new roles by 2025 even after considering automation.
However, workers will need to re-skill and gain technical capabilities for the newly created roles. Organizations must invest in proper training and change management programs, which we‘ll discuss more in the next section.
Implementing Automation Successfully
Automation projects require careful planning and governance to maximize value. Based on leading practices, here are five expert tips:
Get stakeholder buy-in – Early involvement from managers and staff builds support and minimizes resistance. Be transparent about plans and timelines.
Assess tasks suited for automation – Use process mining tools to identify automation opportunities based on suitability and ROI. Focus on repetitive high-volume tasks first.
Start small, demonstrate quick wins – Prove value through small pilots before scaling across the organization. Measure productivity gains and cost reductions.
Prepare workers for change – Offer training in digital skills like analytics, working alongside AI, and soft skills. Redeploy talent to higher value activities.
Set up ongoing governance – Monitor automation effectiveness. Continuously assess new automation opportunities and expand over time.
With this human-centric approach, companies can benefit from productivity gains while supporting employees through the transition. The World Economic Forum provides an Automation Readiness Index assessing how prepared countries are to manage the automation shift.
The Bottom Line
Current economic conditions make labor reduction tempting for companies. But mass layoffs risk damaging morale, corporate culture and critical institutional knowledge.
Intelligent automation provides an alternative path. With robots handling repetitive work, firms can reduce expenses, empower human talent, and position themselves for the future.
While automation adoption requires care and planning, the potential rewards are tremendous. Forward-looking companies who leverage these technologies will gain a competitive advantage in the age of labor shortages.
To learn more about automation opportunities, explore Aimultiple‘s automation hub featuring unbiased comparisons of top vendors. See how other leading companies are staying resilient through AI.
