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The rise of generative AI has surfaced many new questions about how the technology will impact the workforce. Even as AI becomes more pervasive in business, people are still a core competitive advantage. But business leaders are facing a host of talent-related challenges, as a new global study from the IBM Institute for Business Value (IBV) reveals, from the skills gap to shifting employee expectations to the need for new operating models.

The global skills gap is real and growing. Executives surveyed estimate that 40% of their workforce will need to reskill as a result of implementing AI and automation over the next three years. That could translate to 1.4 billion of the 3.4 billion people in the global workforce, according to World Bank statistics. Respondents also report that building new skills for existing employees is a top talent issue.

AIs impact will vary across employee groups. Workers at all levels could feel the effects of generative AI, but entry-level employees are expected to see the biggest shift. Seventy-seven percent of executive respondents say entry-level positions are already seeing the effects of generative AI and that will intensify in the next few years. Only 22% of respondents report the same for executive or senior management roles.

AI can open up more possibilities for employees by enhancing their capabilities. In fact, 87% of executives surveyed believe employees are more likely to be augmented than replaced by generative AI. That varies across functions 97% of executives think employees in procurement are more likely to be augmented than replaced, compared to 93% for employees in risk and compliance, 93% for finance, 77% for customer service and 73% for marketing.

Employees care more about doing meaningful work than flexibility and growth opportunities, but leaders arent always in lockstep with their needs. With AI primed to take on more manual and repetitive tasks, employees surveyed report engaging in impactful work is the top factor they care about beyond compensation and job securitymore important than flexible work arrangements, growth opportunities and equity. On top of that, nearly half of employees surveyed believe the work they do is far more important than who they work for or who they work with regularly.

However, employers seem to have missed the memo about what matters. Executives surveyed said impactful work was the least important factor to their employees, instead pointing to flexible work arrangements as the most important attribute beyond compensation and job security.

The world of work has changed compared to even six months ago. Leaders are starting to believe that the enterprise of tomorrow may not be able to run with yesterdays talent and tomorrows talent may not be able be rely on yesterdays ways of working.

HR leaders can play a critical role in how organizations adapt to the changes driven by generative AI. These leaders can be at the helm of navigating these challenges, redesigning work and operating models to shepherd their organizations into the future. Here are a few actions to consider.

Were at a pivotal point in the world of work and theres a massive opportunity in front of HR leaders, but there are risks as well. As businesses further embrace AI, successful change will only come if organizationsby way of HR leadersprioritize a new approach to talent and operating models where people and technology come together to boost productivity and drive business value.

Managing Partner, Talent Transformation Consulting

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New IBM study reveals how AI is changing work and what HR ... - IBM