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Innovative Technology: the Lead Cause of Employee Redundancy? A Literature Review

| January 20, 2017

Introduction

Technological developments have led to an increase in adoption of different innovative technological solutions in organisations. Several positive consequences have emanated from this, including the increase in efficiency of operations (Thompson, 2011). There have also been negative consequences, one of these being the fact that services of some employees are rendered unnecessary, leading to their possible dismissal (Klehe et al., 2011). This section intends to carry out an in-depth and critical review of literature on the adoption of innovation technology and employee redundancy.

Workplace Innovation and Innovative Technologies

In order to understand the need for innovative technologies, it is vital to develop an understanding of innovation at the workplace. Innovation is defined by Mumford (2012) as the process by which new ideas, methods or devices are introduced so as to provide better solutions for issues being faced by an organisation. The constant changes in the business environment, coupled with an increasing competition across all business industries have made innovation an inevitable option for almost all companies (Thompson, 2011).
According to Sung and Choi (2014), workplace innovation is at the intersection of three organisational elements, which are technology, skills, and human resource management. The coexistence of these elements lies in the fact that when the adoption of technology is driven by the strategic human resource management policies, there is a likelihood of HR managers to improve organisational processes through investing in employee training programs to improve their skills. Conversely, static human resource management presents a barrier to the adoption of technology and thus, less workplace innovation (Tushman & O’Reilly, 2013). This perspective of workplace innovation clearly indicates that technology adoption plays a key role.
Technological innovation is the development or extensive adoption of new and better technologies by organisations (Nordhaus, 2007). Brynjolfsson and McAfee (2011) argue that there has been an increasing pace of technological innovations, which is expected to further increase in future. There are a variety of innovative technologies, which is based on the differences in services and products that are offered by different companies. Whereas development of innovative technologies has been in place for a long time, it was accelerated by the onset of information and computer technologies in the 1960s (Teece, 2010). Often referred to as the computer revolution, it began with the initial use of computers commercially and went on through the introduction of the internet and later, e-commerce (Nordhaus, 2007).
Even though they may be expensive to acquire and maintain, there are several advantages that are associated with these innovative technologies (Brynjolfsson & McAfee, 2011). For businesses, one of the advantages is the reduction of costs. This is because it reduces the overdependence on employees and as a result, eliminates expenses that could be incurred in form of salaries, benefits and training costs. It also eliminates the losses associated with employee turnover and reduces wastages in operations (Davenport, 2013). For manufacturing companies, it makes it easier for them to streamline their processes and implement lean manufacturing strategies (Leiponen & Helfat, 2010). Innovative technologies also increase productivity and reduce downtime. Campbell-Kelly (2009) argues that algorithms used in computerisation of tasks in workplaces eliminate biases that are typical to humans. Whilst human have to fulfil other tasks that are unrelated to their occupations like eating, sleeping and grooming that often disrupt their work routines, algorithms are programmed to accomplish the range of tasks that it is allocated without these interruptions. As a result, it enables companies to meet demands from customers, expand their operations and increase their returns (Campbell-Kelly, 2009).

Trends in Innovative Technologies

In explaining workplace innovative technologies of the 21st century, Autor et al. (2003) categorise tasks into four. These are routine, non-routine, manual and cognitive tasks. Routine tasks are those that are accomplished by following explicit steps, and can be easily executed by machines. Non-routine tasks, on the other hand, are more complex, and have not been adequately understood by programmers to develop a specified computer mode for their operations (Autor et al., 2003). Both routine and non-routine tasks can then be classified into cognitive or manual tasks. Whereas manual tasks relate to physical duties, cognitive tasks relate to manual work. Historically, automation or computerisation was limited to routine manual and cognitive tasks, which are known to involve explicit activities that are rule-based. However, with the technological developments that have taken place over the years, even tasks that are non-routine are also being automated (David & Dorn, 2013).
Examples of innovative technologies being used in present-day organisations are mobile robotics. These are widely used in the health and manufacturing sectors to accomplish tasks that were initially handled by manual labour (Gomes, 2011; Dudek & Jenkin, 2010). Other tasks, as illustrated by Autor et al. (2003), include navigation of automobiles, deciphering handwritings, fraud detections and healthcare diagnostics. In healthcare, for instance, oncologists in leading medical centres are the Watson computer from IBM to offer chronic care and diagnostics for cancer treatment (Cohn, 2013). The computer utilises data from 600,000 medical reports, 2 million pages of from medical journal articles and 1.5 million criminal trials and patient records to benchmark and recognize patterns. This enables the computer to make a near accurate comparison of a person’s genetics, symptoms and history of his/her family medications so as to come up with the most appropriate plan for treatment (Cohn, 2013). Normally, it could take many employees to analyse all this data in order to provide a near-accurate diagnosis and treatment prescription. The fact that all these can be executed by a single machine renders many hospital employees jobless (Walker, 2014). This is one of the examples that denote the milestones that have been reached in regard to technological innovation.

Societal Impacts of Innovative Technologies

There are several societal impacts that have been associated with the adoption of innovative technologies in organisations. Of interest in this study, however, are their impacts on the jobs of employees in different organisations. This concern has been raised by several researchers, including Brynjolfsson and McAfee (2011), who argue that automated or computer controlled equipment have widely contributed to the recent increase in the levels of unemployment across the world. They also state that automation is no longer limited to routine tasks in manufacturing industries (Autor et al., 2003). It is increasingly being applied on other autonomous tasks, which increases the possibility of a reduction on the demand for manual tasks. An example is the recent development of an autonomous driverless car by Google (Rathod, 2013).
In another study by Beaudry et al. (2013), they also established that within the past 10 years, there has been a huge decline in the demand of manual skill as a result of increased automation and dependency on computer and information technology. This is even with the increase in the number of people who enrol in and graduate from higher education institutions. This research, however, fails to put into consideration the jobs that have been created as a result of technological developments and the computer revolution. Among the industries that have prospered because of information technology and, as a result, absorbed many employees include the telecommunications sector (Leiponen & Helfat, 2010). According to Acemoglu (2011), this has resulted into a situation where skilled employees have move down the occupational ladder to take up roles that were originally handles by semi-skilled or unskilled employees. This pushes the low-skilled labourers further down the ladder, forcing some of them to move out of employment. These findings concur with David and Dorn’s (2013), who established that there are increasing proportions of skilled workers in organisations. This does not, however, mean that there is an ongoing creation of jobs for skilled employees. It means that automation has taken up most of the jobs that were originally handled by skilled and semi-skilled employees. Several questions have been raised in regard to technological innovations and employee job security (David & Dorn, 2013). One of these is the extent of unemployment that will be brought about by innovative technologies. With the on-going trends of automating tasks that were originally considered as un-automatable, even skilled employees face the risk of losing their jobs. By losing jobs, these people also lose a source of income, making the impacts to spill over to their families and dependants (Acemoglu, 2011).
Even with the widely available evidence on ‘technological unemployment’ resulting from these technological innovations, there are economists who still insist that it cannot happen (Campa, 2014). They argue that even though automation leads to the displacement of workers, it reduces operational prices in several companies, leading to reduced prices. These reduced prices trigger increased consumer demands, which require more products and services to be satisfied. As a result, more industries will have to be created, which provide a basis for hiring more workers. This argument is often referred to as the Luddite fallacy (Walker, 2014). Even though this has been more or less true for the past two centuries, it is yet to be proved whether it will still hold true with the acceleration in technological innovations that has been facilitated by the computer revolution.

Governmental approaches to employee redundancy

The effect of automation on employment in the United Kingdom and across the globe has raised concerns among different stakeholders (Acemoglu, 2011). As organisations continue to take advantage of technological advancements to increase their competitive positions in their various industries of operation, more employees face the risk of losing their jobs. In response to this, there are several policies that have been put in place by the government to reduce redundancy (Gov.uk, 2014). However, these policies are general and do not focus on the redundancy that may be brought about by technological innovations in the workplace. Some of the reasons that are cited for redundancy, alongside adoption of technological innovations, include changing the location of business premises, acquisition of one company by another or reduction of staff members with the aim of cutting costs in the organisation (Griffith & Macartney, 2014).
In case an employee is selected to be made redundant, employers are required to provide a clear explanation for the decision. Some of the reasons that can be included as explanations for this are skills and qualifications of the employee, their attendance and disciplinary records, success/lack of success at the workplace and their overall workplace performance (Gov.uk, 2014). Reasons for redundancy ought not to be related to prejudice or discrimination. There also has to be an appeal procedure that provides employees with a platform to question his/her selection for redundancy in case they feel that the selection is unfair in any way. On dismissal, companies are also required to pay their employees a statutory redundancy pay (Gov.uk, 2014). Whereas these policies offer a slight reprieve to employees in regard to losing their jobs to technology, there has been no quantifiable argument to pinpoint their effectiveness (Griffith & Macartney, 2014). Even with the extensive research that has been carried out on innovative technologies and their effects on employment, there is still a shortage of literature that explains the approaches that companies can use to retain employees while adopting these innovative technologies.
How to find a balance between innovative technologies and employment
Referring to the literature that has been reviewed on innovative technologies and the ‘technological unemployment’, it is clear that the most likely trend will be an increased adoption of innovative technologies at the workplace, with a consequent increase in technological unemployment (Huizingh, 2011; Campa, 2014). However, there are different approaches that have been suggested by researchers that will help in reducing the adverse impacts of technological innovations on employment and employee living conditions. For instance, Piovarciova (2014) suggests that governments need to introduce an unconditional basic income for the growing number of unemployed people. This will result in the continuation of the market economy as the cycle of consumer spending will be propped up. Yet, this suggestion has been downplayed by many, with some arguing that providing everyone with a guaranteed basic income will mean that the working populations will have to part with more money in form of taxes (Gajewska, 2014). Another approach was offered by Brynjolfsson and McAfee (2012) who suggested that, in order to avoid being overtaken by machines in workplaces, people need to work towards advancing their capabilities faster than the pace with which technological advancements are taking place. In addition to this, super-intelligent minds ought to develop new desires that will trigger the creation of new industries (Brynjolfsson & McAfee, 2012). However, all these suggestions may be impractical because the acceleration in development of innovative technologies that has been facilitated by computer and information technology could be challenging to catch up with. Moreover, some of the human capabilities that will have to be advanced include skills in designing and developing new and more advanced innovative technologies, which are being fought against in the first place.

Mitigating employee redundancy caused by technological advancement
As earlier established, there are several reasons why companies lay off employees, one of these being automation of tasks. Automation reduces costs of operation, standardises quality of repetitive processes and increases the pace at which work is done. However, not all layoffs are necessary (Bartels et al., 2012). There are several measures through which employee redundancy can be mitigated. This section intends to address some of them.

Effective strategic planning

All successful organisations have managers who are strategic planners and future oriented. The ability to take chances and make future projections determines if the company will survive the tough times that are the norm of a globalised and competitive world. In line with this proposition, Autor et al. (2003) state that a clear, elaborate, well-planned and structured strategic plan ensures that the organisation is prepared for any eventualities. As such, organisations need to prepare for technological advancements and make the necessary adjustments in their workforce. One of the adjustments that can be made is distributing employees who could be redundant to other departments to reinforce their operations (Gall, 2011).
Hiring highly skilled employees and offering employee training
Based on analysis conducted by Waters (2007), technological advancement ordinarily automates most of the functionality of an organisation that does not require highly skilled and/or specialised labour. As such, companies whose larger population of employees is not highly skilled are susceptible to employee redundancy in case of technological innovations in the organisation (Walker, 2014). To mitigate this while still allowing the company to grow and advance, organisations should have a highly skilled, effectively trained and tested labour force, which will still be effective after acquisition of new technological innovations. Gall (2011), who concurs with this opinion, states that organisations are expected to invest heavily in training staff that can facilitate growth and stability of the organisation. The limitation of this strategy is that not all tasks in the organisation require a high level of skills to be accomplished (Bartels et al., 2012). In addition, if skilled employees are assigned tasks that they consider not to match with their skill set, they are likely to seek employees in other companies, increasing employee turnover.

Continuous evaluation of employees

Even with the automations of tasks in organisations, companies will still find it difficult to dismiss employees they regard as being valuable to the organisation. There is thus a need for standards to be set to gauge the performance such as performance appraisals (Waters, 2007). Rewards can be put in place for employees who positively contribute towards the organisation’s prosperity and punitive measures for those who do not. With such measures, employees will continuously upgrade their skills and increase their value to the organization (Palaiologos et al., 2011). This will increase their chance of retention in case of an automation of tasks. Even with such measures in place, there will still be employees who will be not as effective as others.

Employee cross-training

Cross-training refers to the provision of training for employees to enable them improve their levels of proficiency in roles other than those of their functional areas or departments (Ramanigopal et al., 2012). An example is when an employee in the production team of an organisation is provided with training on roles in the human resource department. Whereas this is commonly done with the aim of replacing employees who might have moved to other organisations, dismissed or on leave, it can also be used to mitigate employee redundancy occurring as a result of automation. Employees whose jobs will be taken over by machines can be distributed to other functional areas, where they will effectively fit (Abernathy, 2011). Cross-training, however, has the limitation of being costly to the organisation.

Planned and progressive acquisition of innovative technology

Most organisations tend to apply technological advancement as a reactive measures rather than an active measure (Gall, 2011). As a reactive measure, organisations apply technological advancement for purposes such as warding off competition, subscribing to the new standards set by the government or other regulatory bodies, meeting the unexpected high demand from the clients or any other reason which was not planned but rather as a result of unavoidable circumstances. In such cases, employee redundancy is normally high and there is need to take action against it (Campa, 2014). However, this can be mitigated through planned and progressive implementation of technological advancement. When technological advancement is planned, the organization will be ready for the change and the employees will be adequately skilled to tag along with the change and still be relevant (Teece, 2010). Progressive implementation will allow for critical analysis of the impact if the technological advancement and thus laying down better strategies or corrective measures to mitigate the negative impacts of the technology while at the same time reduce employee redundancy (Gall, 2011).
All the suggested approaches towards mitigation of employee redundancy as a result of technological innovation only provide a slight solution. This is because of the fact that whilst the current employees in the organisations will be retained, there will be a shortage of employment positions to accommodate new workers (Walker, 2014). Thus, this will only provide a shot-term solution to technological unemployment.
The relationship between technological advancement and unemployment
Employee redundancy that is majorly caused by technological advancement is also regarded as one of the primary contributors to the high levels of unemployment in the society (Autor et al., 2003). In order to fully understand the concepts behind the relationship between technological advancement and unemployment, one has to understand the genesis of formal employment and technological advancement.
From the onset of capitalism in the society, there was need for specialised labour to ensure that the high demand for goods and services was met. The surplus production of food led to larger populations and thus higher demand for goods and services. The industrial revolution helped to set the platform on which technology was used in industries to enhance productivity and maximise on the resources available (Huizingh, 2011). The use of technology helped to automate repetitive tasks and standardise the quality of goods. The more beneficial technology was to the organisations, the more it was harnessed to ensure that capitalism prevailed and the needs of the people were met. However, the unskilled labourers lost their jobs when machines were able to do the work that they did faster and at lower costs (Antonelli, 2014). This situation led to the term commonly referred to as technological unemployment where people lost their jobs to machines. The use of machinery led to the employment of only skilled labour (Brynjolfsson & McAfee, 2011).
The invention of computers was revolutionary to the way humans lived, communicated with each other and also the way they worked (Gajewska, 2014). There was more automation of functions in organisations and the skills that people possessed then were rendered obsolete. According to Ayres (2009), many organisations, such as Google, have specific departments that are focused on research and development of new technologies to make work cheaper, easier and faster. Each and every day, there is a new invention aimed at making life for humans better but the inventions could also lead to massive unemployment (Campa, 2014). The development of robotics is one of the forms of technological advancement that has led to unemployment. Robots are being used to perform the tasks that were initially being performed by people (Ayres & Warr, 2009). For example, as earlier stated, Google has recently launched a driverless car which is not prone to accidents (Rathod, 2013). These technologies require highly skilled labour to operate. However, since most of the world’s population is unskilled thus technology is leaving them jobless thus increasing the levels of unemployment (Campa, 2014).
The acceleration if the digital revolution is conditioned by the basic human desire to be better. Tasks that were considered to be complex and had to be done by highly skilled professionals are also being overtaken by technology (Nordhaus, 2007). Careers, such as banking, are being taken over by automated teller machines and online banking leading to unemployment of skilled labour. The use of 3D printers and the integration of artificial intelligence in the technological advancement concepts are leading to obsolesce of skills that were considered impressive, such as surgery (Cohn, 2013).
As much as technological advancement is criticised for causing massive unemployment in various industries for both skilled and unskilled labour, there are many jobs which may be related to the technological advancements which have been created as a result (Mumford, 2012). For instance, although the librarians and libraries are becoming less significant with the invention of computers and the internet, jobs for people who are manufacturing the computing devices have been created. In addition, other computer and information technology related industries, like telecommunications, have expanded and created more jobs (Leiponen & Helfat, 2010). Technological advancement can thus be regarded as constructive destruction where it causes unemployment in some sectors while creating employment in others.

The future of technological advancement

Technology has been regarded as a solution for several problems within and outside organisations. This mentality has deterred people from considering the adverse impacts that it has on society. One of the many drawbacks of technological advancement is employee redundancy, which is the subject of this study. In this regard, researchers like Brynjolfsson and McAfee (2012) are for the opinion that technology is but an improved means to unimproved ends and cannot equal social and moral progress.

According to Walker (2014), as technological advancements progress, there are resulting limitations in people’s learning abilities and their flexibility in adopting new ideas. This will in turn limit their innovation and as such, the rate of technological advancement will decline. However, Gomes (2011) presents a conflicting argument, stating that technological advancement is limitless and will continue to advance as long as humanity survives. This is because of the tendency of human beings to design easier approaches to day-to-day tasks. Human beings strive on a daily basis to make their lives better and are not satisfied with the level of progress made. Even though several strides have been made, there still is need for improvement (Huizingh, 2011). This is evidenced by the recent technological innovations that have been made, included the development of smartphones and driverless cars. In addition, for all innovations, there are often flaws or discoveries of better ways that they can deliver their intended tasks. Thus, there is a persistent need for further improvements of previous designs (Acemoglu, 2011).

One of the factors that could limit the adoption of innovative technologies in workplaces is the increasing concern of their greenhouse gas emissions and energy consumption (Wheeler, 2013). However, this concern is being addressed by a further development of technological innovations that are more environmental friendly, and use sustainable energy sources like solar and wind power (Hansmann et al., 2012). Based on these findings, unless raw materials needed to facilitate technological advancements are depleted, technological advancements are expected to endless.

Summary

This section has reviewed a wider range of literature on innovative technologies at the workplace and its impacts on employee redundancy. A wide range of literature suggests a positive relationship between the adoption of innovative technology and technological unemployment. However, the Luddite fallacy developed by some economists states that that there is no positive relationship between the two. Other issues that have been addressed in this section include the trends in innovative technologies, the affects that they have on social life and how the resulting employee redundancy can be mitigated. In regard to whether there will be an end to technological advancements, most of the literature that has been reviewed suggests that technological innovation will progress. This argument is supported by the trends in technology innovations in the 21st century, where tasks that are non-routine and were considered as being non-automatable, are now being automated. One of the gaps that have been identified in literature is on the measures being taken by organisations to limit employee redundancy as a result of technological innovation.

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