David Green:The best HR & People Analytics articles of August 2024
I’ve just returned from a three-week family holiday in the South of France and am feeling refreshed, recharged and ready for the final four months of the year. These are invariably the busiest for the team at Insight222, and 2024 is set to be no different.
The Digital HR Leaders podcast returns from its summer sojourn on September 3 with a special episode on how HR can help their organisations embrace the blended workforce, featuring Diane Gherson and Lynda Gratton, and based on their brilliant recent HBRarticle,
The Insight222 Global Executive Retreat, which we host annually for leaders of 100+ companies that are part of the Insight222 People Analytics Program, takes place in Amsterdam from September 24-26 with guest speakers including: Erin Meyer, Prasad Setty, Janine Vos, and a workshop on storytelling with Duarte, Inc..
The fifth annual Insight222 People Analytics Trends report, which studies how leading companies are using people analytics to generate business value will be published in October – you can read the 2023 study here.
Additionally, I will be speaking at a number of conferences before the end of the year including Workday Rising (Las Vegas, September 16-19), People Analytics World (New York, October 2-3), UNLEASH World (Paris, October 16-17), and Workday Rising EMEA (London, November 12-14).
This edition of the Data Driven HR Monthly is sponsored by our friends at 365Talents
365Talents goes beyond traditional approaches, offering more than just technology for Skills-Based Organizations. Our approach is not just about managing skills; it's about making the entire process seamless, effective, and enjoyable. Picture real-time insights into your workforce's skills, coupled with the expertise to implement strategic HR projects aligning with your business goals.
Our experience in talent mobility and skill development contribute to creating a more democratic, inclusive, and future-ready world of work where every individual has the power to shape their professional path. Start your skills journey with 365Talents today and join the ranks of trailblazers like Veolia, SLB, TotalEnergies, SocGen, and more! To find out more click here: https://www.365talents.com/en/lp/experience-365talents
2024 Skills Impact Report
In today’s fast-paced and increasingly disruptive environment, companies need to adopt a more flexible approach that puts its people and their skills at the center of its talent management strategies. This has become more and more imperative as:
59% of the global workforce are disengaged.
69% of job candidates say they would reject a job offer from an employer with a negative reputation, even if they were unemployed.
87% of organizations currently have an existing skills gap or expect to within the next two to ten years.
Enter the 2024 Skills Impact Report. It explores the business imperative of talent experience for Skills-Based Organizations, the impact it has on your employees, the pillars of design thinking for HR and how to start applying it to your strategy with 5 intuitive roadmap worksheets.
CASE STUDY: SEGULA Technologies Group
In 2020, as the world faced significant engineering transformations, the COVID crisis, talent shortages, and the rise of AI, SEGULA Technologies Group launched a strategic initiative to plan and manage the resources and skills of its workforce. The goal of this ambitious project was to identify and leverage the talents of the Group's 15,000 employees across 30 countries, using AI to drive innovative skills management and enhance overall performance.
Read the Case Study to learn all the steps and actions taken to successfully tackle the challenge!
To sponsor an edition of the Data Driven HR Monthly, and share your brand with more than 130,000 Data Driven HR Monthly subscribers, send an email to dgreen@zandel.org.
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Enjoy reading the collection of resources for August and, if you do, please share some data driven HR love with your colleagues and networks. Thanks to the many of you who liked, shared and/or commented on July’s compendium.
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NEW: Insight222 research report on the People Analytics Ecosystem
Access the new Insight222 study here: Building the People Analytics Ecosystem: Operating Model v 2.0.
HYBRID, GENERATIVE AI AND THE FUTURE OF WORK
MCKINSEY - Gen AI’s next inflection point: From employee experimentation to organizational transformation
HR plays an especially important role in gen AI, both by transforming the people domain and by acting as a gen AI copilot for all employees. One executive noted that for every $1 spent on technology, $5 should be spent on people.
A new study by McKinsey finds that to generate value from the momentum associated with GenAI, businesses must transform their processes, structures, and approach to talent. The article, penned by Charlotte Relyea, Dana Maor, Sandra Durth, and Jan Bouly, outlines the key findings from the research: (1) Employee use is at an inflection point, while their organisations lag behind. (2) The next inflection point will see organisations shift from individual experimentation to strategic value capture. (3) Reinvent domains by translating vision into value. (4) Reimagine talent and skilling by putting people at the centre (see FIG 1). (5) Reinforce the changes to continue transforming (“To make gen AI changes stick, organizations need the right infrastructure to support continuous change and win over hearts and minds”).
FIG 1: Early adopters prioritise talent and the human side of GenAI more than other companies (Source: McKinsey)
DAVE ULRICH - How are You Doing at AI for HR? A Ten-Item Assessment to Evaluate Your Progress
Getting started in AI for HR often begins with initiatives that can be done relatively quickly and easily.
Dave Ulrich shares key takeaways from a recent deep-dive, he and his colleagues at The RBL Group facilitated with senior HR leaders on AI in HR. He distils these into ten dimensions designed to help HR leaders assess how they are doing at applying AI for HR to their organisation (see FIG 2). These include: (1) Articulate a business case. (2) Develop Talent who can ‘do’ AI. (3) Create Responsible AI policies. (4) Create metrics to guide and measure success. (5) Start with low-hanging fruit.
FIG 2: Criteria to evaluate how well your organisation is using AI for HR (Source: Dave Ulrich)
DUNCAN HARRIS AND KATE ZOLNER - 5 Employee Fears of AI and How to Overcome Them
If companies want to get the most out of AI, they need employee trust. Securing it is not easy. More than three-quarters of employees don’t think their organization’s future use of the technology will be ethical.
Duncan Harris and Kate Zolner present the findings of Gartner research on the five main employee fears of AI use by their organisations (see FIG 3), which have a negative impact on employee trust. They then explain how leaders can address these fears through initiatives in areas such as learning, co-creation, effective communications, ethics and data privacy. As well as enabling the organisation to benefit from AI, Harris and Zolner argue that these solutions will lead to higher levels of inclusion, engagement and effort.
FIG 3: Five Employee Fears of Organizational AI Use (Source: Gartner)
STACIA GARR - How is HR using Gen AI today? | MAX BLUMBERG - GenAI in HR: Slashing Costs, Boosting Efficiency | SWANAND DEODHAR, FAVOUR BOROKINI, AND BEN WABER - How Companies Can Take a Global Approach to AI Ethics | BAIN - AI Survey: Four Themes Emerging
Four more resources tracking topics related to GenAI in HR. (1) Stacia Sherman Garr’s LinkedIn post summarises RedThread Research analysis of how HR is using GenAI today (see FIG 4). (2) Max Blumberg (JA) ?? provides a summary of his report on Slashing HR Costs: The Ultimate Blueprint for Implementing GenAI in HR, which provides guidance on implementing GenAI to transform HR cost efficiency, and includes Max’s GenAI HR Cost Reduction Maturity Model (see FIG 5). (3) Ben Waber teams up with Swanand Deodhar and Favour Borokini in a Harvard Business Review article offering guidance on how companies can take a global approach to AI ethics: “Because AI and related data regulations are rarely uniform across geographies, compliance can be difficult. To address this problem, companies need to develop a contextual global AI ethics model that prioritizes collaboration with local teams and stakeholders and devolves decision-making authority to those local teams.” (4) Gene R., Sanjin Bicanic, Jue Wang, Richard Lichtenstein, and Arjun Dutt share the four key themes that emerged from Bain’s recent AI survey, which includes that the emphasis has shifted from experimentation in 2023 to delivering real value 12 months later – thanks to Hung Lee for sharing Bain’s research in a recent edition of Recruiting Brainfood.
FIG 4: How HR is using GenAI (Source: RedThread Research)
FIG 5: GenAI HR Cost Reduction Maturity Model (Source: Max Blumberg)
MARC EFFRON - Above the Fray: What We Know About How WFH and Hybrid Affect Work
We should approach solving this problem in the same intelligent way as we suggest all human problems be solved – start with the science.
As his article on skills-based organisations testified, Marc Effron has a penchant for cutting through the hype and getting to the heart of an issue. As such, I highly recommend digging into his new analysis on what the science and evidence says are the trade-offs among WFO, WFH and hybrid work. Firstly, Effron dispels four myths propagated by proponents and opponents on CEOs, real estate, proximity bias and employees who prefer WFH. Then he examines the consequences of different work arrangements on (1) performance, (2) creativity, (3) innovation (4) work relationships, (5) collaboration, and (6) managing based on the emerging knowledge available via Google Scholar.
LYNDA GRATTON - Seven Truths About Hybrid Work and Productivity | BRIAN ELLIOTT - Hybrid Work: How Leaders Build In-Person Moments That Matter | REBECCA KNIGHT - 17 Team-Building Activities for In-Person, Remote, and Hybrid Teams
To get the most from hybrid work, leaders should prepare for trade-offs, make expectations clear, and think harder about how productivity is measured.
Three more resources on hybrid work to read in conjunction with Marc Effron’s article above. First, Lynda Gratton unveils seven key findings from what she is seeing from experiments in hybrid working including: (1) Hybrid work is a continuum. (2) Productivity is usually challenging — and measurement is always complex. (3) It’s useful to view hybrid work as fundamentally a job design option. Second, Brian Elliott provides guidance on the four essential times leaders should be intentional about building moments that matter for hybrid workers: (1) Team development (“Get people together three or four times a year, with a 50-50 mix of business and social”). (2) Onboarding and training. (3) New-team formation and major-initiative kick-offs (“Grapple together over the objectives and norms of a project”). (4) Business-function-specific activities (“Let teams figure out the best in-person schedules for their needs”). Finally, Rebecca M. Knight provides guidance to leaders on team-building activities for in-person, remote and hybrid teams.
FIG 6: Focus on Productivity, Not Physical Presence (Source: Brian Elliott, Future Forum)
PEOPLE ANALYTICS
NAOMI VERGHESE, JONATHAN FERRAR, AND JORDAN PETTMAN - Building the People Analytics Ecosystem: Operating Model v2.0 ARTICLE | FULL REPORT
One of the questions we get asked most by the people analytics leaders and chief people officers we work with at Insight222 is: What capabilities do I need to build into our people analytics function? Based on research of more than 250 companies, focus interviews with 20 organisations, and our experience of working with more than 120 global companies as part of the Insight222 People Analytics Program, my colleagues Naomi Verghese, Jonathan Ferrar and Jordan Pettman have developed a new report: Building the People Analytics Ecosystem: Operating Model v 2.0. The executive article provides a summary of the key highlights, while the full report breaks down the six elements of the People Analytics Ecosystem (see FIG 7): (1) A Value Chain: from client drivers to business outcomes. (2) People Strategy at the Centre: a symbiotic relationship exists between people strategy and people analytics. (3) Five Core Capabilities: consulting, data science and research, employee listening, analytics at scale, adoption. (4) Four Additional Capabilities: reporting, data governance, workforce planning, AI strategy. (5) Internal Partnerships: HR and other business stakeholders are key to operational effectiveness. (6) External Partnerships: external suppliers and expertise are important for enabling success.
FIG 7: The People Analytics Ecosystem (Source: Insight222 Building the People Analytics Ecosystem: Operating Model v 2.0)
NELSON SPENCER - Introducing the S.T.A.R.T. Framework
The strategy pillar is all about aligning with your overall HR and Business goals. You should be able to connect how your strategy is driving business outcomes.
Nelson Spencer, who has worked in both sports and people analytics, presents his S.T.A.R.T Framework (see FIG 8), which is designed to solve a perennial problem for many HR functions: the disconnect between analytics, technology and operations. As Nelson explains, S.T.A.R.T has been designed “to consider these three critical functions holistically, acknowledging that they are part of a bigger puzzle and are all deeply interconnected.” The five pillars, which Nelson describes in detail in his article, are: (1) Strategy, (2) Technology, (3) Analytics, (4) Results, and (5) Transformation. He then provides guidance on how to implement the framework in organisations of varying sizes, from small to large.
FIG 8: The S.T.A.R.T Framework (Source: Nelson Spencer)
MICHAEL LUCA AND AMY EDMONDSON - Where Data-Driven Decision-Making Can Go Wrong
When making decisions (using data), managers should consider internal validity—whether an analysis accurately answers a question in the context in which it was studied. They should also consider external validity—the extent to which they can generalize results from one context to another.
Drawing on their research and work with companies, Michael Luca and Amy Edmondson present an approach that considers internal validity and external validity that leaders can apply to discussions of data to support better decision-making. This approach is designed to help leaders avoid five common pitfalls (see FIG 9) associated with data-driven decision-making.
FIG 9: How to avoid predictable errors (Source: Michael Luca and Amy Edmondson)
WILLIS JENSEN - Building a Network View of Data | MARTHA CURIONI - Supporting HR Adoption of People Analytics | JACKSON ROATCH - Your Best Career Move could be Going for a Run | SERENA HUANG - The Future of Work is Wellbeing | JASPAR SPANJAART - How NVIDIA's Talent Intelligence approach helped fuel its trillion-dollar rise | TOBY CULSHAW - The Talent Nexus: Redefining Business Agility for the 21st Century CEO
In each edition of the Data Driven HR Monthly, I feature a collection of articles by current and recent people analytics leaders. These are intended to act as a spur and inspiration to the field. Six are highlighted in this month’s edition. (1) In another excellent edition of his Making People Analytics Real blog, Willis Jensen discusses how to get a network view of data: “Linking your data together should be a top priority for any people analytics team.” (2) Martha Curioni provides guidance on how to support HR to adopt people analytics harnessing insights from the likes of Isabel Naidoo, Patrick Coolen, Greg Newman, and Amit Mohindra. One of Martha’s tips focuses on the importance of including HRBP’s rather than going around them. (3) As someone whose best ideas invariably come when I’m on a run, I particularly enjoyed Jackson Roatch’s article exploring the link between physical exercise and workplace learning, performance and thriving. (4) In an edition of her From Data to Action blog, Serena H. Huang, Ph.D. explores how AI can support wellbeing and lays out a ten-point plan on responsible AI principles for workplace wellbeing (see FIG 10). (5) NVIDIA’s Meta McKinney, MLIS and Nickolas Dowler, MBA explain to Jasper Spanjaart how the company’s Talent Intelligence strategy helped fuel its growth: “A winning Talent Intelligence strategy requires several key ingredients: data-driven and tested theories, meticulous and thoughtful research, reliable data, creative problem-solving, clear communication of the rationale, trusted relationships with business leaders, and the financial support and freedom to execute.” (6) Toby Culshaw provides a compelling breakdown of what he describes as The Talent Nexus: “The Talent Nexus represents a revolutionary approach to talent management and acquisition in the modern business landscape. It's an AI-driven, quantum-computing-enhanced ecosystem that transforms how organizations interact with, deploy, and develop talent.” A must-read for all those involved in talent intelligence, people analytics and workforce planning.
FIG 10: Responsible AI Principles for Workplace Wellbeing (Source: Serena Huang)
THE EVOLUTION OF HR, LEARNING, AND DATA DRIVEN CULTURE
RAVIN JESUTHASAN - The AI revolution is coming to L&D
AI will empower the L&D function to support strategic workforce planning through skills-related insights and interventions. This will help organizations shift from costly ‘churn and burn’ strategies to more cost-effective and sustainable reskilling and upskilling programs.
Ravin Jesuthasan, CFA, FRSA examines how AI is set to transform the learning and development function. He highlights Mercer analysis that finds that AI and automation will likely augment some L&D activities (see FIG 11), as well as outlining four potential AI uses cases for corporate L&D: (1) Producing L&D content. (2) Personalising L&D delivery. (3) Driving the skills-powered revolution. (4) Democratising knowledge. For more from Ravin, watch the recent LinkedIn Live on Skills-Powered Organisations in the Age of AI, which I moderated and featured Ravin alongside Tanuj Kapilashrami.
FIG 11: Time by task: L&D versus AI and Automation (Source: Mercer)
NANCY DUARTE - Are Your Presentations Too Emotional — or Too Analytical?
When making a presentation, leaders need to balance appeals to both logic and emotion — the head and the heart.
Nancy Duarte provides invaluable guidance on how to strike a balance between logic and emotion when making a presentation, and how credibility plays a crucial role in this balancing act. She explains that the first step in achieving this balance is understanding the audience: “Are they data-driven decision makers who thrive on statistics and factual evidence? Or are they more likely to be swayed by personal stories and emotional connections?”
FIG 12: An Analytical and Emotional Balance That’s Just Right (Source: Nancy Duarte)
WORKFORCE PLANNING, ORG DESIGN, AND SKILLS-BASED ORGANISATIONS
SANDRA LOUGHLIN – Seven Elements of Skills Data Quality
Skills data quality isn’t talked about much despite being the foundation for the SBO value proposition, a critical input to selecting and gaining value from skills tech vendors, and arguably the most difficult part of a skills transformation.
These wise words open Sandra Loughlin, PhD’s excellent article, where she outlines seven aspects of skills data quality, why they matter and their trade-offs: (1) Relevance (“Skills that are tracked should be the skills that need to be tracked—there’s no point in collecting skills data that won’t help you make better business decisions”). (2) Accuracy. (3) Validity. (4) Completeness. (5) Consistency (“Skills data should be consistently defined, recorded, and categorized across systems and within the organization”). (6) Timeliness. (7) Uniqueness. Thanks to Victoria Holdsworth for highlighting Sandra’s article.
EMPLOYEE LISTENING, EMPLOYEE EXPERIENCE, AND EMPLOYEE WELLBEING
CATHERINE COPPINGER - Introducing Two New Metrics: Fragmented & Interrupted Time
Catherine Coppinger from Worklytics introduces two new metrics: (1) Fragmented Time (“the sum of the total number of hours people have in blocks of time that are too short to get any deep work done”) and (2) Interrupted Time (“a metric designed to measure those periods of the day where people keep getting interrupted and just can’t find enough concentrated time to finish an important task”). Understanding these can help individuals and managers organise time more productively while enhancing employee wellbeing (see FIG 13). Read as a follow-up to another recent article by Catherine: 4 New Ways to Model Work, which featured in the July edition of Data Driven HR Monthly.
FIG 13: Source: Catherine Coppinger, Worklytics
MCKINSEY - What employees say matters most to motivate performance
Performance management is most effective when it features strong, consistent internal logic that employees understand
In their article, Asmus Komm, Brooke Weddle, Dana Maor, Katharina Wagner and Vivian Morrow Breaux present the findings of a McKinsey study of more than 1,000 employees across the globe on what matters most to motivating employee performance. The findings provide insights to employers to guide their approach with regards to performance management. These include: (1) Performance management frameworks should be consistent and clearly articulated. (2) Goal setting has impact when goals are measurable and clearly linked to company priorities (see FIG 14). (3) Performance reviews with skilled managers are crucial to employee performance. (4) Rewards that include nonfinancial incentives provide a boost.
FIG 14: Employees are motivated by measurable goals linked to company/team (Source: McKinsey)
LEADERSHIP, CULTURE, AND LEARNING
MEGAN REITZ AND AMY EDMONDSON - When a Team Member Speaks Up — and It Doesn’t Go Well
Speaking up — and being heard — in organizations is critical. What gets said, and what doesn’t, directs ethical behavior, innovation, inclusion, and performance.
In their article for Harvard Business Review, Megan Reitz and Amy Edmondson explore how 'conversational failures' often cause breakdowns in psychological safety rather than being used as opportunities to learn and develop. They discuss why they occur and the reasons why it is difficult to learn from these failures, before providing guidance on how these failures can become ‘intelligent’: (1) Prepare to learn from conversations. (2) Notice critical moments. (3) Implement process tools. (4) Attend to learning over the long term. For more on ‘intelligent failure’, tune in to Amy’s conversation with me on the Digital HR Leaders podcast: How Learning to Fail Can Help People and Organisations to Thrive.
If you’re not failing, you’re not journeying into new territory
JAMIE SMITH - How boards can champion a resilient talent strategy
Talent strategy is increasingly vital to driving overall strategy.
Based on a study of by EY and Corporate Board Member magazine of US public company directors across a range of industries, Jamie Carroll Smith presents analysis of the four opportunities identified in the research for boards to champion a resilient talent strategy: (1) Gain deeper insight into the employee experience. (2) Enable a workforce for the future (“Directors recognize that AI developments demand a reskilling of the workforce”). (3) Harness the value of diversity, equity and inclusion (“The future talent pool may depend on companies prioritizing DEI”). (4) Identify opportunities to strengthen talent governance. Thanks to Brian Heger for highlighting in an edition of his excellent Talent Edge newsletter.
FIG 15: The biggest impacts of AI on company workforce strategy (Source: EY)
JEN FISHER, SUE CANTRELL, JAY BHATT, AND PAUL SILVERGLATE - The important role of leaders in advancing human sustainability
More than eight out of 10 executives surveyed say a stronger commitment to prioritizing a positive human impact would increase their company’s ability to attract new talent (82%), appeal to customers and clients (81%), and profitability (81%).
Jen Fisher, Susan Cantrell, Jay Bhatt, and Paul Silverglate outline the key findings from Deloitte’s third annual Workplace Wellbeing report. The primary finding suggests that leaders can play a key role in prioritising and advancing a human sustainability agenda, particularly when it comes to measuring outcomes and holding their organizations accountable for progress. Insights identified in the study include: (1) The three trends impacting today’s workforce the most are skills, burnout and mental health. (2) The modern work experience doesn’t promote human sustainability but C-suite leaders aren’t seeing it. (3) While three out of four executives believe workforce wellbeing is excellent or good, workers are having a different experience (see FIG 16). The article then provides guidance on the metrics companies can implement to measure human sustainability including on skills development, purpose, DEI and societal impact.
FIG 16: Source – Deloitte Wellbeing at Work survey, 2024
DIVERSITY, EQUITY, INCLUSION, AND BELONGING
JANINE LEE - Breaking Down Barriers to Belonging for Women of Color in Tech
In her article in Harvard Business Review, Dr. Janine Lee, MBA, Ed.D. Global Head of L&D at Google, outlines the findings from her doctoral research on workplace belonging for women of colour in the tech industry. Janine highlights the top belonging contributors and detractors identified in the study (see FIG 17), and then offers three recommendations to boost workplace belonging: 1) Invest in programs that foster peer-based relationships, 2) Enable sponsorship and mentoring opportunities, and 3) Hold leaders accountable to “walk the talk.”
FIG 17: Sense-of belonging contributors and detractors (Source: Janine Lee)
HR TECH VOICES
Much of the innovation in the field continues to be driven by the vendor community, and I’ve picked out a few resources from August that I recommend readers delve into:
GURU SETHUPATHY – Understanding the EU AI Act in Four Handy Charts – Guru Sethupathy of FairNow provides an invaluable breakdown of the EU AI Act and its implications.
FIG 18: The four risk levels under the EU AI Act (Source: FairNow)
EMILY KILLHAM - How to Build a Better Boss: What Leaders (and Their Teams) Need Now to Thrive – Emily Killham delivers a new study by Perceptyx identifying five key behaviours for managers, the positive and negative impacts of manager behaviour on employees and organisations, and the role of employee feedback in help managers take corrective action.
FRANCISCO MARIN - The Role of Active and Passive Organizational Network Analysis in Cybersecurity – Francisco Marin of Cognitive Talent Solutions breaks down how active and passive ONA can support organisational cybersecurity initiatives including the detection of anomalous communications, enhancing incident response and tailoring security strategies.
LOUJAINA ABDELWAHED - How To Lose an Employee in 10 Days – Loujaina Abdelwahed, PhD presents analysis by Revelio Labs highlighting the negative impact of return to office on employee reviews and attrition.
FIG 19: Negative reviews of RTO correlate positively with attrition (Source: Revelio Labs)
ALICIA ROACH – Not all ‘Workforce Planning’ is the Same – If you are interested in workforce planning and don’t follow Alicia Roach of eQ8 on LinkedIn, you really should. In her recent post, Alicia reflects on her ‘triangle of workforce planning’ (see FIG 20), which skilfully illustrates the value of ‘strategic’ workforce planning.
FIG 20: Source – Alicia Roach
PODCASTS OF THE MONTH
In another month of high-quality podcasts, I’ve selected six gems for your aural pleasure: (you can also check out the latest episodes of the Digital HR Leaders Podcast – see ‘From My Desk’ below):
EMILY HACKER AND DAN WEISS - The Critical Role Data Plays in Skills Development - Emily Hacker, CPTD and Dan Weiss share insights from MetLife's skills journey with Stacia Sherman Garr and Dani Johnson of RedThread Research on the Workplace Stories podcast. The key learning from the conversation is that your skills data doesn't need to be perfect to benefit employees, improve talent acquisition, and enhance workforce planning.
JOSH BERSIN - The Future Of The Workforce Has Arrived, Can’t You See It? – Inspired by his recent trip to Europe, Josh Bersin explains why the traditional industrial work model has ended, gig work is now mainstream, reskilling should be given primacy, and why HR professionals need to reskill in AI to stay relevant.
BRYAN HANCOCK AND EMILY FIELD - Managing in the era of gen AI – In this episode of McKinsey Talks Talent, Bryan Hancock and Emily Field, two of the authors along with Bill Schaninger, Ph.D. of Power to the Middle: Why Managers Hold the Keys to the Future of Work, join host Lucia Rahilly to explain why middle managers matter, what leaders could do differently to make more of the managers on their teams, and how gen AI could change middle managers’ jobs—for the better.
ANSHUL SHEOPURI - How Mastercard is Training Employees for the AI Era – Anshul Sheopuri, EVP People Operations and Insights at Mastercard, joins Christopher Rainey on the HR Leaders podcast to shares insights on leveraging AI in HR and the importance of continuous learning.
JAMES GALLMAN - Bridging HR Technology, Analytics, AI Agents, LLMs, & Nudging at NetApp - James Gallman , VP HR PMO, Systems and Analytics at NetApp, joins hosts Cole Napper and Scott Hines, PhD on the Directionally Correct podcast to discuss the overlap between HR technology and people analytics.
LILY ZHENG - Ground Your DEI Efforts in Data – In an episode of Women at Work, DEI strategist and consultant Lily Zheng joins hosts Amy Bernstein and Amy Gallo to explain the role of data and analytics in DEI, and the importance of measuring outcomes to make lasting progress.
VIDEO OF THE MONTH
JULIET SCHOR - Smarter Work for a Better World?
Studies suggest that the Four Day Week may reduce burnout and depression, while also offering significant opportunities to reduce our collective carbon footprint.
One of my favourite sessions at this year’s Wharton People Analytics Conference saw Professors Juliet Schor and Iwan Barankay discuss what we know about the four-day work week and share their different perspectives on what this alternate structure might mean for organisations and their employees.
BOOKS OF THE MONTH
One of the benefits of being on holiday the past few weeks has been that it enabled me to catch up on some reading, hence there being two books of the month for August:
NICK VAN DAM – Boosting Your Well-being: The Best Version of Me - A wonderful book – and a wonderful cause with 100% of the book’s royalties being donated to the e-Learning for Kids Foundation. Written by Prof. dr. Nick van Dam, and 20 co-authors, this is a comprehensive book on professional wellbeing. It delves into the interconnected aspects of four key dimensions: body, mind, purpose, and environment, and offers a compelling approach to self- improvement. I particularly enjoyed the chapters on resilience and adaptability (written by Jacqui Brassey, PhD, MA, MAfN ?️ (née Schouten) ), sleep (Dr Els van der Helm) and contribution (Emily Ricci). An uplifting and potentially life-changing read.
KALIFA OLIVER – I Think I Love My Job: Secrets To Designing A People-Centered Employer Value Proposition - At times a powerful and relatable story of the ups and downs of corporate life, and at others a compelling narrative on how to approach work, harness data and build a world-class employee experience. Kalifa Oliver, Ph.D. combines both an academic and a practitioner mindset that empowers the reader to take charge of their career, challenge workplace norms, and use data to revolutionise the employee experience.
FROM MY DESK
August saw us reach a notable milestone on the Digital HR Leaders podcast – our 200th episode, and we celebrated in style with a special guest, Amy Edmondson, Thank you to Louis Gordon and the team at HiBob for sponsoring series 40 of the podcast.
AMY EDMONDSON - How Learning to Fail Can Help People and Organisations to Thrive – Harvard professor, pioneer of psychological safety and Thinkers50 #1, Amy Edmondson joined me for our 200th episode, where we discussed intelligent failure, and how failing well can drive individual and organisational success.
DAVID GREEN - What key elements do you believe are essential to building a strong company culture? - A round up of series 40 of the Digital HR Leaders podcast, with insights from John Winsor, Maureen N. Dunne, Ph.D., Nirit Peled-Muntz, Heidi Manna and Amy Edmondson.
DAVID GREEN - Five Key Elements For Building a Strong Company Culture? – A recent article for myHRfuture, where I break down five elements in building a strong company culture including aligning with organisational mission and using people data as your GPS.
LOOKING FOR A NEW ROLE IN PEOPLE ANALYTICS OR HR TECH?
I’d like to highlight once again the wonderful resource created by Richard Rosenow and the One Model team of open roles in people analytics and HR technology, which now numbers close to 500 roles – and has now been developed into a LinkedIn newsletter too.
THANK YOU
Wayne Tarken for kindly writing a post about me on LinkedIn: Curious About People Analytics? - What Leaders Can Learn from Thursday's Thought Leader.
Ester Martinez and her team at People Matters for including the Digital HR Leaders podcast in their list of 100 must-read resources for HR and talent leaders.
Rachel Collins for her post emphasising the need to move from employment to employability, inspired by the LinkedIn Live I hosted recently with Ravin Jesuthasan and Tanuj Kapilashrami.
Similarly, thanks to James Elliott for also posting here about the LinkedIn Live with Ravin and Tanuj.
David McLean , whose post on learning from your failures references the Digital HR Leaders podcast episode with Amy Edmondson.
Veronika Birkheim , whose post on Culture Diagnostics, references the Digital HR Leaders podcast episode with Heidi Manna.
Andrew Gadomski for his post on how he uses the Data Driven HR Monthly as a learning tool at the Cybersecurity and Infrastructure Security Agency.
Irada Sadykhova for her post on how to build a strong company culture, which was inspired by a recent series of the Digital HR Leaders podcast.
Ashley Utz for her post reflecting on the recent Digital HR Leaders podcast episode with Nirit Peled-Muntz.
HR Executive Leadership Exchange for including me in their list of the Top 10 HR Leaders You Should Follow.
Mirro.io for including me in their list of Top HR Leaders to Follow in 2024.
Daniyal Wali and The Talent Games for including me in their list of the Top 10 HR Tech Leaders to Follow in 2024.
Finally, a huge thank you to the following people who shared the July edition of Data Driven HR Monthly. It's much appreciated: Jaqueline Oliveira-Cella Andrés García Ayala Kristhy Bartels Sandy Zou Danielle Farrell, M.A. David Hodges Jeff Wellstead Gord Johnston MA, BHJ, BA, CHRP Debbie Harrison Dave Millner Sharna Wiblen Aizhan Tursunbayeva, PhD, GRP Catriona Lindsay Amardeep Singh, MBA Walter Maes Marcano Gert-Jan Tretmans Tim Peffers Kouros Behzad Adam Tombor (Wojciechowski) Lewis Garrad Sebastian Szachnowski Bob Pulver John Golden, Ph.D. Ben Wigert, Ph.D, MBA Ken Oehler Alexis Fink Katia Simões Francisca Solano Beneitez Abbas Qaidari Onno Bouman Aravind Warrier Kathleen Kruse Adedamola Adeleke ☁️ Elodie MENAGER Susan Knolla John Healy David Simmonds FCIPD Andrews Cobbinah, MLPI, ACIHRM Deviprasad Panda Vanesa C. David McLean Timo Tischer Prachi Agasti Maria Alice Jovinski Tristan Hack Adam McKinnon, PhD. Nicole Hazard Michael Arena Andras Vicsek Jane Kuhn Emily Pelosi, PhD Malgorzata Langlois Ahmed Salah ?? Swechha Mohapatra (IHRP-SP, SHRM-SCP, CIPD) Paul Daley Kyle Forrest Shivaani Talesra Ryan Wong Shujaat Ahmad Tessa Hilson-Greener Vivek Ojha Jacob Nielsen Søren Kold Tobias W. Goers ツ Terri Horton, EdD, MBA, MA, SHRM-CP, PHR Galo Lopez Noriega Marino Mugayar-Baldocchi Alexandra Nawrat Marian Stancik Hanadi El Sayyed Marcela Niemeyer Higor Gomes Kirsten Edwards Andreea Lungulescu Bradford Williams Faiza Tasneem(Associate CIPD) Alysson DuPont, SHRM-SCP, MBA Dr. Peter Schulz-Rittich Joaquin Hernandez Doug Shagam Mariami Lolashvili Caitie Jacobson Jaap Veldkamp Jaejin Lee Yvonne Bell (She/Her) John Gunawan Roberto Amatucci Philipp Heller Tina Peeters, PhD Gianni Giacomelli Lina Makneviciute Roshaunda Green, MBA, CDSP, Phenom Certified Recruiter Jacob Bradburn, Ph.D. Ying Li Phil Inskip Jack Liu Jonathan Berríos Leiva Stephen Hickey Lars Schmidt Geetanjali Gamel Dan George Anabel Fall Alejandra Barbarelli Adam Gibson Mia Norgren David van Lochem Nick Lynn Silja Kupiainen Heather Whiteman, Ph.D. Meghan M. Biro Martijn Wiertz Agnes Garaba Dolapo (Dolly) Oyenuga Laurent Reich Sebastian Kolberg Sebastián Mestre Chris Long Penny Newman Ralf Buechsenschuss Sebastian Knepper Marcela Mury Joseph Frank, PhD CCP GWCCM Dave Fineman Ron Ben Oz Danielle Bushen Kimberly Rose Daorong Lin Sukumaran Mariappan Abhilash Bodanapu Sonia Mooney Kerrian Soong Jay Polaki⚡️ SHRM-SCP/SPHR Remco van Es Ken Clar Matt Elk Aulia Raubien Natalie Wiseman Graham Irene Wong David Balls (FCIPD) Olivier Bougarel Ramesh Karpagavinayagam Oliver Kasper Andrew Kilshaw Nick Hudgell Gal Mozes, PhD Tatu Westling Brandon Merritt Johnson
UNLOCK THE POTENTIAL OF YOUR PEOPLE ANALYTICS FUNCTION THROUGH THE INSIGHT222 PEOPLE ANALYTICS PROGRAM
At Insight222, our mission is to make organisations better by putting people analytics at the centre of business and upskilling the HR profession The Insight222 People Analytics Program® is your gateway to a world of knowledge, networking, and growth. Developed exclusively for people analytics leaders and their teams, the program equips you with the frameworks, guidance, learnings, and connections you need to create greater impact.
As the landscape of people analytics becomes increasingly complex, with data, technology, and ethical considerations at the forefront, our program brings together over one hundred organisations to collectively address these shared challenges.
Insight222 Peer Meetings, like this event in London, are a core component of the Insight222 People Analytics Program®. They allow participants to learn, network and co-create solutions together with the purpose of ultimately growing the business value that people analytics can deliver to their organisations. If you would like to learn more, contact us today.
ABOUT THE AUTHOR
David Green ?? is a globally respected author, speaker, conference chair, and executive consultant on people analytics, data-driven HR and the future of work. As Managing Partner and Executive Director at Insight222, he has overall responsibility for the delivery of the Insight222 People Analytics Program, which supports the advancement of people analytics in over 90 global organisations. Prior to co-founding Insight222, David accumulated over 20 years experience in the human resources and people analytics fields, including as Global Director of People Analytics Solutions at IBM. As such, David has extensive experience in helping organisations increase value, impact and focus from the wise and ethical use of people analytics. David also hosts the Digital HR Leaders Podcast and is an instructor for Insight222's myHRfuture Academy. His book, co-authored with Jonathan Ferrar, Excellence in People Analytics: How to use Workforce Data to Create Business Value was published in the summer of 2021.
MEET ME AT THESE EVENTS
I'll be speaking about people analytics, the future of work, and data driven HR at a number of upcoming events in 2024:
September 11 - Productivity, Purpose, and Profit: How to thrive in ‘25 (London)
September 16-19 - Workday Rising (Las Vegas)
September 24-26 - Insight222 Global Executive Retreat (Colorado, US) - exclusively for member organisations of the Insight222 People Analytics Program
October 2-3 - People Analytics World (New York)
October 16-17 - UNLEASH World (Paris)
October 22-23 - Insight222 North American Peer Meeting (hosted by Workday in Pleasanton, CA) - exclusively for member organisations of the Insight222 People Analytics Program
November 12-14 - Workday Rising EMEA (London)
November 19-20 - Insight222 European Peer Meeting (hosted by Merck in Darmstadt, Germany) - exclusively for member organisations of the Insight222 People Analytics Program
More events will be added as they are confirmed.
AI Ethics
2024年09月03日
AI Ethics
How Generative AI Adds Value to the Future of Work
这篇Upwork的文章深入探讨了生成式人工智能（AI）在重新塑造工作价值方面的变革力量，强调了自动化和创新不仅改变了工作岗位，还在各个行业提高了生产力和创造力。文章着重讨论了对劳动力市场的细微影响，强调了技能发展和道德考虑的重要性，并对人工智能与人类合作的未来提供了前瞻性的视角。
Authors: Dr. Ted Liu, Carina Deng, Dr. Kelly Monahan
Generative AI’s impact on work: lessons from previous technology advancements
In this study, we provide a comprehensive analysis of the initial impact of generative AI (artificial intelligence) on the Upwork marketplace for independent talent. Evidence from previous technological innovations suggests that AI will have a dual impact: (1) the displacement effect, where job or task loss is initially more noticeable as technologies automate tasks, and (2) the reinstatement effect, where new jobs and tasks increase earnings over time as a result of the new technology. Take for example the entry of robotics within the manufacturing industry. When robotic arms were installed along assembly lines, they displaced some of the tasks that humans used to do. This was pronounced in tasks that were routine and easy to automate. However, new tasks were then needed with the introduction of robotics, such as programming the robots, analyzing data, building predictive models, and maintaining the physical robots. The effects of new technologies often counterbalance each other over time, giving way to many new jobs and tasks that weren’t possible or needed before. The manufacturing industry is now projected to have more jobs available as technologies continue to advance, including Internet of Things (IoT), augmented reality, and AI, which transform the way work is completed. The issue now at hand is ensuring enough skilled workers are able to work alongside these new technologies.
While this dynamic of displacement and reinstatement generally takes years to materialize, as noted above in the manufacturing example, the effects of generative AI may be taking place already on Upwork. For the platform as a whole, we observe that generative AI has increased the total number of job posts and the average spend per new contract created. In terms of work categories, generative AI has reduced demand in writing and translation, particularly in low-value work, while enhancing earnings in high-value work across all groups. In particular, work that relies on this new technology like Data Science and Analytics are reaping the benefits. The report highlights the importance of task complexity and the skill-biased nature of AI's impact. Skills-biased technology change is to be expected as the introduction of new technologies generally favors highly skilled workers. We observe this on our platform as high-skill freelancers in high-value work are benefiting more, while those in low-value work face challenges, underscoring the need for skilling and educational programs to empower freelancers to adapt and transition in this evolving work landscape.
Understanding the lifecycle of work on Upwork and the impact of gen AI
Generative AI has a growing presence in how people do their work, especially since the public release of ChatGPT in 2022. While there’s been extensive discussion about the challenges and opportunities of generative AI, there is limited evidence of such impact based on transaction data in the broader labor market. In this study, we use Upwork’s platform data to estimate the short-term effects of generative AI on freelance outcomes specifically. The advantage of the Upwork platform is that it is in itself a complete marketplace for independent talent, as we observe the full life cycle of work: job posts, matching, work execution, performance reviews, and payment. Few other instances exist where a closed-system work market can be studied and observed. Thus, the results of this study offer insights into not only the online freelance market, but also the broader labor market.
How technological progress disrupts the labor market is not a new topic. Acemoglu and Restrepo (2019) argue that earning gain arises from new tasks created by technological progress, which they term the “reinstatement effect,” even if the automation of certain tasks may have a displacement effect in the labor market initially. What this means is that there may be a dynamic effect going on: the displacement effect (e.g., work loss) may be more noticeable in the beginning of a new technology entry, but as new jobs and tasks are being created, the reinstatement effect (e.g., rates increase, new work) will begin to prevail. In the broader labor market, such dynamics will likely take years to materialize. But in a liquid and active independent work marketplace like Upwork, it’s possible that we’re already observing this transition happening.
Existing studies such as this provides a useful conceptual framework to think about the potential impact of generative AI. It’s likely that in the short term, the replacement of generative AI will continue to be more visible, not just at Upwork, but also in the broader labor market. Over time and across work categories, however, generative AI will likely spur new tasks and jobs, leading to the reinstatement effect becoming stronger and increasing rates for those occupations with new tasks and a higher degree of task complexity. We’ve already seen evidence of new demand as a result of gen AI on our Upwork platform, with brand new skill categories like AI content creator and prompt engineer emerging in late 2022 and early 2023. We test this hypothesis of both work displacement and reinstatement, and provide insights into how generative AI affects work outcomes.
Impact of generative AI on work
To understand the short-term impact of generative AI on the Upwork freelance market, we capitalize on a natural experiment arising from the public release of ChatGPT in November 2022. Because this release was largely an unanticipated event to the general public, we’re able to estimate the causal impact of generative AI. The essential idea behind this natural experiment is that we want to compare the work groups affected by AI with the counterfactual in which they are not. To implement this, we use a statistical and machine-learning method called synthetic control. Synthetic control allows us to see the impact that an intervention, in this case, the introduction of gen AI, has on a group over time by comparing it to a group with similar characteristics not exposed to the intervention. The advantage of this approach is that it allows us to construct reasonably credible comparison groups and observe the effect over time.
The units of analysis we use are work groups on the Upwork platform; we analyze variables such as contract number and freelancer earnings. Instead of narrowly focusing on a single category like writing, we extend the analysis to all the major work groups on Upwork. Moreover, we conduct additional analysis of the more granular clusters within each major group. The synthetic control method allows for flexibility in constructing counterfactuals at different levels of granularity. The advantage of our comprehensive approach is that we offer a balanced view of the impact of generative AI across the freelance market.
Generative AI’s short-term impact on job posts and freelancer earnings
Looking at the platform as a whole, we observe that generative AI has increased the total number of job posts by 2.4%, indicating the overall increased demand from clients. Moreover, as shown in Figure 1, for every new job contract, there is an increase of 1.3% in terms of freelancer earnings per contract, suggesting a higher value of contracts.
Figure 1 Effect of Generative AI on Freelancer Earning per Contract
The Upwork platform has three broad sectors: 1. Technological and digital solutions (tech solutions); 2. Creative & outreach; 3. Business operations and consulting. We have observed both positive and negative effects within each of the sectors, but two patterns are worth noting:
The reinstatement effect of generative AI seems to be driving growth in freelance earnings in sectors related to tech solutions and business operations. In contrast, within the creative sector, while sales and marketing earnings have grown because of AI, categories such as writing and translation seem disproportionately affected more by the replacement effect. This is to be expected due to the nature of tasks within these categories of work, where large language models are now able to efficiently process and generate text at scale.
Generative AI has propelled growth in high-value work across the sectors and may have depressed growth in low-value work. This supports a skills-biased technology change argument, which we’ve observed throughout modern work history.
More specifically and within tech solutions, data science & analytics is a clear winner, with over 8% of growth in freelance earnings attributed to generative AI. This makes sense as the reinstatement effect is at work; new work and tasks such as prompt engineering have been created and popularized because of generative AI. Simultaneously, while tools such as ChatGPT automate certain scripting tasks (therefore leading to a replacement effect), it mainly results in productivity enhancements for freelancers and potentially leads to them charging higher rates and enjoying higher overall earnings per task.
In terms of contracts related to business operations, we observe that accounting, administrative support, and legal services all experience gains in freelance earnings due to generative AI, ranging from 6% to 7%. In this sector, customer service is the only group that has experienced reduced earnings (-4%). The reduced earnings result for customer service contracts is an example of the aggregate earnings outcomes of AI, related to the study by Brynjolfsson et al (2023), who find that generative AI helps reduce case resolution time at service centers.
A potential outcome of this cut in resolution time is that service centers will need fewer workers, as more tasks can be completed by a person working alongside AI. At the same time, the reinstatement effect has not materialized yet because there are no new tasks being demanded in such settings. This may be an instance where work transformation has not yet been fully realized, with AI enabling faster work rather than reinventing a way of working that leads to new types of tasks. A contrasting case is the transformation that happened with bank tellers when ATMs were introduced. While the introduction of these new technologies resulted in predictions of obsolete roles in banks, something different happened over time. Banks were able to increase efficiency as a result of ATMs and were able to scale and open more branches than before, thereby creating more jobs. In addition, the transactional role of a bank teller became focused on greater interpersonal skills and customer relationship tasks.
When taken together, the overall gains in such business operations work on Upwork are an encouraging sign. These positions tend to require relatively intensive interpersonal communication, and it seems the short-term effects of generative AI have helped increase the value of these contracts, similar to what we saw in the banking industry when ATMs were introduced.
As of now, the replacement effect of AI seems more noticeable in creative and outreach work. The exception is sales and marketing contracts, which have experienced a 6.5% increase in freelance earnings. There is no significant impact yet observed on design. For writing and translation, however, generative AI seems to have reduced earnings by 8% and 10% respectively. However, as we will discover, task complexity has a moderating effect on this.
High-value work benefit from generative AI, upskilling needed for low-value work
Having discussed the overall impact of generative AI across categories, we now decompose the impact by values. The reason we’re looking at the dimension of work value is that there may be a positive correlation between contract value and skill complexity. Moreover, skill complexity may also be positively correlated with skill levels. Essentially, by evaluating the impact of AI by different contract values, we can get at the question of AI's impact by skill levels. This objective is further underscored by a discrepancy that sometimes exists in the broader labor markets – a skills gap between demand and supply. It simply takes time for upskilling to take place, so it’s typical for demand to exceed supply until a more balanced skilled labor market takes place. It is worth noting, however, freelancers on the Upwork platform seem more likely than non-freelancers to acquire new skills such as generative AI.
For simplicity, let’s assume that the value of contracts is a good proxy for the level of skill required to complete them. We’d then assume that high-skill freelancers typically do high-value work, and low-skill freelancers do low-value work. In other words, our goal is also to understand whether the impact of generative AI is skills-biased and follows a similar pattern from what we’ve seen in the past with new technology disruptions. Note that we’re focusing on the top and bottom tails of the distribution of contract values, because such groups (rather than median or mean) might be most susceptible to displacement and/or reinstatement effects, therefore of primary concern. We define high-value (HV) work as those with $1,000 or more earnings per contract. For the remaining contracts, we focus on a subset of work as low-value (LV) work ($251-500 earnings).
Figure 2 shows the impact of AI by work value, across groups on Upwork. As we discussed before, writing and translation work has experienced some reduction in earnings overall. However, if we look further into the effect of contract value, we see that the reduction is largely coming from the reduced earnings from low-value work. At the same time, for these two types, generative AI has induced substantial growth in high-value earnings – the effect for translation is as high as 7%. We believe the positive effect on translation high-value earning is driven by more posts and contracts created. In the tech solutions sector, the growth in HV earnings in data science and web development is also particularly noticeable, ranging from 6% to 9%. Within the business solutions sector, administrative support is the clear winner.
There are two takeaways from this analysis by work value. First, while we’re looking at a sample of all the contracts on the platform, it’s possible that the decline of LV work is more than made up for by the growth of HV work in the majority of the groups. In other words, except for select work groups, the equilibrium results for the Upwork freelance market overall seem to be net positive gains from generative AI. Second, if we assume that freelancers with high skills (or a high degree of skill complexity) tend to complete such HV work (and low-skill freelancers do LV work), we observe that the impact of generative AI may be biased against low-skill freelancers. This is an important result: In the current discussion of whether generative AI is skill-based, there exists limited evidence based on realized gains and actual work market transactions. We are one of the first to provide market-transaction-based evidence to illustrate this potentially skill-biased impact. Finally, additional internal Upwork analysis finds that independent talent engaged in AI-related work earn 40% more on the Upwork marketplace than their counterparts engaged in non-AI-related work. This suggests there may be additional overlap between high-skill work and AI-related work, which can further reinforce the earning potential of freelancers in this group.
Figure 2
Case study: 3D content work
To illustrate the impact of generative AI in more depth, we have conducted a case study of Engineering & Architecture work within the tech solutions sector. The reason is that we want to illustrate the potentially overlooked aspects of AI impact, compared with the examples of data science and writing contracts. This progress in generative AI has the potential to reshape work in traditional areas like design in manufacturing and architecture, which rely heavily on computer-aided design (CAD) objects, and newer sectors such as gaming and virtual reality, exemplified by NVIDIA's Omniverse.
Based on activities on the Upwork platform, we see that there is consistent growth of job posts and client spending in this category, with up to 12% of gross service value growth year over year in 2023 Q3, and over 11% in job posts during the same period. Moreover, applying the synthetic control method, we show a causal relationship between gen AI advancements and the growth in job posts and earnings per contract. More specifically, there is a significant increase in overall earnings because of AI, an average 11.5% increase. Additionally, as shown by Figure 3, the positive effect also applies to earning per contract. This indicates a positive impact on freelancer productivity and quality of work, due to the fact that we’re measuring the income for every unit of work produced. This suggests that gen AI is not just a facilitator of efficiency but also enhances the quality of output.
Figure 3 Effect of Generative AI on Freelancer Earning per Contract in EngineeringIn a traditional workflow to create 3D objects without generative AI, freelancers would spend extensive time and effort to design the topology, geometry, and textures of the objects. But with generative AI, they can do so through text prompts to train models and generate 3D content. For example, this blog by NVIDIA’s Omniverse team showcases how ChatGPT can interface with traditional 3D creation tools.
Thus, the positive trajectory of generative AI in 3D content generation we see is driven by several factors. AI significantly reduces job execution time, allowing for higher productivity. It facilitates the replication and scaling of 3D objects, leading to economies of scale. Moreover, freelancers can now concentrate more on the creative aspects of 3D content, as AI automates time-consuming and tedious tasks.
This shift has not led to a decrease in rates due to the replacement effect. In fact, this shift of workflow may create new tasks and work. We will likely see a new type of occupation in which technology and humanities disciplines converge. For instance, a freelancer trained in art history now has the tools to recreate a 3D rendering of Japan in the Edo period, without the need to conduct heavy coding. In other words, the reinstatement effect of AI will elevate the overall quality and value proposition of the work, and ultimately enable higher earning gains. This paradigm shift underscores generative AI's role in not just transforming work processes but also in creating new economic dynamics within the 3D content market. Fortunately, it seems many freelancers on Upwork are ready to reap the benefits: 3D-related skills, such as 3D modeling, rendering, and design, are listed among the top five skills of freelancer profiles as well as in job posts.
A dynamic interplay: task complexity, skills, and gen AI
Focusing on the Upwork marketplace for independent talent, we study the impact of generative AI by using the public release of ChatGPT as a natural experiment. The results suggest a dynamic interplay of replacement and reinstatement effects; we argue that this dynamic is influenced by task complexity, suggesting a skill-biased impact of gen AI. Analysis across Upwork's work sectors shows varied effects: growth in freelance earnings in tech solutions and business operations, but a mixed impact in the creative sector. Specifically, high-value work in data science and business operations see significant earnings growth, while creative contracts like writing and translation experience a decrease in earnings, particularly in lower-value tasks. Using the case study of 3D content creation, we show that generative AI can significantly enhance productivity and quality of work, leading to economic gains and a shift toward higher-value tasks, despite initial concerns of displacement.
Acemoglu and Restrepo (2019) argue that the slowdown of earning growth in the United States the past three decades can partly be explained by new technologies’ replacement effect overpowering the reinstatement effect. But with generative AI, we’re at a point of completely redefining what human tasks mean, and there may be ample opportunities to create new tasks and work. It's evident that while high-value types of work are being created, freelancers engaged in low-value tasks may face negative impact, possibly due to a lack of skills needed to capitalize on AI benefits. This situation underscores the necessity of supporting freelancers not only in elevating their marketability within their current domains but also in transitioning to other work categories.
To ensure as many people as possible benefit, there’s an imperative need to provide educational resources for them to gain the technical skills, and more importantly skills of adaptability to reinvent their work. This helps minimize the chance of missed opportunities by limiting skills mismatch between talent and new demands created by new technologies. Upwork has played a significant role here by linking freelancers to resources such as Upwork Academy’s AI Education Library and Education Marketplace, thereby equipping them with the necessary tools and knowledge to adapt and thrive in an AI-present job market. This approach can help bridge the gap between low- and high-value work opportunities, ensuring a more equitable distribution of the advantages brought about by generative AI.
Methodology
To estimate the causal impact of generative AI, we take a synthetic control approach in the spirit of Abadie, Diamond, and Hainmueller (2010). The synthetic control method allows us to construct a weighted combination of comparison units from available data to create a counterfactual scenario, simulating what would have happened in the absence of the intervention. We use this quasi-experimental method due to the infeasibility of conducting a controlled large-scale experiment. Additionally, we use Lasso regularization to credibly construct the donor pool that serves the basis of the counterfactuals and minimize the chance of overfitting the data.
Moreover, we supplement the analysis by scoring whether a sub-occupation is impacted or unaffected by generative AI. The scoring utilizes specific criteria: 1. Whether a certain share of job posts are tagged as AI contracts by the Upwork platform; 2. AI occupational exposure score, based on a study by Felten, Raj, and Seamans (2023), to tag these sub-occupations. We also use data smoothing techniques through three-month moving averages. We analyzed data collected on our platform from 2021 through Q3 2023. We specifically look at freelancer data across all 12 work categories on the platform for high-value contracts, defined as those with a contract of at least $1,000, and low-value contracts, consisting of those between $251 and under $500.
The main advantage of our approach is that it is a robust yet flexible way to identify the causal effects on not only the Upwork freelance market but also specific work categories. Additionally, we control for macroeconomic or aggregate shocks such as U.S. monetary policy in the pre-treatment period. However, we acknowledge the potential biases in identifying which sub-occupations are influenced by generative AI and the effects of external factors in the post-treatment period.
About the Upwork Research Institute
The Upwork Research Institute is committed to studying the fundamental shifts in the workforce and providing business leaders with the tools and insights they need to navigate the here and now while preparing their organization for the future. Using our proprietary platform data, global survey research, partnerships, and academic collaborations, we produce evidence-based insights to create the blueprint for the new way of work.
About Ted Liu
Dr. Ted Liu is Research Manager at Upwork, where he focuses on how work and skills evolve in relation to technological progress such as artificial intelligence. He received his PhD in economics from the University of California, Santa Cruz.
About Carina Deng
Carian Deng is the Lead Analyst in Strategic Analytics at Upwork, where she specializes in uncovering data insights through advanced statistical methodologies. She holds a Master's degree in Data Science from George Washington University.
About Kelly Monahan
Dr. Kelly Monahan is Managing Director of the Upwork Research Institute, leading our future of work research program. Her research has been recognized and published in both applied and academic journals, including MIT Sloan Management Review and the Journal of Strategic Management.
AI Ethics
AI Ethics
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