Adapting to emerging technologies isn’t a new challenge for corporate executives. Whether it’s cloud computing, smart phones and 5G, the Internet of Things, or 3D printing, new innovation has often forced the C-suite to refashion business strategy to account for the effects of automation introduced throughout the enterprise.
But experts say the arrival of the latest next-generation technology poses unique and unprecedented challenges that will test the ability of even the most seasoned CEOs to respond in a way that maximizes the technology’s benefits and limits its risks.
Unlike other forms of automation, generative artificial intelligence (GenAI) won’t just impact blue-collar and entry-level jobs. It will redefine many highly skilled professional jobs in disciplines across organizations.
A newly released report from SHRM and the Burning Glass Institute, titled Generative Artificial Intelligence and the Workforce, found that the accelerating adoption of GenAI will cause the broad transformation of roles such as financial analysts, lawyers, software developers, marketers and human resource professionals. While few of those jobs will be fully replaced by GenAI, many will be augmented and fundamentally reshaped by the rapidly evolving technology.
Top executives will be faced with difficult decisions as GenAI becomes a mainstay in their organizations’ technology platforms. For example, the SHRM and Burning Glass Institute report found that the surge in productivity and output GenAI will create over time is unlikely to meet a corresponding growth in demand for goods and services. This will lead to overstaffing in many industries. Senior leaders will need to craft mitigation strategies, such as hiring freezes, to minimize the disruption.
CEOs will need to work more closely with their CHROs, chief technology officers (CTOs), chief information security officers (CISOs) and legal counsel on GenAI-related issues, the SHRM/Burning Glass report found. They will need to design talent management, governance, legal and cybersecurity strategies to capitalize on the vast productivity and efficiency benefits created by GenAI. At the same time, they will need to overcome its still-significant risks.
Impact on Business Strategy
Technology analysts believe that in 2024 organizations will increasingly adopt GenAI, including OpenAI’s ChatGPT and DALL-E, Google’s Bard, and Microsoft Copilot, as corporate leaders install more rigorous governance plans. Additionally, the still-high costs of the technology will fall and the results of GenAI proof-of-concept projects will encourage broader enterprise rollouts.
Analysts also expect that GenAI tools will become a standard feature of vendor technology platforms used in HR, customer service, marketing, cybersecurity, supply chain management and more. Walmart is one of the latest organizations to double down on its investment in GenAI. The retailer recently announced it was expanding access to the company’s proprietary GenAI platform, My Assistant, to 25,000 additional employees in 10 more countries this year.
Barriers to adoption of the technology will remain, including the risks posed by use of public large language models (LLMs) such as ChatGPT. These risks include violating copyright laws or basing decisions on inaccurate outputs. Still, CEOs need to find ways to capitalize on GenAI or risk falling behind competitors.
A 2023 global study by IBM’s Institute for Business Value found that 75 percent of CEOs believe the organizations with the most advanced forms of generative AI will have a competitive advantage. Half of those CEOs also said they’ve already integrated GenAI into products and services, with 43 percent reporting they’re using GenAI to inform their strategic decisions.
This current generation of tools are not cheap. GenAI is by no means a free replacement of labor."
The ubiquitous nature of the technology will impact leadership decisions on multiple levels. “It’s affecting everything from establishing governance strategies that ensure control but don’t deter innovation to employee value propositions to how an organization trains its workforce to use the technology effectively and responsibly,” says Bryan Ackermann, head of AI strategy and transformation in Scottsdale, Ariz., for consulting firm Korn Ferry. “We’ve rarely seen a technology evolve this quickly and become ubiquitous in its first year of introduction.”
But investing in the technology doesn’t come without caution flags. For one thing, executives need to weigh the considerable costs to develop, deploy and maintain the software. These include expenses tied to using application programming interfaces (APIs) to connect to GenAI tools from the likes of OpenAI or Google.
“This current generation of tools are not cheap,” Ackermann says. “GenAI is by no means a free replacement of labor. As enterprise vendors have released more GenAI products and a plethora of startups have done the same, these tools all remain reasonably expensive because of the costs of the underlying computing power.”
Small and midsize organizations aren’t without hope in this environment. Analysts say they can start to get in the GenAI game by using new tools such as artificial-intelligence-as-a-service (AIaaS) platforms, which are technologies that allow organizations to license GenAI software without prohibitive upfront capital or labor costs.
GenAI’s Impact on Jobs
The SHRM/Burning Glass Institute report found that the use of GenAI is more likely to augment than replace most existing jobs in the short term. But job roles with high exposure to GenAI will remain vulnerable to being automated in the future. While workforce reductions resulting from the use of AI could become widespread over the coming decade, many of those cuts may be driven less by machines replacing humans than by economic growth lagging behind significant leaps in worker productivity.
“Despite the best efforts of savvy HR leaders, workforce reductions will become increasingly pressing as GenAI transforms the macroeconomic landscape,” the SHRM/Burning Glass report says.
Gad Levanon, chief economist with the Burning Glass Institute in New York City, offered an example of how the growing use of GenAI in software engineering jobs could impact organizations in the future.
“Ten software developers in a company might now be able to do the work of 15, for example, because of the increased efficiency introduced by GenAI,” Levanon says. “But the demand for goods and services of the organization employing those developers may only increase by 10 percent in a certain time frame, not 50 percent. So that organization may become overstaffed because it doesn’t need as many developers.”
The IBM study found that 43 percent of responding CEOs said they’ve already reduced or redeployed their workforces due to generative AI, with another 28 percent saying they planned to do so in the coming year.
While disruptions caused by GenAI will in some cases carry human costs, the SHRM/Burning Glass report found those costs may be short-lived.
“Corporate profits will increase as firms benefit from decreased payroll costs,” the report says. “In a competitive market, we expect price decreases to follow. Finally, price cuts and new jobs created by GenAI will drive increased demand and employment will rebound, at least somewhat.”
Despite the best efforts of savvy HR leaders, workforce reductions will become increasingly pressing as GenAI transforms the macroeconomic landscape."
Generative Artificial Intelligence and the Workforce, SHRM and the Burning Glass Institute
The report also found that in the long term, research and development (R&D) will accelerate as GenAI enables researchers to process more data and achieve new discoveries more quickly.
In their 2024 workplace predictions, analysts in the HR practice at consulting company Gartner said AI will likely create and not diminish workforce opportunities.
“Despite anxiety and significant discussion around how GenAI will impact jobs, in the short to medium term GenAI will fully replace few jobs,” Gartner analysts wrote in their report. “GenAI will lower the level of technical skills needed for many roles, widely increasing the roles for which candidates can qualify. Many jobs heavily impacted by GenAI will be redesigned and will have new responsibilities that include interacting with GenAI tools.”
Some experts believe GenAI will lead to more hiring and not less, as the technology unleashes more creativity and innovation per employee. The IBM study, for example, found that 46 percent of CEOs have already hired additional workers because of GenAI, with 26 percent saying they have plans for more hiring ahead.