2018-02-12 11:27:10 Managing People English Understand the current state of robotics, automation, and AI and how it pertains to your Canadian small business. Learn some of the current... https://d1bkf7psx818ah.cloudfront.net/wp-content/uploads/2018/02/09120204/Developer-reviews-basics-of-replacing-workforce-with-robots.jpg What You Need to Know About Replacing Workers With Robots

What You Need to Know About Replacing Workers With Robots

3 min read

Rising worker costs can make automation and robots an attractive alternative to employment expenses. These workers don’t take time off for emergencies, get sick, or require pension plans, helping boost many Canadian small businesses’ bottom lines. While many look at this as a problem, acquiring automation and specialized robotics can often lead to production gains that give your human workers more job security, making AI a helper rather than a disruption. Each case, however, is unique, making it important for employers to consider numerous factors before bringing robots into their companies.

Employment Expenses

For existing businesses experiencing labour shortages, robotics can help immensely, especially in areas with few available workers to fill open positions. As of 2014, the true cost of hiring employees sat at approximately 1.5 times the salary or wage. This means that if you expect to pay a full-time worker $50,000 per year, your actual cost is roughly $75,000. This additional expense included mandatory costs such as Canadian Pension Plan (CPP) contributions and Employment Insurance (EI) premiums, not to mention Worker’s Compensation insurance, head-hunting and bookkeeping costs, and discretionary costs such as sick pay, vacation pay, and travel expenses, among others.

For this reason, automating some processes can be a cost-effective alternative to hiring extra workers. Initial investment costs may be higher than those for employment, but since robots require only maintenance and repair, their cost typically lets businesses break even after a few years, essentially creating a dedicated company asset. Additionally, these workers don’t spend time at the water cooler and tend to finish work faster than their human counterparts, which can pay off in boosted productivity.

The Current State of Automation

Though many don’t realize it, small businesses typically already use some form of automation in their day-to-day processes, such as software programs like the Quickbooks bookkeeping application used to better manage financials. While most people think of automation as comprising complex machinery that performs repetitive tasks in industrial settings, it also includes everything from automated phone systems that route callers to the correct individual to kiosk ordering systems that let customers make menu selections and pay without talking to a restaurant worker. AI innovations coming down the pike point to self-driving vehicles, which could replace taxi drivers and Uber along with truck drivers and delivery personnel. At the moment, all these examples typically require human input, whether to enter information, make repairs or perform maintenance, fill orders, or unload packages. Additionally, this has the positive potential to remove humans from traditionally dangerous workplace situations, which can lead to improved on-the-job safety and work conditions.

The Effects of AI

If you’re considering automating a portion of your small business, you should be aware of government concerns and requirements. Many studies show that between 1.5 and 7.5 million Canadian jobs could be automated in the coming years, with those most at risk being repetitive tasks such as assembly line work. Though many sources think that new job creation can balance these numbers out, others aren’t so optimistic. Regardless, as of early 2017, the Canadian government is seeking ways to increase training options for displaced workers, which could end up boosting business expenses in the long-term. Many people feel that one way to counter this is taxing the owners of robots that displace workers to pay for these sorts of programs. With the automation genie out of the bottle, however, things continue to trend toward higher reliance on automation and AI within numerous industries, despite the brakes bureaucracy attempts to put on the process.

Small businesses can greatly benefit from automating some processes. With hiring costs high and labour shortages frequent, AI and robotics can fill the gap while boosting production and reducing long-term costs. Those looking to automate should keep an eye on current and future innovations to better plan capital expenses.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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