Human Capital Intelligence - 2/21/2024
AI layoffs erode trust | Skill obsolescence | Great retirement resumes | RTO regrets | Rising healthcare costs erode salary gains | Pay transparency side-effects
Welcome to the latest edition of Human Capital Intelligence. As always, we would love to hear from you at ken@stibler.me with news ideas, feedback and anything else you find interesting.
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By Ken Stibler; Powered by Reyvisum Analytics
What’s Working
Dishonest layoffs lead to further loss of employee trust
Recent layoffs driven by AI adoption are damaging employee trust in employers. While companies downplay AI's role, it's estimated that tens of thousands of cuts are quietly resulting from automation. Firms rename layoffs "restructuring" and "rightsizing" to avoid backlash.
This obfuscation further erodes already-fragile faith in employers which are seen prioritizing AI productivity over loyalty. Now, the layoffs are driving more employees to freelance work over traditional employment. 73% see recent job cuts making freelancing more appealing than full-time roles, with 64% losing faith in job stability, according to recent surveys.
Half of furloughed workers are now freelancing or starting businesses rather than seeking new staff jobs. The US freelancer population has ballooned to 72 million - nearly half the workforce encompassing second jobs and full-time freelancers.
But the freelancer life has downsides too. Unlike staff jobs, freelance contracts can vanish overnight when firms pull back. And solo entrepreneurs lack benefits like insurance and severance. While AI and layoffs push more to freelance, instability remains a tradeoff.
AI accelerates skill obsolescence
Businesses are rapidly adopting AI to transform operations, accelerating skills obsolescence. Technical skills now have a 4-year "half-life" as AI automates tasks. Generative AI is proving ideal for boosting productivity across functions like customer service, software development, and HR. Companies are customizing AI for industry-specific uses, like insurance underwriting. But workers may struggle to reskill fast enough to work alongside AI. Firms that bridge the human-AI skills gap will see major productivity gains. Those that don't risk losing competitiveness.
Sectors from finance to manufacturing are deploying AI for core processes. Ally Financial developed an AI tool to generate customer service call summaries, and Cisco is using GitHub's Copilot to aid coding, and Dow Chemicals applies AI to materials research and patent prospects. The gains are clear: Ally's tool provides accurate summaries 95% of the time, while Cisco sees higher response rates to AI-generated emails.
But as AI renders skills obsolete overnight, workers may lack time to reskill. Companies that provide ongoing training and find roles for those displaced will stay competitive. With AI transforming operations at light speed, firms must ensure that employees keeps pace or risk having technological infrastructure without the human capital to match.
Generational divides undermine productivity
New research indicates that generational divides in the workplace are hampering productivity and mentorship. Younger employees, especially Gen Z and Millennials, report feeling dissatisfied and achieve less when working under much older managers. The age gap causes misunderstandings and tensions that undermine communication and output.
While diverse ages can benefit teams, companies must train managers to oversee and nurture workers of all generations. Support tailored to employees' needs and experience levels is key. Age diversity is an asset when leaders commit to advancing workers based on merit, not ageist assumptions.
47% of Gen Z get better career advice from ChatGPT than from their managers. (Employee Benefits News)
With populations aging, businesses that bridge generational divides will keep veteran expertise while benefiting from young talent. Failing to do so stifles productivity and leaves younger workers - now the majority of the workforce - disengaged.
Reading List
Retirement rises again threatening the loss of critical expertise
The "Great Retirement Boom," accelerated by the COVID-19 pandemic, has seen a significant increase in the number of retirees, surpassing economists' predictions and reaching a post-pandemic record in December. This unexpected surge, influenced by a buoyant financial market and expectations of favorable economic conditions, such as interest rate cuts and declining inflation, has prompted more Americans to retire.
Read more about how to respond to the loss of institutional knowledge.
Most leaders regret RTO strategies
A new report found that 80% of executives admit their RTO approach would have been more successful if they had used more data. Just 7% used feedback to guide strategy, while 59% relied on badge swipes and meeting room logs. The unsubstantiated approaches appear to justify concerns that RTO is more about pride and control than productivity and collaboration.
Read more about what executives wish they’d done differently.
Rising healthcare costs erode salary gains
While paychecks may be getting bigger, workers aren't taking home as much as they seem. New research finds US families with employer health insurance lost $125,340 on average from 1988 to 2019 as premiums surged. Healthcare now eats up over 15% of compensation, versus under 8% before.
Read more about how HR can respond.
Disabled Americans drive outsized job growth
Americans with disabilities have punched above their weight in rebuilding the workforce post-pandemic, accounting for nearly a third of labor force growth despite being just 12% of adults, Bloomberg reports. Disabled participation hit record highs in 2022 and remains near those peaks.
Read more about how remote work has allowed disabled Americans to alleviate labor shortages.
Pay transparency’s unintended consequences become clear
Policies aiming to illuminate pay differences, like revealing salary bands in job posts, are well-intentioned tools for closing gender gaps. But new evidence suggests transparency is backfiring in many offices.
Read more about the negative side effects of pay transparency.
Stat of the Week
In Other News
Personalized AI training helps employees embrace new tech. (Employee Benefits News)
Small Business Hiring Plans Continue to Slide. (National Federation of Independent Business)
Fixing apprenticeships would be a vote-winner. (Financial Times)
Employers risk losing talent to the gig economy if they don't prioritize flexibility. Here's what they can do. (Employee Benefits News)
Now is the time to put people before robots: Policymakers must act to ameliorate the impact of automation on incomes. (Financial Times)
Why Americans Are So Down on a Strong Economy: Many feel their long-term financial security is vulnerable to wide-ranging social and political threats. (Wall Street Journal)
How ‘meeting purges’ have paid off. (WorkLife)
More than one-third of Black, Hispanic workers report code-switching, new Indeed survey finds. (HR Brew)
5 things employers need to know about reporting their Scope 3 carbon emissions. (WorkLife)
This platform is helping employees send their kids to college. (Employee Benefits News)
Ready to hire? Make sure your background checks are compliant with clean slate laws and more. (Employee Benefits News)
'What's your bandwidth?' 10 corporate jargon phrases office workers hate. (Employee Benefits News)
Improve employees’ quality of life as a retention strategy. (HR Brew)
Companies forcing workers to come back to the office are creating a 'massive disruption' in their lives, workplace expert says. (Business Insider)
Is AI making workers more or less ambitious? (Fast Company)
U.S. Workers Assess the Impacts of Artificial Intelligence on Jobs. (Heldrich Center for Workforce Development)