Labour Consumption is Broken

Here’s How to Fix It – Blog by Richard Skellett

Labour consumption is a dinosaur of a model—outdated, inefficient, and financially crippling. For decades, businesses have treated labour as a fixed cost, blindly paying for entire years of employment when they are only getting a fraction of that in actual productivity. The traditional workforce model is completely broken.

Now is the time for a radical shift. Automation, Augmentation, and Artificial Intelligence offer organisations the opportunity to flip the script, moving from wasteful, rigid fixed costs to agile, outcome-driven variable costs.

The Workforce Model is Stuck in the Past

Being blunt: labour costs are spiralling out of control. Employers are still paying for time rather than value, locking themselves into an archaic model where salaries are fixed, when productivity isn’t. The numbers don’t lie:

• The average career spans 80,000 working hours, but how many of these arespent delivering value?
• High attrition rates mean businesses are constantly haemorrhaging cash on training, onboarding, and inefficiencies.
• Meanwhile, technology has transformed every other major cost structure, yet labour costs remain wildly inefficient

From Fixed Costs to Variable Costs: The Only Viable Future

The shift from fixed to variable labour costs is no longer an option, instead it is an economic necessity. Companies that fail to adapt will continue to burn money on inefficient workforce structures while their competitors move towards outcome-based employment models that align costs with performance.

A variable labour model offers:

Pay for Performance, Not Presence : Align compensation with revenue and margin, not just attendance. Stop treating payroll as a sunk cost.

Kill Cost as a Recurring Symptom : Move beyond budget obsession and start thinking about
ROI-driven workforce investment.

Meet Shareholder Demands Head-On : Investors are not interested in the numbers of employees you have. They care about dividends, share price growth, and operational efficiency.

The new model is not about cutting jobs, it is about optimising human potential.

Humans and Tech Working in Sync

This is where Automation, Augmentation, and AI come in. The organisations that will dominate the next decade are those that understand :

• Digital Workers = Outputs | Human Workers = Outcomes : Let AI handle routine, process-driven tasks while human workers focus on high-value creativity, problem-solving, and strategy.
• Eliminate Burnout, Boost Productivity : Why are highly skilled people still drowning in admin?Automate the mundane, and free up human talent to deliver results.
• Unlock New Career Monetisation Models : Work-life is not a rigid 80,000-hour journey anymore. With AI augmentation, people can earn more, work smarter, and increase disposable income without inflating salaries.

This is not just about efficiency, it’s about creating a workforce model that actuall makes sense in a digital economy.