opinions expressed by entrepreneur Contributors are their own.
Wage inflation is taking place throughout the western world. At the end of 2021, wage inflation in the UK peaked at 5 per cent. Andrew Bailey of the Bank of England suggested workers should hold back on their demands for pay rises and urged companies to “show restraint” on price hikes. Easier said than done.
Fears that inflation will continue to get worse into 2022 are not allayed by Russia’s invasion of Ukraine, which at the time of writing has already pushed oil prices to an eight-year high.
In the professional and legal services industry, where many organizations I work with have expressed concern about rising inflation, there is a secondary problem: the war for talent. Talent costs increase significantly in highly skilled jobs. For example, city and regional law firms in the UK – which were already competing with US law firms before the pandemic, which offered higher starting salaries and bigger bonuses – are now having to contend with firms like Skadden, which are offering newly qualified staff salaries of £157,000.
With this in mind, what should companies in regulated and competitive industries do? There is no easy answer, but there are immutable principles of business survival. And when economic pressures coincide with labor shortages, companies need to pay more attention to these principles.
The “roaring 2020s” may sound absurd – they shouldn’t
In 2010, a study entitled “Roaring Out of Recession” appeared in the Harvard Business Review. Two years after the great recession of 2007, business leaders still faced myriad challenges, many of which “were busy addressing short-term priorities,” the study found. Business leaders had feared that the world after the recession “is unlikely to be the same as before”. You weren’t entirely wrong.
The study’s authors analyzed companies’ strategies during the last three recessions to find out which characteristics led to post-recession gains. They found that “companies that strike the delicate balance between cutting costs to survive today and investing for growth tomorrow do well post-recession.” That means they tightened the wallets while reminding themselves to think ahead.
Additionally, firms that combine defensive and offensive strategies had the highest likelihood (37%) of emerging from a period of economic pressure. According to the study, the strategy that all successful companies had in common was to reduce costs by “focusing more deliberately on operational efficiencies than their competitors, even if they invested relatively heavily in the future by spending on marketing , R&D and new spend assets.”
See also: Robots are stealing our jobs
How intelligent automation can help
While today’s inflationary pressures mean companies must interpret a vastly different economic picture, companies also need to recognize how much technology has changed. A recent IBM survey found that nearly one in three companies around the world is using artificial intelligence (AI) in some way, and adoption is accelerating. About 43% of them have accelerated their AI adoption as a direct result of the COVID-19 pandemic, according to the same survey.
By adopting new technologies, companies are realizing new ways to achieve operational efficiencies and leverage them for R&D and new revenue streams. With the simultaneous growth of cloud-based SaaS platforms and no-code automation, new technologies are also enabling businesses to improve customer experiences.
These technologies are increasingly being recognized as “intelligent automation,” the computerization of work previously done by humans. Far from the abstract applications of AI, intelligent automation is showing tangible value that even goes beyond pure robotic process automation (RPA).
For many, this new challenge can only be met by significantly increasing operational efficiency and resilience and unlocking new revenue streams through intelligent automation. And for most companies, whose overheads are being weighed down by the ever-growing demand for higher wages, and whose quality of expertise and talent make or break their business, intelligent automation is the only solution.
The power of intelligent automation can enable much higher output per full-time employee. It can embed human intelligence into systems used by those employees to improve the quality of their jobs, while reducing the time to competency for recruits and protecting the company against tribal knowledge coming out the door.
Through intelligent automation, one company I know has harnessed the expertise of their accountants and generated nearly half a million dollars in revenue. I know another who is converting costly, regulatory-mandated operational burdens like KYC onboarding into automated processes that not only ensure compliance, but also identify more opportunities and generate more revenue than manual approaches. And some hospitals, for example, are completely revamping the way they conduct COVID risk assessments, saving countless lives.
What should companies do?
When organization leaders ask me for my opinion on the state of their business and opportunities to leverage innovation, my answer is always the same: find a way to keep costs down and generate new revenue without losing sight of the bigger picture to lose.
Those who hesitate to join the unstoppable train of intelligent automation, one of the surest ways to do so, are ultimately left behind.
Related: Artificial Intelligence Strategies Startups Should Use to Grow
https://www.entrepreneur.com/article/421166 Why intelligent automation is the only answer to wage inflation