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Human resource solutions for competitive advantage

The concept of a fourth Industrial Revolution is a hot topic in international business and political circles. For example, it was the main theme of the 2016 World Economic Forum (WEF) conference in Davos, Switzerland and the WEF has established a high-powered Centre for the Fourth Industrial Revolution based in San Francisco. The principles of this revolution also frame much of the economic policies of a number of countries such as the Germany, China and Japan. South Korea even has a Fourth Industrial Revolution Committee chaired by the President. This revolution has also been talked about by the president of South Africa, Cyril Ramaphosa. So, what is the Fourth Revolution all about and what are the other revolutions that preceded it? 

The first industrial revolution occurred during the 18th and 19th centuries with the introduction of mechanization and steam power (e.g. mechanised spinning and weaving in the textile industry). The second started around the turn of the 20th century and is characterized by mass production (think Henry Ford) based on electrical energy generated by burning oil, gas and coal. Klaus Schwab, founder and Executive Chairman of the World Economic Forum (WEF) writes that the third industrial revolution started with the use of computers and includes the Internet - it took place mainly during the second half of the last century. He maintains that the more recent technological innovations are taking us into the Fourth Industrial Revolution that is rapidly bringing about unprecedented social, economic and political changes throughout the world.

The following images show some of the innovations forming the basis of the 4th Industrial Revolution:

 

These technologies have come about in an ongoing frenzy of innovation where new inventions trigger others through a network of associated ideas. As Schwab points out, these mainly digitally-based technologies should help to solve many difficult and complex problems of which the existential threat of global warming is high on the list of priorities. He also spells out a few other major global problems; "The world continues to struggle with a range of challenges linked to the last three industrial revolutions – median wages in advanced economies are stagnating or falling, developing economies are struggling to translate economic growth into broad-based, sustainable progress in living standards; and nearly one in 10 people lives in extreme poverty.” He also mentions that the Fourth Industrial Revolution is already causing additional problems such as a shortage of skills and knowledge required to perform the numerous new jobs that are being created while many existing jobs are being made redundant, thus causing increased unemployment in some sectors. In order to understand these Human Resource problems, the WEF conducted a survey during 2015 to investigate the skills that are and will be in demand for the 4th Revolution and those that will probably become redundant. Their very comprehensive and detailed report on the findings was published in January 2016.

Some highlights of the WEF Future of Jobs Report (2016)

The preface to the report states;

“While the impending change holds great promise, the patterns of consumption, production and employment created by it also pose major challenges requiring proactive adaptation by corporations, governments and individuals. Concurrent to the technological revolution are a set of broader socio-economic, geopolitical and demographic drivers of change, each interacting in multiple directions and intensifying one another. As entire industries adjust, most occupations are undergoing a fundamental transformation. While some jobs are threatened by redundancy and others grow rapidly, existing jobs are also going through a change in the skill sets required to do them. The debate on these transformations is often polarized between those who foresee limitless new opportunities and those that foresee massive dislocation of jobs. In fact, the reality is highly specific to the industry, region and occupation in question as well as the ability of various stakeholders to manage change.”

Validity and credibility of the WEF survey

The question arises as to how much weight we can place on the results of the survey and this depends to a large extent on the sample of people that responded to the questionnaire. As you can see from the following explanation, the response was large and covered a substantial cross-section of industries and countries so we can conclude that the results have a high level of validity and credibility. The section on the survey and research design reads,

“The dataset that forms the basis of this Report is the result of an extensive survey of CHROs (Chief Human Resource Officers) and other senior talent and strategy executives of leading global employers, representing more than 13 million employees across 9 broad industry sectors in 15 major developed and emerging economies and regional economic areas. …. A total of 371 individual companies from these industries and regions responded to the survey over the first half of 2015, providing us with 1,346 detailed occupation-level data points on mass employment, specialist and newly emerging occupations based in specific geographic locations across these companies’ global operations.”

Regarding ‘drivers of change,’ Figure 2 of the report shows that the changing nature of work and flexible work arrangements (flexi-time, flexi-place) make up 44% of the forces driving change.

Employment trends – the ups and downs

The report comments on employment trends as follows; 

“It is clear from our data that while forecasts vary by industry and region, momentous change is underway and that, ultimately, it is our actions today that will determine whether that change mainly results in massive displacement of workers or the emergence of new opportunities. Without urgent and targeted action today to manage the near-term transition and build a workforce with futureproof skills, governments will have to cope with ever-growing unemployment and inequality, and businesses with a shrinking consumer base. Our dataset aims to bring specificity to the debate and to the options for action, by providing the perspective of Chief Human Resources Officers of leading employers who are among those at the frontline of the emerging trends and are key actors in implementing future workforce strategies.”

Figure 6 of the report, Net employment outlook by job family, 2015–2020, shows the estimates of the number of jobs in the respondent companies that will decrease and which will increase between 2015 and 2020.  

Net employment outlook by job family, 2015–2020

Decrease

Office and administrative 4 759 000
Manufacturing and production 1 609 000
Construction and extraction 497 000
Arts, design, entertainments, sports and media 151 000
Legal 109 000
Installation and maintenance 40 000
Total 7 165 000

 Increase

Business and financial operations 492 000
Management

416 000

Computer and mathematics  405 000
Architecture and engineering  339 000
Sales and related  303 000
Education and training 66 000
Total 2 021 000

Of special concern is that the figures indicate an estimated net decline of over 5 million jobs over only 6 years (2015 – 2020) and this trend is likely to continue.

Hence the urgency of the problem.

The demand for core/generic skills 2015 - 2020

Figure 10 of the report shows the increase in demand for ‘core’ skills between 2015 and 2020. The percentage in the table for each sub-skill is the percentage of the jobs that will experience an increase in demand for that skill by 2020.

Increase in Skills Demand

Cognitive Abilities 15%
Systems Skills 17%
Complex Problem Solving 36%
Content Skills 10%
Process Skills 18%
Social Skills 19%
Resource Management Skills 13%
Technical Skills 12%
Physical Abilities 4%

 

These ‘core’ skills are also called generic skills, i.e. skills that are needed for virtually all jobs – they apply generally.

 On page 22 the report comments as follows on these results;

“With regard to the overall scale of demand for various skills in 2020, more than one third (36%) of all jobs across all industries are expected by our respondents to require complex problem-solving as one of their core skills.”

Table 7 on page 22 of the report shows the demand for each of the skills by industry sector.

The report then breaks down the core/generic skills listed above into sub-skills as shown below.

Cognitive Abilities:

Cognitive Flexibility (The ability to generate or use different sets of rules for combining or grouping things in different ways.)

Creativity (especially when thinking of a number of possible solutions to problem)

Logical Reasoning

Problem Sensitivity (recognising when a problem exists)

Mathematical Reasoning

Visualisation (The ability to imagine how something will look after it is moved around or when its parts are moved or rearranged)

Systems Skills

Judgement and Decision-making (These are critical aspects of solving a problem because one has to judge the pros and cons of possible solutions and decide which solution to apply.)

Systems Analysis (Determining how a system should work and how changes in conditions, operations and the environment will affect outcomes – this is part of both analytical thinking and systems thinking.)

Complex Problem Solving Skills

Complex Problem Solving

Content Skills

Active Learning (solving complex problems is usually a step-by-step learning process)

Oral expression

Reading comprehension

Written expression

ICT Literacy (Information and communication technology literacy - the ability to use digital technology, communication tools, and/or networks)

Process Skills

Active Listening

Critical Thinking

Monitoring self and others

Social Skills

Coordinating with others

Emotional intelligence

Negotiation

Persuasion

Service Orientation

Training and Teaching Others

Resource Management Skills

Management of Financial Resources

  • Management of Material Resources

People Management

Time Management

Technical Skills

Equipment Maintenance and Repair

Equipment Operation and Control

Programming

Quality Control

Technology and User Experience Design

Troubleshooting

Physical Abilities

Physical Strength

Manual Dexterity and Precision

Table A1 of the report (page 53) provides detailed definitions of each of these generic sub-skills.

Keep in mind that many of the generic sub-skills listed above could be relevant in a particular problem situation. For example, other research has shown that cognitive abilities, systems skills, content skills, process skills, and social skills are very important in complex problem solving, especially in team situations. But as the WEF report points out, “the reality is highly specific to the industry, region and occupation in question.” The implication is that managers need to assess the demand for these skills in their industry and company and take action to meet the demand – either by appointing people who are skilled in decision making and problem solving or training existing employees to develop these skills.  

Other Studies

The WEF Future of Jobs study is not the only one to show the importance of problem solving skills in this new era. A number of other research studies on generic skills carried out in many countries show that organisations are placing increasing emphasis on generic skills and problem solving is included in virtually all of these studies. For example, in 2010, the Irish Expert Group on Future Skills Needs Secretariat, prepared a report on, The Changing Nature of Generic Skills. The report listed the following generic skills that would be required by Irish ‘enterprises’ (in no particular order);

  • Specialist/technical skills, with breadth of understanding of others areas – interdisciplinary understanding & ability to work with other disciplines
  • People-related skills - communication, interpersonal, team working, customer-service skills
  • Conceptual & organisational skills - collecting & organising information, problem-solving, planning & organising, learning-to-learn skills, innovation & creativity, systems thinking
  • Prepared for Continuing Learning – will have many jobs during working career, may change careers, may occupy a role that doesn’t exist now
  • Knowledgeable about the significance of Regulation, Governance & business ethics
  • Flexible, good attitude & aware of workplace expectations
  • Entrepreneurial (skills)

Also, Young and Chapman of the University of Western Australia published a paper in 2010 titled, Generic Competency Frameworks: A Brief Historical Overview, in the Education Research and Perspectives journal in which they reviewed a number of studies carried out in New Zealand, Australia, the UK, Europe, Canada and the USA from the 1980s onwards. They provide a table that lists 58 generic skills and the number of times each of them was rated as important. The most frequent skills were; literacy, numeracy and problem solving. They were followed closely by communication and teamwork. If one considers the socio-economic problems in South Africa, these five generic skills are probably at the top of our list as well.

Job Evaluation

Note that problem solving and/or decision making are factors in most job evaluation systems internationallly, which is further evidence of the importance these skills. For example, the popular Paterson job evaluation system is based entirely on decision making. (Remember – decision making is an important element of problem solving.) As one moves up the organisational ladder problem solving and decision making skills become more important. Also, the extent to which these factors are relevant to a job determines the compensation level for that job so these skills are obviously very important for employees who aspire to more senior levels and the benefits that go with them.  

CONCLUSION: Effective problem solving skills are very important, especially in conditions of complexity and uncertainty. 

It is clear from the WEF Future of Jobs Report and other studies that there is a high demand for generic skills and problem solving stands out as the most important. However, the education institutions do not focus on this skill and it is left to employers to train their employees to close the gap through training. So, what should this training consist of?

Training problem solving skills

Although the WEF survey does not delve into the actual training content, problem solving training traditionally involves training the learners to apply a fairly standard set of steps that include defining the problem, setting a goal, deciding on the solution and applying it. However, these steps are inadequate on their own when trying to solve complex problems and need to be reinforced by more advanced thought processes. The appropriate thought processes that need to be developed to solve complex problems effectively are critical thinking, analytical thinking and systems thinking. These are well-established and, when applied in an integrated manner, constitute an effective approach to solving many of the problems presented by the 4th Industrial Revolution. Intuition (gut feel) is also commonly involved in decision making but it has both ‘powers and perils’ so people also need to be aware of how to use their intuition constructively.

Links/references:

For information on the Hunter HRC decision making and problem solving course click here.

For information on the book, Sharpen Your Decision Making and Problem Solving Skills by Clive Hunter click here

For the full WEF Future of Jobs Report go to http://reports.weforum.org/future-of-jobs-2016/ then download it in PDF.

To view a video on a WEF, Davos, press conference, “Educating the Masters of the Fourth Industrial Revolution” click on,

https://video.search.yahoo.com/yhs/search;_ylt=A0geKV.FqQlbLV0AcfoPxQt.?p=theme+of+world+economic+forum+davos+2016&fr=yhs-adk-adk_sbyhp&fr2=piv-web&hspart=adk&hsimp=yhs-adk_sbyhp&type=#id=3&vid=c85bb8f406910f7c0679aac55205c1c1&action=view

For Young and Chapman’s paper: http://erpjournal.net/wp-content/uploads/2012/07/ERPV37-1_Young-J.-Chapman-E.-2010.-Generic-Competency-Frameworks.pdf

For the Irish report:  

http://www.qualifax.ie/attachments/-01_IBEC%20IGC%20Conference%20231110.pdf

Klaus Schwab’s two books, The Fourth Industrial Revolution and Shaping the Fourth Industrial Revolution are available from Amazon.

Jeremy Rifkin

Jeremy Rifkin has also written and consulted extensively on this new revolution – he calls it The Third Industrial Revolution but it’s very similar to Schwab’s Fourth (Rifkin includes computerisation and the internet in the second revolution.) For more on Rifkin, the Third Industrial Revolution and his interesting proposals about how to revolutionise the energy sector by creating an “intergrid” go to his website, www.foet.org and the articles he wrote in the Huffington Post at https://www.huffingtonpost.com/jeremy-rifkin/third-industrial-revolution-green-economy_b_8286142.html. His book, The Third Industrial Revolution is available from Amazon.

2020  Clive Hunter Human Resource Consulting