Harnessing automation for a more productive and skilled workforce - - PowerPoint PPT Presentation

McKinsey & Company

WORKFORCE OF THE FUTURE

ARNE GAST

Partner, Leader of McKinsey's Organization Practice in Asia Pacific (McKinsey & Company, Malaysia)

A future that works: Harnessing automation for a more productive and skilled workforce TUESDAY, 25 JUNE 2019 | 11.15AM

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Our challenge is mobilizing minds

The changing pattern of size of productivity

1 Excluding outliers and companies with negative net income; constant 2004 dollars 2 Includes the following industries: Utilities, Financial Institutions, Information Technology, Healthcare, Automobile and components, Commercial and Professional Services, Real Estate and Energy

1984 2004 2017

200 100 300 700 600 400 500 150 50 100 200 250 300 Employees Thousands Net income/employee (financial) Top 300 firms by MV2 USD thousands 100 500 200 300 400 50 100 150 200 250 300 Employees Thousands Net income/employee (performance)1 Top 150 firms by MV USD thousands 400 300 100 200 500 50 100 150 200 250 300 Employees Thousands Net income/employee (performance)1 Top 150 firms by MV USD thousands

Source: Lowell L. Bryan and Claudia I. Joyce. “Mobilizing Mind” (2007) – updated 2017

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“Workforce for the Future” needs 5 strategies

WHY? Productivity Strategy

• Determine productivity pathway
• Choose automation speed

WHO? Skill hours strategy WHERE? Location Strategy HOW? Organization Strategy

• Skill up Social/Emotional Skills
• Skill out Manual Skills
• Domino upskilling
• …
• Deal with “ city pull”
• Decide on talent hot spots
• Know where you talent is
• …
• Focus on your core
• Renew operating model
• Change EVP
• ….

WHAT? Mobility Strategy

• Massive action plan
• Align your ecosystem
• Start mobility center
• Shift mindsets
• …
• …
• Build capabilities for your strategy
• Adjust to regulation

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WHY? Determine your productivity pathway

Measure productivity granularly...

Across corporate functions By asset type By asset maturity … By subfunction Across all assets

… and choose your path for competitiveness

Drive organization wide productivity uplift

1

Build “old” for efficiency and “new” for effectiveness

2

…..

3

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WHY? Decide your speed to capture automation potential

64 58 55 53 53 50 47 44 44 44 43 41 40 40 39 38 37 36 31 Agriculture, forestry, fishing and hunting Construction

Oil & Gas

Retail trade Manufacturing Accommodation/food services Transportation/warehousing Mining Finance/insurance Utilities Real estate/rental and leasing Other services Information Arts/entertainment/recreation Administrative/support/waste management Professional, scientific, and technical services Health care/social assistance Management of companies/enterprises Educational services

FTE weighted % of technically automatable activities 1, (%)

1 We define automation potential by the work activities that can be automated by adapting currently demonstrated technology

• f occupations

have close to

1%

• f tasks

automatable..

~100

• f occupations

have

~60%

• f tasks

automatable

~30

...yet less then 10% of jobs are full automatable

Source: McKinsey Global Institute Global Automation Impact Model; McKinsey Global Institute analysis

Activities are automatable across industries…

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WHY? Your strategy will need new institutional capabilities

Implications

New and more complex analytical methods required to maximize the value of large data AI to interpret seismic images, improving hit rate and removing human error Advanced Analytics Higher-level, uniquely human cognitive abilities become the differentiator as lower value tasks are automated Next generation BIM models significantly reduces engineering hours Eliminate the need for human intervention in non-decision making functions through artificial intelligence, machine vision Augmented reality to provide training on complex procedures (advanced simulation) Robotics Completely new, agile business models – enabled by digitization lowering distribution and transaction costs Data sharing allows for supplier to take an end-to-end responsibility Process digitization

Source: McKinsey Organization in Oil & Gas Service Line Technological trends

Business model innovation Design thinking skills required for integrated planning and coordination with supplies, reducing CAPEX Digital enables working closer with suppliers with fewer inefficient interfaces Production increased through optimization and automated production controls Autonomous pipeline inspections using submarine drones Digital and Technical (i.e. robotics, programming) skills become ‘core’ as technological solutions replaces manual labor Robotic handling of hazardous activities (e.g. pipe handling) Real-time advanced analytics models

• ptimizing topside and subsurface settings

Reduced exploration costs by less need for manual analytics work

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14 19 14 17 20 21 11 9 43 34 2016 2030

Evolution in skill categories

Percent hours worked, Energy sector

Skill categories

Physical and manual skills Manual service or maintenance tasks Facilities or operational system monitoring Basic cognitive skills Basic data input and processing Basic literacy, numeracy and communication Higher cognitive skills Project management Information interpretation and decision making Social and emotional skills Adaptability and continuous learning Entrepreneurship and initiative taking Technological skills Advanced data analytics and mathematical skills Tech design and engineering

Example skills

WHO? Some skill-hours will go up , yet some other skill-hours will go down

Source: McKinsey Global Institute analysis

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WHO? ‘Domino reskilling’ will help to bridge skill hours - gaps ‘Domino’ development path from Mortgage Loan Officer to Management Analyst

Percentage skill overlap between roles

59.3% 53.0% 76.8% 80.1% 77.9%

Credit analyst Management analyst Financial analyst Mortgage loan officer

Note: Skill clusters were computed based on global LinkedIn database. Skill clusters were then mapped to job roles. Transitions between job roles suggested based on similarity of skills.

Shortcut Shortcut

Source: McKinsey People Analytics

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WHERE? Use “outside in” data to address talent questions

How does your sourcing compare to

• ther organizations and where are there

potential sources of untapped talent? What is the your distribution of key skills and how does it compare to other organizations?

Alabama Arkansas Arizona California Colorado Connecticut Florida Georgia Iowa Idaho Illinois Indiana Kansas Kentucky Louisiana Massachusetts Maine Michigan Minnesota Missouri Mississippi Montana North Carolina North Dakot a Nebraska New Hampshire New Mexico Nevada New York Ohio Oklahoma Oregon Pennsylvania South Carolina South Dakota Tennessee Texas Utah Virginia Vermont Washington Wisconsin West Virginia Wyoming Washington, DC Delaware Maryland New Jersey Rhode Island

PeerCo PeerCo ClientCo

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WHAT? Massive action to bridge skill hour gaps

How do I adjust my volume & variety of skill- hours? SHORTAGE: How do I close a skill gap? I will... OVERAGE: How do I address a skill source I no longer need? I will… ACQUIRE new, in-house workers that are ready… Today, by… Tomorrow, by… BUILD upon existing workforce via… RENT new, external workers through… RELEASE workers by… REDEPLOY workers I do not need but cannot release, by… GROW by… A B C D E F

Areas of interventions

5. Acqui-hire entire organizations 6. Recruit ready-now individuals 7. Rent-to-acquire individuals 8. Create and recruit from new pools of potential hires 9. Recruit for intrinsic and building skills needed 1. Reskill existing employees 2. Upskill existing employees 3. Retain employees with scarce skills 4. Reshape jobs and projects to focus scarce skillsets on key work

• 10. Form strategic partnerships (e.g., JVs)
• 11. Outsource entire function(s)
• 12. Contract out work to an organization or individual
• 13. Activate gig economy by creating discrete, paid tasks for freelancers
• 16. Terminate employees thoughtfully
• 17. Encourage voluntary attrition and not back-filling
• 18. Divest business units
• 19. Create contractual options to end relationships
• 20. End contracts with rented talent
• 14. Rent workers out to other entities
• 15. Shift unneeded skillsets to next-best alternatives
• 21. Accelerate business demand in order to match supply

Levers

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WHAT? “Mobility Center” is required at the heart of the FoW Strategy

Analytical Core One source of truth

• n skills and #

Advanced analytics Modelling scenarios for FTEs and cost Quantitative decision-making Reskilling Domino Skill Plan Bootcamps Digital Learning Skill-out Plans Partnerships Insource Carve out Recruiting engines Job partners Placement Engine Matching supply and demand Internal job database External job database Online skills matching Global talent recruitment Physical space for counseling Communication Strategy Internal communication Brand building to employers Story to the media Workforce management Management Dashboards Annual dynamic KPI setting to reach targets Tracking of automation and productivity initiatives

Aspiration Purpose of the Mobility Center Scope of the Mobility Center Ultimate KPIs and milestones Lean structure P&L for mobilizing people

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WHAT? Work with your ecosystem

Release Recruit, rent

• Retirement age
• Welfare mechanisms

Overseas

• Migration policy
• Skill-based curricula,

micro-credentialing

• Life-long learning
• New delivery methods

(e.g. Massive Open Online courses)

• Redeploy

labour

• Internal training,

retraining, upskilling

• Talent and training

exchanges between orgs

Businesses +

• rganisations

Other influencers and enablers Labour market (skills matching)

• Mobility centre

Training, upskilling

Not in workforce Educational institutions

 Government  Social sector  Unions

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WHAT? Mindsets: shift for employees

Me & & Me

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“Your principal moral obligation as a leader is to develop the skill set of every one of the people in your charge - including semi- permanent and temporary –to the maximum extent of your abilities consistent with their revolutionary needs in the years ahead”

Tom Peters The Excellence Dividend

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WHAT? Mindset: Shift for executives

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Thank you

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