December 31, 2019 / 4:02 PM / 18 days ago

Breakingviews - HR nous will make or break CEOs’ tech ambitions

Beth Galetti, Senior Vice President of Human Resources at Amazon, speaks during the Wall Street Journal CEO Council, in Washington, U.S., December 10, 2019. REUTERS/Al Drago

NEW YORK (Reuters Breakingviews) - Chief executives from carmakers to consumer giants sound surprisingly similar when talking about the future. Artificial intelligence, machine learning and automation crop up, as does the challenge of finding staff qualified to carry out such grand strategies. That gives an unlikely back-office function the power to make or break tech-driven ambitions in 2020: human resources.

It’s usually a department with limited scope, performing the grunt-work of hiring, setting workplace-conduct policies and policing unacceptable behavior. At a more senior level, it also involves devising compensation packages to encourage and reward service – sometimes to excess.

The focus is shifting. Over four-fifths of corporate executives and HR bosses surveyed by Randstad Sourceright expect artificial intelligence and robotics to create employment opportunities. Mentions of AI rose almost fivefold between 2012 and 2017 on the earnings calls of non-tech New York-listed companies, reckons Stanford University’s AI Index.

Yet hiring the best tech talent pits, for example, Walmart, whose jobs website lists almost 700 vacancies for software developers, against Alphabet and Amazon. The median annual salary for a U.S. software developer with five years’ experience is over $100,000, according to Stack Overflow. CEOs outside of finance, who are not used to paying handsomely for junior staff, have to get comfortable with higher wage bills.

Companies also face frequent battles to stop employees decamping elsewhere. Software firms have higher staff turnover than those in other sectors, LinkedIn found. CEOs hoping to attract and keep coders may therefore have to offer more appealing benefits, like Dropbox’s unlimited vacation, or help paying off student loans, or better parental leave. Appealing to millennials’ much-hyped sense of social responsibility might also work. Ford Motor could pitch that working on self-driving cars is more beneficial to society than building new phone software. Procter & Gamble can talk up the kudos of creating environmentally friendly shampoo.

Yet CEOs will also have to accept that tech-savvy staff increasingly want multiple changes of job, rather than long stints at one firm. Specialty chemicals group Covestro, for example, set up a tech hub away from its German headquarters in Leverkusen, and assumes those who join will remain for 18 months at best. That means the hunt for good coders may be endless, and that hiring the right hirers will become the most crucial job in 2020.

This is a Breakingviews prediction for 2020. To see more of our predictions, click here: bit.ly/2Qz9lz9

Breakingviews

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