“Responsible automation is a vision, concept and framework that goes beyond economic benefits to enable social, environmental and governance (ESG) outcomes,” says Kristin Moyer, Distinguished VP Analyst at Gartner. “And without due attention, automation can conflict with investor priorities for ESG.”
Three ways to think about automation benefits and ESG risks
No. 1: Earnings-driven automation
Earnings-driven automation focuses on improving financial performance. Gartner estimates that automation could result in a $15 trillion benefit to the global economy by 2030. Executive leaders apply earnings-driven automation to improve productivity.
Automation can reduce the volume of talent needed, but it may also exacerbate skills mismatches (such as the lack of data and analytics talent), which are already an issue. Earnings-driven automation may also warrant upskilling and reskilling existing employees.
“Quite often, higher productivity and better bandwidth for an existing employee would result in performing high-value tasks that were not getting done, such as nurturing high-value client relationships,” says Moyer. Training a robot might be a new job profile. Business domain knowledge would be mandatory.
Earnings-driven automation can be used to mitigate inflation. It can also be a response to an economic downturn, alleviate talent shortages, and improve operating margins and productivity.
The potential risks of using earnings-driven automation
Worker displacement and potential long-term unemployment
Competition for highly skilled workers, such as data scientists
Capital expenditure (capex) required to implement automation
Hidden operating expenditure (opex) costs of automation (maintenance, training, aversion to change)
Experience-focused automation seeks to improve the overall experience and accuracy for customers, employees, investors and partners, among others. It focuses on automating tedious tasks to increase accuracy and improve the quality of work.
Many manufacturing companies in emerging markets use automation and machines to improve quality reporting and quality assurance.
The potential risks of using experience-focused automation
Lack of available skills on the market to implement a responsible automation strategy
Abandonment of automation before full return on investment (ROI) is seen
Workers augmented out of jobs (there’s a fine line between augmenting work and automation that eliminates headcount)
Technology is trusted over the voice and experience of workers
Equity-oriented automation can be used to drive new revenue streams, create new and high-quality jobs, and support DEI. This automation reduces the level of employee knowledge needed to perform tasks and therefore upskills workers to perform at a higher level.