You may, or may not, be aware that the Fourth Industrial Revolution came upon us a couple of years ago. Each of its predecessors had been powered by the invention of ground-breaking new technologies; the First, in the 1780s, came about through the development of mechanical production techniques harnessing water and steam power, the Second in the 1870s was powered by electricity and mass production techniques, while the Third which started at the end of the 1960s was underpinned by advances in computing technology.

So, you may be wondering, what is driving this latest revolution? The answer is ‘cyber-physical systems’ or, in less succinct terms, computer-based algorithms, tightly integrated with the internet, deeply intertwined, and harnessing a range of exciting technological advances such as artificial intelligence, robotics, 3D printing, virtual/augmented reality, the Internet of Things, cloud computing, self-driving cars, predictive analytics, quantum computing, block chain, and big data. Effectively, the next Industrial Revolution will be like the last one on steroids.

Having been through these revolutions a number of times before, we can take some comfort in the fact that we understand what the likely outcome will be. Classical economic theory suggests that the following will occur:-

  • An increase in the efficiency of production;
  • a reduction in the price of goods;
  • an increase in real income feeding an increase in demand for other goods;
  • a destruction effect on labor and reallocation of labor supply;
  • a capitalization effect as more companies enter industries where productivity is relatively high, leading to increased employment in those expanding industries.

While Industrial Revolutions can be extremely traumatic in their impact on individuals, more generally the result has been better quality jobs and a better standard of living for the population at large.

Of course, there’s no guarantee that, just because this was the outcome for the past three revolutions, we can rely on a similar outcome this time around. The technological tsumani that is about to sweep over us is unprecedented and, perhaps, more widespread in that it will hit the service sector and professional classes as much as unskilled workers.

In 2015, the World Economic Forum asked 800 technology experts what advances they expected to see by 2025. They came up with a range of exciting breakthroughs such as the first 3D-printed car, 10% of people wearing clothes connected to the Internet and the first AI machine appointed to a corporate board of directors. They were clearly unaware when they responded to the survey that the first AI board member had actually been working in Hong Kong for the past year.

VITAL (Validating Investment Tool for Advancing Life Sciences), was appointed as a voting member of the board of Deep Knowledge Ventures (DKV), a venture capital fund in 2014. VITAL contributes to board decisions by identifying market trends “not immediately obvious to humans”.

And outside the boardroom, robots have begun to perform a range of administrative tasks far removed from their more primitive forebears working on the production line. Service robots like Pepper, a product of the Japanese telecom giant, Softbank, can be used to perform a number of functions such as hotel concierge, car salesman, estate agent, data collector, thespian or promotions assistant. And Pepper is by no means alone. Leo is a baggage handler at Zurich Airport, Ademco is a robotic security guard, and Mitsubishi’s Wakamaru has been used for presenting at exhibitions, guiding customers, and working as a receptionist since 2005.

Staffing Revolution 4.0

Such advances will undoubtedly have a huge impact on the staffing industry. Many jobs will be replaced, many will be profoundly changed, and many new jobs will appear. Beyond this, staffing firms will need to consider the way their services will be delivered, determining what should be automated and what shouldn’t. It seems highly likely that the staffing firm of the future will be offering their clients both human and non-human solutions to help them get work done. Already, innovative providers have sprung up like Robots of London where you can buy or hire a robot to perform work tasks in much the same way you’d buy (perm) or hire (temp) a human worker from a staffing firm. The mixed ‘man-machine’ staffing model has been embraced by Dutch staffing firm HOBIJ which offers its clients in the food, technical, industrial or logistics sectors a choice of human or robotic labor while Silicon Valley’s Knightscope adopts a “software + hardware + humans” approach in the provision of autonomous robots for security assignments. It’s unlikely that the larger international staffing firms will get left behind in this respect. It’s unlikely that the larger international staffing firms will get left behind in this respect. Recruit, the Japanese staffing giant has established an Institute of Technology in Silicon Valley to study artificial intelligence.

Automation is hardly new to the staffing industry but it’s versatility and sophistication has now reached a level where staffing executives need to determine whether internal tasks are best performed by brain power or by machine power. While no one expects the staffing industry to become completely automated, there are activities where the effectiveness and cost of machine power is becoming compelling.

In determining whether man or machine is best suited to the role, staffing executives should ask themselves three questions:

  • Is the work best conducted remotely or in person? If there are parts of your services that don’t depend on face-to-face communication, do you really need a ‘face’ to represent your business at all? One of the most important developments in the recruitment space over the past 12 months has been the emergence of recruitment chatbots to support initial candidate engagement. Numerous products have sprung up; Mya, Job Pal, Karen, Talla, Stanley and Xor while, in 2016, Randstad invested in Wade & Wendy.
  • Can you rely on an algorithm or do you need intuition? While intuition is, quite rightly, a highly-valued quality of a successful recruitment consultant, human beings are also saddled with biases and prejudices that don’t necessarily result in the best outcome for your business. An algorithm, on the other hand, is stable, predictable and operates 24/7. Companies such as CitySail provide digitized interviews that can be utilized for sophisticated ‘micro-expression’ analysis in order to determine mood and personality matching.
  • Are you selling a transaction or a consultation? There are many unskilled roles that are quite transactional in nature while others require a deeper understanding of the hiring company, its culture and strategy and are more advisory in nature. We have already started to see human intermediaries being extracted from some of these transactional roles with the growth of so-called ‘Just-in-Time’ staffing firms, the most successful example of which is Swiss firm, Coople.

Of course, in many respects, the right solution to these questions isn’t to opt for man (or woman) over machine or vice versa but to consider the advantages of harnessing machine power to empower your employees and provide a better-quality service to your clients.

Staffing firms can also look forward to enhancements in the recruitment technology they use. Every software manufacturer is currently considering how artificial intelligence can be used to upgrade their products (if they haven’t made such upgrades already). Cognitive systems with self-learning capability have the potential to take searching, screening and matching tools to a whole new level and staffing executives can look forward to more intelligent software to support their processes. Google for Jobs is the most recent example of the use of machine learning to enhance the job search process. As these products evolve, however, this is as much as a minefield as it is an opportunity – picking the right cutting-edge product in such a fast-moving and volatile market will not become any easier.

We’re also on the cusp of a revolution in data analytics and many companies operating in the workforce solutions ecosystem are investing significant amounts of time and money in developing their capability in this respect. We are beginning to see the emergence of more insightful and more predictive analytics enhanced by machine learning, particularly from job boards, MSPs, VMSs and ATSs as part of the Big Data wave; two examples being Brightfield Strategies’ Talent Data Exchange (TDX) and SAP Fiedglass’s Live Insights.

A New Legislative Landscape

One challenge caused by the growth of robotics and artificial intelligence will be the need for legislation to evolve. Staffing executives with an eye to the future should not be surprised if there are some dramatic changes in employment and other laws.

  • Additional focus on data protection. This is already a hot topic with more rigorous protections being afforded to individuals in many jurisdictions alongside increasingly harsh criminal sanctions and costly civil penalties for organizations that fail to abide by the law. The fact that emerging technologies will be able to do so much more with personal data suggests that this focus on data protection is not going away any time soon. Governments will continue to seek to protect the privacy of individuals and provide them with legal opt-outs from profiling.
  • Treatment of redundancy through digitization. Where jobs are lost as a direct result of automation, governments may seek to ameliorate the effects by providing an automatic right to re-training for displaced workers or other career support initiatives, especially in continental Europe where the social model is more prevalent.
  • Human worker quotas and/or tax incentives to retain human workers. Organizations could be incentivized to maintain employment levels through tax breaks or even the imposition of quotas.
  • Union-led collective agreements on machine-man interaction. As employees more regularly interact with technology, it seems likely that unions will want to exercise their influence over worker rights as they relate to the use of artificial intelligence and robotics, especially when such technology takes on a supervisory role.
  • Allocation of ‘e-person’ liability. The first death caused by a robot was as early as 1979 when a Ford Motor assembly line worker was killed in Michigan. When robots go wrong, there will need to be clarity over roles and responsibilities in determining the degree of culpability among the individual programmer, the corporation providing the robot, the corporation using the robot and the robot operator.
  • Universal basic income. First proposed by 18th Century English radical, Thomas Paine, universal basic income is now being considered as a potential solution to the problems of a society facing fewer jobs and lower wages. State provision of a universal basic income of just under £4,000 a year wouldn’t be enough to take someone out of poverty, but it could give them the flexibility to work part-time, provide access to retraining opportunities or breathing space to find a worthwhile job without facing benefit sanctions. With trials underway in the Netherlands, Italy, Finland and UK, enthusiasts for the idea include Elon Musk, former Clinton labor secretary Robert Reich, the French socialist Benoît Hamon, and South Korean presidential candidate Lee Jae-myung.

So where does all this leave the busy staffing executive? Like usual, facing an uncertain future and a period of profound change. Such uncertainty shouldn’t necessarily be perceived as a negative after all, if business was completely predictable organizations would not need to use temporary labor in the first place. For those who can be bothered to stay informed about the impact of artificial intelligence and robotics, the Fourth Industrial Revolution could turn out to be a huge opportunity.

View of FutureOne thing we know about the future is that people have a tendency to overestimate the importance of technology in the short-term and underestimate its importance in the long term. Whatever you may believe about automation today, its eventual impact is likely to be even greater than you can imagine.

In thinking through the impact of automation on your business, conduct both a company and industry assessment to determine what it will mean in terms of demand for your services and the way you deliver them. Re-imagine what your company could look like in twenty years’ time and review your workforce mix on that basis. Update your strategic plan to ensure you are nimble enough to take advantage of new technological developments as and when they occur. And finally, appoint an evangelist to take responsibility for keeping on top of these trends. You don’t necessarily need to be that evangelist – in fact, you should probably appoint someone at least 10 years younger than you!