Why Industry 4.0 Belongs at the Top of HR Agenda

Industry 4.0 signifies the rise of new digital industrial technology that has the potential to boost
productivity and industrial & economic growth to engender a great global manufacturing
revolution. These “disruptive” technological shifts necessitate a change in perspective in how
one views work. In the new reality of work, technology would redesign each job description,
automation and artificial intelligence would increase low-level labor unemployment,
demographic change would imply that workforce becomes diverse and difficult to fit in a
unidimensional HR agenda.
Impact on corporate strategy: According to McKinsey Global Institute (2015), digitalization is
the catalyst that will widen the “divide between haves and have-mores” of corporate America as
the adoption of Internet of Things intensifies. PwC estimates that global GDP could be up to
14% higher in 2030 as a result of AI. No organization can, therefore, afford to sit on the
sidelines while industries transform around them. For instance, companies in manufacturing,
energy, and other heavy industries are slowly beginning to connect their physical assets into
smart grids whereas financial services, ICT, and media are already leading the artificial
intelligence race.
Effect on Workforce: The World Economic Forum (2016) predicts that automation will lead to
a net loss of 5 million jobs (conservative estimates) across 15 developed nations by 2020.
Another study by the International Labor Organization (2016) states that around 137 million
workers across Cambodia, Indonesia, the Philippines, Vietnam & Thailand (~56% of total
workforce of these countries) are at risk of displacement by robotic automation.  Job security is a
huge concern looming over the workforce of today and CHROs need to tackle this issue head-on.
Key Internal Stakeholders: Employees of tomorrow comprising majorly of millennials will
need a sense of purpose and meaning in their work. More and more “specialists” will thrive as
automation replaces mundane jobs. More value will be placed on employee recognition and

visibility on career development as opposed to pay checks. According to Bersin, J. (2017), “the
idea of a single, long-lasting career is slowly becoming a thing of the past.” Secondly,
globalization allows for workforce to move seamlessly across organizations which when
combined with technological convergence leads to individualization of careers (McGregor,
2014). Companies that can figure out how to build new career models for their employees will
outperform others in the long run.
CEO-CHRO Alignment: The CEO-CHRO alignment is critical in not only creating a culture of
learning and appropriate reward and performance management but also being an active
proponent of this perceptual shift. Few examples include:
– Randall Stephenson, AT& T CEO & Chairman, was quoted addressing his employees, “There
is a need to retool yourself, and you should not expect to stop” as AT&T tries to focus its culture
on continuous re-skilling of employees up to top levels of management.
– Jeff Bezos in an interview by the Forbes magazine said that he tells his employees “One day,
Amazon will fail. So, stay hungry”. His management style is geared towards empowering
employees so they do not settle with the status quo and continually innovate.
– Harald Kruger, CEO of the BMW Group, says, “The BMW Group always puts people at the
center of its production systems, and Industry 4.0 won’t replace people. I am convinced that
human beings will remain the pivotal success factor. They will be flanked by Industry 4.0, which
will improve the ergonomic aspects of processes”.
– Arvind Bali, CEO, Videocon (Telecom) at IIM Rohtak’s management summit said, "The pace
of change (in context of Industry 4.0) is much higher today as compared to what it was
yesterday; upskilling and cross-skilling of employees is an important part of the change”.
Way Forward: Despite technological disruptions such as robotic automation, Korn Ferry
Institute asserts that the future of work will involve humans to a great extent and technology will
only be an enabler and not a replacement. Since human capital will continue to remain the
world’s most valuable asset, I believe that it becomes CEO’s imperative to build an
organizational culture driven by the HR that not only strengthens human capital but also enables
a productive interaction between humans and machines. After all, the future of work is not about

conceptualizing work in silos (the assembly-line mentality) but about a collaborative problem-
solving effort (Mariani et. al, 2017) that involves both humans and machines to achieve results
where sum will be greater than its parts.

 

Written by Akshita Agarwal

Akshita is a PGP student at IIM Ahmedabad

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