Without governance, AI may hollow out leadership pipelines
A new Melbourne Business School whitepaper calls for CEOs and Boards to view AI as an operating and governance challenge rather than just a cost-cutting tool.
Created in collaboration with Australian business leaders and policy makers, and drawing on current research evidence from across the globe, the whitepaper AI and the Redesign of Work highlights how organisations are under-governing AI, with around 88 percent of organisations deploying AI, but only 21 per cent fundamentally redesigning their workflows.
As a result, not only is the true value of AI not being realised, but organisations are at risk of weakening their capability base and diminishing the leadership pipeline, explains Melbourne Business School Professor Ujwal Kayande, lead author of the paper and Director of the Institute for Digital Innovation and AI.
“The problem with the current debate around AI is that it is focused on the wrong question,” Professor Kayande said. “One side says AI is hollowing out knowledge work and wrecking the graduate jobs market, the other says displacement is overstated and employment remains steady. It’s a choice between alarm and reassurance. Neither position tells a CEO how to govern a company through the transition.”
The paper provides practical steps CEOs and Leadership teams can take, including building an AI-literate leadership culture, retraining managers, and appointing mission owners with cross-functional authority when deploying AI systems.
As a first step, it suggests organisations should combat cognitive surrender by sampling 15 to 20 junior staff and asking each to explain or defend a recent piece of AI-assisted work with the tool switched off.
It also stresses that the leadership pipeline should be treated as a board-level risk. If early-career roles are being thinned significantly, boards should be questioning how the organisation will develop its next generation.
Kee Wong, a non-executive director and IDIA Advisory Board member who also chairs the Australian Institute of Company Directors’ Governance of Innovation and Technology Panel, said boards were too often shown efficiency and productivity gains only - especially labour savings based on existing work operating environment.
“The real question is what future operating model you are building with AI at the centre, and what risks you are importing into it if you do not think differently. These risks are what haven't yet appeared on the balance sheet,” Mr Wong said.
If Australian organisations are going to scale AI and compete on a global scale, executives need to take a deeper look at the overall structure and workflow within their organisation and re-design work intelligently.
“The organisations most at risk from AI are the ones adopting it without the governance and design infrastructure to understand where it helps and where it misleads – and then deploying it appropriately,” Professor Kayande said.
The paper also warns that if organisations do not take the opportunity to redesign work deliberately, that re-design is likely to be suboptimal because it will occur by default.
The paper suggests designing work around these two questions: what capabilities does this organisation need its future leaders to develop by the time they reach mid-level positions, and what structured experiences will help develop those capabilities in an environment where AI does automatable work?
“When early-career employees are given access to AI tools without the repetitions that build foundational competence, organisations may be creating what we would call human-capital debt,” Professor Kayande said.
“Work is produced, but the worker may not be able to explain or improve upon it.
“Over time, that could degrade the organisation's capacity for independent judgment when AI systems fail or mislead.”
Read the full whitepaper AI and the Redesign of Work here.
To find out more about the work our Institute for Digital Innovation and AI is undertaking, visit their page.
