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The dictionary defines automation as “the technique of making an apparatus, a process, or a system operate automatically.” We define automation as "the creation and application of technology to monitor and control the production and delivery of products and services.”
Earnings-driven automation can be used to mitigate inflation. It can also be a response to an economic downturn, alleviate talent shortages, and improve operating margins and productivity
Wage inflation is occurring across the western world. At the end of 2021, wage inflation in the UK topped out at 5 percent. The Bank of England's Andrew Bailey suggested that employees should temper their demands for pay raises, and issued a follow-up to firms, requesting they "show restraint" when raising prices. Easier said than done.
Worries that inflation will continue to get worse into 2022 are far from eased by the Russian invasion of Ukraine, which, as this article goes to press, has already sent oil prices to an eight-year high.
In the professional and legal services industry, where many organizations I work with have expressed their concerns about spiraling inflation, there's a secondary problem: the battle for talent. Highly skilled professions are seeing the cost of talent increase considerably. For example, city and regional law firms in the UK—who, before the pandemic, were already struggling to compete with US law firms offering higher starting salaries and bigger bonuses—are now having to compete with the likes of Skadden offering newly-qualified employees salaries of £157,000.
With all this going on, what should firms in regulated and competitive industries do? There's no easy answer, but there are immutable principles of business survival. And, when economic pressures coincide with labor shortages, firms need to pay closer attention to those principles.
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