Workforce Economics Rises with AI-Powered Business Transformation

The convergence of financial and human resources strategies is becoming increasingly important as companies navigate the impact of artificial intelligence (AI) on their workforce. At IBM Corp., this shift has led to the creation of a new discipline called 'workforce economics,' which brings together financial strategy and human capital decisions.

According to SVP and CFO Jim Kavanaugh, AI is forcing the convergence of human capital strategy and financial strategy in businesses today. The boundaries between finance and HR are becoming increasingly blurred as companies decide where AI fits, how it will impact productivity, and how gains should be reinvested.

Kavanaugh explained that workforce economics involves connecting the economics of AI with the workforce needed to turn productivity into sustained enterprise performance. This requires CFOs and CHROs to make decisions together about whether work belongs with humans, AI, or a combination of both.