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​Update: Automation's Workforce Impact

Accelerated technology changes may double disruption of jobs.

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​Analysts have long foreseen the potential for vast worker displacement as the number of jobs rendered obsolete by automation outpaces the number of jobs created. As the COVID-19 pandemic continues, however, this trend has accelerated — and the workforce may not be entirely prepared for the transition.

According to a report by the World Economic Forum (WEF), technological changes initiated as a result of the pandemic could displace as many as 85 million jobs globally in the next five years. “Automation, in tandem with the COVID-19 recession, is creating a ‘double-disruption’ scenario for workers,” the report says. “In addition to the current disruption from the pandemic-induced lockdowns and economic contraction, technological adoption by companies will transform tasks, jobs, and skills by 2025.”

Of particular concern is not just the volume of jobs affected, but also the type, further deepening inequalities that already existed. For example, the pandemic has been particularly rough on the travel, tourism, and hospitality industries, which tend to have younger, lower wage workers who are disproportionally female compared to most of the workforce. Without an increased urgency to expand social protections — including support for retraining — the WEF warns, income inequality could increase significantly and put as many as 115 million people into extreme poverty within a year.

Not all is gloom and doom. Automation is expected to add as many as 97 million new jobs to the workforce. Moreover, a global survey of 800 executives by McKinsey & Co. finds that 68% of businesses expect to hire more technology and automation professionals. However, without organizational commitment to retraining an evolving workforce, those most in need of a new role will not be able to take advantage. — L. Wamsley

Mapping the Skills Path

The IIA updates the Internal Audit Competency Framework.

A new update to The IIA’s Internal Audit Competency Framework may provide direction for auditors looking for paths to advancement. The framework is a visual tool to help practitioners build skills and knowledge at any stage of their career.

The framework is broken into four competency areas — professionalism, performance, environment, and leadership and communication — which are further divided into knowledge areas, such as organizational objectivity and fraud. Internal auditors can assess their abilities in these areas at three levels of competency: general awareness, applied knowledge, and expert.

The framework’s flexibility can help internal auditors identify their unique strengths and weaknesses, says Lisa Hirtzinger, The IIA’s senior vice president of training and development. “It’s here to help you assess where you are, figure out where you want to be, and then map that gap,” she says. “It’s meant to be your tool to help you grow in the profession.”

Based on the International Standards for the Professional Practice of Internal Auditing and key proficiencies, the framework can be used by individuals, teams, or up-and-coming auditors looking to take the Certified Internal Auditor exam. The knowledge areas also are linked to many of The IIA’s educational resources. — C. Janesko

Racial Equity and Justice

CEOs advocate actions while boards lag.

Business Roundtable has announced public policy recommendations and corporate initiatives to reduce the economic opportunity gap among Black and minority individuals in the U.S. by addressing employment, finance, education, health, housing, and the justice system. While some progress to curb racial inequities has been made, gaps in economic opportunity have grown, according to the association, which comprises more than 200 CEOs of the largest U.S. companies.

For instance, in 2019, white family wealth in the U.S. was eight times that of a typical Black family and five times that of a typical Hispanic family. Such inequities are compounded across generations, according to Business Roundtable. Last year, the organization redefined its Statement on the Purpose of a Corporation to include benefiting all stakeholders, not just shareholders.

“It will take broad cooperation of leaders from every sector of society working together to create a force sufficient enough to bring about the necessary change,” wrote Business Roundtable Chairman Doug McMillon, president and CEO of Walmart, in USA Today. In June, he established a special committee of Business Roundtable’s board to collaborate with experts on how businesses could drive systemic change.

According to PwC’s 2020 Annual Corporate Directors Survey, U.S. boards have yet to put teeth behind such initiatives. Only 39% of the directors surveyed support including diversity and inclusion goals in company pay plans, and only 34% of directors rate racial diversity on their board as very important. PwC says boards should “take action to help dismantle racism and injustice” by requiring standardized reporting on diversity and inclusion efforts, tying program targets to executive pay, and committing to diversity on the board (for more on this topic, see “Board Perspectives”). — L. Nelson

Forecast for a Changed World

COVID-19’s impacts will extend to 2021 and beyond the pandemic, says David Wood, chair of London Futurist and principal of Delta Wisdom.

What risks and opportunities can businesses expect in 2021?

The centuries-long trend of increasing urbanization is likely to be stopped in its tracks. People’s willingness to commute into cities or town centers is being reduced, and more companies will find effective ways to manage their employees remotely. New companies and organizations that are “born distributed” — being designed from the beginning to operate without any shared central offices, and with all staff hired with distributed working in mind — may have advantages over older, less distributed competitors.

A second pandemic is arising in the wake of COVID-19: poor mental health. Huge stress is being induced by lockdowns, threats of business failure or personal bankruptcy, changed family circumstances, and the prospects of short- or long-term health problems from the virus. Companies that prioritize emotional well-being can stand out from the crowd in new ways.

What are the biggest factors for internal auditors to consider considering going into next year as they assess risks and advise their organizations ?

The problems caused by the biological infection of COVID-19 should remind us of the risks of other kinds of viral infection: surreptitious distribution of dangerous software, such as ransomware and spyware, and the circulation of cleverly constructed fake messages that are personally targeted at the foibles and biases of individual employees.

Unexpected restrictions on movement have also highlighted the importance of designing supply chains with resilience as well as efficiency — with agility as well as regularity. "Just-in-time" systems should now be viewed more skeptically than before.

​46% of households across the U.S. report facing serious financial problems during the COVID-19 pandemic, including difficulty paying credit card bills, loans and other debt, and mortgage or rent.

31% of U.S. households surveyed say they have used up all or most of their savings.

“The survey’s implications could mean everything from a bigger drag on the economy to the nation’s mental health outlook,” noted NPR Business Desk correspondent Yuki Noguchi.

Source: NPR, The Robert Wood Johnson Foundation, and Harvard T.H. Chan School of Public Health,  The Impact of Coronavirus on Households Across America

What will business be like after the pandemic and what risks might that raise?

The COVID-19 experience has made such an impact on the public conversation that there is little prospect of reverting to business as before." It has become widely accepted that many of the most important professions have been inadequately compensated: health workers, cleaners, delivery personnel, janitors, and school teachers. Society has given too much attention to flashy innovation-speak and too little attention to the vital tasks of maintenance, prevention, and infrastructure.

With many businesses embracing automation more forcefully — to limit the need for employees to work together in close proximity — the specter will accelerate of technological unemployment (and its cousin, technological underemployment). Unless society switches away from an infatuation with gross domestic product and "employment rate," the risk will increase of greater inequality and alienation. Attention is overdue to the design of an updated social contract suited to the changed needs of the 2020s.

The Poor State of Enforcement

Few countries actively enforce anti-bribery laws, report says.

Only four countries — Israel, Switzerland, the U.K., and the U.S. — actively enforce the Organisation for Economic Co-operation and Development’s Anti-Bribery Convention, according to Transparency International’s latest report, Exporting Corruption. For the report, Transparency International, a global anti-corruption nonprofit, reviewed the actions of 46 countries and Hong Kong that together represent 83% of global exports.

The report finds Hong Kong and 33 countries — which account for nearly half of all global exports — have limited or no enforcement of anti-bribery laws. Those countries include major exporters such as China, Japan, South Korea, and the Netherlands. Nine countries — seven in Europe in addition to Australia and Brazil — moderately enforce laws against foreign bribery.

Transparency International says the U.S. remains a leader in launching international investigations and prosecuting offenders under the Foreign Corrupt Practices Act. In addition, international cooperation against foreign bribery is increasing. — G. Nordhoff

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