It’s been just over six months since ChatGPT was launched on the world. Like every other transformative technology shift, it’s already prompting leaders to question how they do everything from drug discovery and investing to talent management and partnerships. And yet unemployment rates remain near a 50-year low as employers struggle to find and retain the talent they need to get ahead of the next wave in work.
That’s prompting a move towards skills-based hiring, experimentation with AI and other themes that we explored at our Future of Work Summit last week. Here is a summary of highlights from the event, courtesy of Emmy Lucas, and a shout-out to Jena McGregor for creating such a thought-provoking event.
On Tuesday, I had the opportunity to hear from experts at McKinsey about what they’re seeing and doing in this realm at their annual media day. The management consultancy has faced plenty of challenges in the past few years—from paying hefty fines over its role in marketing opioid drugs to an embarrassing lack of diversity in its senior ranks. (Full Disclosure: I worked there in 2020.)
And yet McKinsey remains the advisor of choice for many of the world’s top leaders, having built a deep bench of expertise in areas like sustainability, organizational health, growth strategies and digital transformation. More than a million people applied for 10,000 jobs last year. What’s more, some among that top 1 percent didn’t come in with traditional four-year degrees—reflecting what chief people officer Katy George describes as a shift towards hiring for potential vs. pedigree. “We used to be the stewards of jobs,” says George. “Now, we are stewards of skills.”
The CEO Shift Around AI
Among the most coveted of skills, of course, is the ability to understand and leverage ChatGPT and other forms of generative AI. Alex Singla, a senior partner and global leader of QuantumBlack, AI by McKinsey, said that conversations with CEOs have shifted over the past several weeks. Gone are the requests for explanations of how the technology works — and whether it’s over-hyped. Now, Singla says, five questions dominate:
- What are the specific use cases?
- How do I get started?
- What are the risks I need to manage?
- What are the implications for present and future employees?
- How do I learn fast?
The automation that McKinsey had previously predicted would take effect by 2040 has now moved up to 2030. The winners will be those who move fast and quickly figure out how to integrate these new technologies into their IT stacks and work flows, and reimagine how they manage talent and design their operating model as a result.
Jacky Wright, a former chief digital officer of Microsoft US who became McKinsey’s first chief technology & platform officer last fall, also notes that generative AI is already creating new roles around risk and prompting forward-thinking companies to constantly iterate existing job descriptions.
Junior analysts, for example, will no longer need to spend most of their time gathering research, preparing pitch decks and creating content that synthesizes the data. Their focus is instead shifting to more value-added tasks.
Senior Partner Ben Ellencweig of QuantumBlack, in true McKinsey fashion, distills AI’s current impact to four Cs: coding (AI-generated suggestions are already generating productivity gains of up to 55%s), customer engagment (suggesting more personalized ways to engage customers), creative content generation (especially in marketing) and content synthesis (essentially connecting the dots). “All the mundane tasks go away,” he says. “It’s about change management … just moving at a lightning speed.” Here’s a report that QuantumBlack produced on what CEOs need to know about generative AI,
The Productivity Paradox
The current job market is both confounding and heartening to Anu Madgavkar, a McKinsey Global Institute partner who leads global research focused on labor markets and talent trends. Despite economic headwinds, people continue to switch jobs, work schedules and industries, helping job openings go up. That points to resilience and reasons for optimism, in her view. A key lever to keep the momentum going is to accelerate productivity growth, which now lags historical averages. Correcting that could add $10 trillion to US GDP, by McKinsey’s calculations.
While technology has the power to accelerate productivity gains, it’s not the only ingredient. Labor mobility, regulations, hiring practices and other factors also play into productivity. About three-quarters of of open job descriptions still ask for a four-year degree but 13 states have removed that criteria as a prerequisite in applying for public-sector roles and momentum is building for a more skills-based approach. As an example, Scott Blackburn, a senior partner & global co-leader of the McKinsey Center for Government pointed out how infantry soldiers are extensively trained in many of the skills needed in managing corporate risk.
Asutosh Padhi, McKinsey’s managing partner for North America, argues that “productivity is the only solution” for America’s continued prosperity. “How do we pay for the energy transition?,” he asked. “It all comes down to productivity at the state level, the sector level.”
And yet, as senior partner Olivia White of The McKinsey Global Institute noted, U.S. productivity gains have halved to an annual rate of 1.1% over the last 15 years. Moreover, those figures vary widely across the country. She cited seven states that were outperforming in terms of gains: North Dakota, California, New York, Texas, Colorado, Massachusetts and Washington. Many more are underperforming, she notes, creating a productivity gap that will only exacerbate the country’s regional divide.
Ezra Greenberg, a partner and global leader in overseeing macro scenarios and trends for the firm, has one piece of advice that almost every company can follow: “Keep your Baby Boomers.” Their institutional knowledge and ability to mentor younger generations could prove to be priceless in the coming years. For Boomers, that could be a recipe to work less and get paid more — if they adapt to new technologies and reimagine their own roles, too.