Even as AI becomes more pervasive in business, people are still a core competitive advantage. But business leaders are facing a host of talent-related challenges, from the skills gap to shifting employee expectations to the need for new operating models, a global study from the IBM Institute for Business Value (IBV) reveals.

The global skills gap is real and growing. Surveyed executives estimate 40% of their workforce will need to reskill over the next three years as a result of implementing AI and automation. That could translate to 1.4 billion of the 3.4 billion people in the global workforce, according to World Bank statistics. Respondents also report that building new skills for existing employees is a top talent issue.

AI could open up more opportunities for employees by enhancing their capabilities. In fact, 87% of the executives surveyed believe generative AI is more likely to augment employees than replace them. That varies across functions—97% of those executives think generative AI is more likely to augment than replace employees in procurement, compared with 93% for employees in risk and compliance, 93% for finance, 77% for customer service, and 73% for marketing.

Employees care more about doing meaningful work than about flexibility and growth opportunities, but leaders aren’t always in lockstep with their needs. With AI primed to take on more manual and repetitive tasks, surveyed employees report engaging in impactful work is the top factor they care about beyond compensation and job security—more important than flexible work arrangements, growth opportunities, and equity. Nearly half of surveyed employees believe the work they do is far more important than whom they work for or with.

However, employers seem to have missed the memo about what matters. Surveyed executives said doing impactful work was the least important factor to their employees, and that having flexible work arrangements was the most important, beyond compensation and job security.

The world of work has changed from even six months ago. Leaders are starting to believe that the enterprise of tomorrow may not run as before—and tomorrow’s talent cannot rely on yesterday’s ways of working.

Human resources (HR) leaders can play a critical role in how organizations adapt to the changes driven by generative AI. These leaders can help navigate these challenges, redesigning work and operating models to shepherd their organizations into the future.

Here are four actions for HR leaders to take.

Redesign the work, starting with the operating model. Automating bad processes won’t make them better. Rather than automating legacy activities, i.e., old processes that may be repetitive, manual, or simply outdated, look for a better way forward.

Process mining can analyze how work is done and where bottlenecks or other inefficiencies exist. From there, you can rethink and reengineer how work gets done, identifying where to apply AI or automation for repetitive or highly manual tasks to free up employee time and brainpower for higher-value tasks.

IBM’s HR team reexamined the highly manual and data-intensive quarterly promotions process, applying a custom watsonx Orchestrate solution to automate data gathering, which empowered human staff to devote more time and energy to high-value tasks.

Invest in talent as much as technology, preparing the workforce for AI and other technology disruption. This is a pivotal moment for HR leaders to help define their organization’s transformation strategy and how their people will use AI to deliver it.

HR leaders will drive workforce planning, design, and strategy by defining higher-value work, identifying the critical roles and skills of the future, and managing hiring, shifting people into new roles, retention, and more. These shifts in workforce planning, design, and strategy can include identifying and eliminating repetitive tasks that can be handled by AI. They can also include reviewing and changing roles to merge them or create new ones, and expanding existing roles to include tasks like applying or managing AI tools. With AI, HR leaders can create targeted skill development for the higher-level tasks driven by people.

Put skills at the center of workforce strategy—for today and for tomorrow. Leaders should be thinking about how to increase the overall technical acumen of the workforce. That can serve as a broad foundation for employees to build new skills, such as how to work creatively and responsibly with AI.

That doesn’t mean every employee will have to learn how to code, but most will need to familiarize themselves with new AI solutions. And it’s very important for all employees to have a basic understanding of AI and its capabilities so they can be both critical thinkers and users of the technology. Everyone should be empowered to ask questions about a model’s training data, how it made its predictions, its potential risks, and more.

Technology can help employees develop their skills and careers, too. Interactive career roadmaps with dynamic prompts can help employees see what’s expected for them to progress. At Delta Airlines, IBM Consulting implemented a skills foundation and a talent platform that enabled their IT workforce to upskill into critical new technologies.

The future pipeline of talent is an important consideration, too. The global AI skills gap is an urgent need industry-wide, and closing this gap will require strategic investments.

Give jobs more meaning by putting the employee in the driver’s seat. AI has the potential to transform the employee experience. It could automate repetitive tasks, letting people focus on what they are passionate about; free up their time for skills development or work-life balance; and create exciting new job roles and career paths.

It’s important to engage employees in this process. Give teams a forum to recommend tasks that could be automated to make their jobs easier and more fulfilling, using digital channels for a continuous and open feedback loop. This kind of openness to feedback and company-wide growth mindset can also help your organization develop its next generation of leaders. Cultivate an environment that encourages leaders at all levels to bring new ideas and creatively apply technology within their roles.

We’re at a pivotal point in the world of work. HR leaders have a massive opportunity in front of them, but there are risks as well. As businesses further embrace AI, successful change will only come if organizations—by way of HR leaders—prioritize a new approach to talent and operating models that puts people and technology together to boost productivity and drive business value.

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