'The hype is over': HR expecting employee reallocation, not reduction from GenAI

The reality of generative AI's impact seems to be setting in as workplaces decide to reallocate employees rather than reduce their numbers because of the technology, according to a new report.

Gartner's June 2024 Labour Market Outlook found that 52% of HR leaders are not planning to decrease their workforce due to GenAI advancements. In fact, 67% are anticipating reallocation for those whose roles will be impacted by the technology.

Aaron McEwan, Vice President of Research & Advisory at Gartner, said these findings are "kind of predictable" as GenAI's hype wears off across organisations.

"I think what you're seeing in the data is the recognition from HR leaders that the hype is over and we're now starting to get into the reality of what this type of technology can actually do and what it can deliver and how expensive it is," he told HRD.

"So, they're starting to soften their expectations on how many jobs might be able to be taken over by this technology."

Leaving GenAI hype behind

Various reports have pointed out similar deflating sentiments regarding GenAI.

Fewer executives are interested in the technology, according to a Deloitte report, while another Gartner report predicted that 30% of GenAI projects will likely be abandoned by 2025. 

McEwan said the initial hype behind GenAI can be attributed to FOMO, or the fear of missing out.

"If you think back to a few months ago when generative AI hit the front page of newspapers, everyone was saying, 'This is going to change the world. It's revolutionary. It's going to impact every industry. People are going to lose their jobs,'" he said.

"That's a part of what we call a hype cycle. So, when new technologies come on the scene, they tend to get hyped up."

According to McEwan, part of this hype is CEOs expecting that GenAI will drive the next phase of growth, “cynically, maybe off the back of not needing as many people to do the work," he pointed out.

"That was kind of the expectation… that generative AI would improve productivity, it would probably remove the need for labour."

But what's happening now is organisations are coming off the "peak of inflated expectations" and entering a "trough of disillusionment,” McEwan said.

"This is where we go: 'Oh my goodness, this thing that we first thought was revolutionary is actually harder to do than we first thought. It's maybe more costly and more expensive to implement than we had originally thought. Maybe it doesn't do everything quite as well as we thought it would and maybe it can't be applied to all of the areas that we thought it could be applied to,'" he said.

Instead of reducing employees, McEwan said the findings indicate HR leaders' recognition of how automation will impact almost all jobs rather than replace people.

"It might be more of a case of moving people around the organisation or retraining them, reskilling them, or re-equipping them to adjust to the way that work is now changing," he added. "I think this is consistent with how we would view most automation-based technologies: that automation tends to be a net creator of jobs over time rather than a destroyer of jobs."

What happens next?

Amid decreasing hype over GenAI, McEwan urged HR leaders to avoid pulling back on investments.

"There's no doubt that over the long term, this technology is going to potentially deliver on these exciting promises. The difference is that it's just going to take a little longer than maybe people first thought," he said.

"So, my advice to HR leaders would not be to pull back on your investments, but to rather think very carefully about the best ways that this technology can be applied."

According to McEwan, GenAI should be used to solve real problems, enhance employee performance, and boost value creation in the workplace.

"It's about thinking very carefully about where we want to apply this technology, how we are going to support that application, and what problems in the business we really want to solve," he said.