The article that follows is about the ways in which AI and automation will augment and/or replace human labor in management roles. American Public University offers degrees in Information Technology at both the bachelor’s and master’s levels. These degrees prepare students for professional roles in developing technology and automation across various industries.
In previous articles, I’ve discussed how technology and automation will cause an unemployment crisis for line-level employees as machines are deployed into workplaces across the landscape of business and industry.
It’s easy to think that management jobs requiring critical thinking and abstract problem-solving will be safe from the outmoding of the technological revolution.
However, here I want to talk about the specific ways in which artificial intelligence (AI) and advanced technologies will also likely take over many management duties in many fields.
To Understand How and Why Managers Are Vulnerable to AI, Look at McDonald’s
To understand how and why managers are vulnerable to this kind of threat, it’s helpful to look at a simple and familiar example such as a McDonald’s fast food restaurant operation. In a typical McDonald’s, there are line-level employees taking orders, cooking food and performing other repetitive work routines. And we are already seeing that McDonald’s is happy to replace front-line workers with kiosks and machines wherever it is cost-effective to do so.
But what do McDonald’s managers do? There are of course a variety of different duties, including oversight for employee scheduling, payroll and performance management. This is the “people leadership” component. To be fair to good leaders, there is often a visceral component to their presence and the relationships they build with their staffs that make them effective in their roles.
But the administrative sides of their people leadership tasks are already being largely handled by technology. Recruitment platforms help managers easily find and hire new employees when job openings occur. Online software systems handle scheduling, call-outs, sick time allotments and vacations.
Also, payroll systems manage compensation and electronic delivery of paychecks to workers’ bank accounts via direct deposit. Performance review systems help to log and organize employee work metrics for meaningful feedback. So the people leadership component of management is already very much reliant upon technology and automation.
Managers Look at Sales Data and Adjust Strategy to Continuously Improve Their Business
But what else do McDonald’s managers do? Another key component of the management function is to analyze business reports and make changes to maximize profits. How do managers do this work? They look at sales data and adjust strategy in order to continuously improve on the status quo.
There is a hypothetical sweet spot for every price-sensitive product where the optimal price will lead to optimal demand and thus optimal profits. Suppose, for example, that you are a McDonald’s manager and you decide to sell Big Macs for $100 each. Suffice to say, you probably won’t sell very many at that price.
If you sell one Big Mac and we assume a production cost of $1, your total profit margin would be $99, which is great. But overall, you could likely do much better by lowering your price and increasing volume.
Let’s say you reduce the price to $5, which yields a profit of $4 per burger. Now, because of the cheaper price, you are able to sell 100 Big Macs. So now your total profit is $400, which is obviously much better than your profit under the price-gouging scenario above.
But this is an unrealistic comparison with an obvious superior choice. Management decisions are rarely this easy; the real questions of fine-tuning strategy involve much more subtle changes.
The Only Ways to Know Whether Price Hikes Yield a Higher Profit: Test and Measure
What if we increased the price of the Big Mac from $5.00 to $5.10? This would yield a higher profit per burger. But would we see a substantial drop in sales volume from customers who aren’t willing to pay the additional 10 cents so that we would offset the gains made? There is only one way to know for sure: Test it and measure the difference.
Here’s another example. What if the problem with Big Mac sales is not price-demand sensitivity but rather product placement and marketing? In other words, perhaps we could sell more Big Macs at the current price point of $5 if we just displayed the Big Mac more prominently in our restaurants with better signage and professional marketing photography. Again, we would need to test this theory and observe the results.
A Computer Program Could Easily Be Written to Look at Price-Demand Dynamics
Now notice that none of what was just described, in terms of management analysis and strategy implementation, is beyond the scope of today’s technology and AI capabilities. In other words, a computer program could easily be written to look at price-demand dynamics and then change the pricing of products on a daily or weekly basis. The program would automatically update digital marquees and menu displays to experiment with different pricing tactics and find the “sweet spots.”
Likewise, if the displays in the McDonald’s restaurant are linked to the same system, the software could automatically adjust the kinds of images shown to consumers and which products receive more prominent visibility in the store. The system then could assess whether increased visibility affects sales in a material way.
In the 21st century, these analytical processes do not require human oversight. We have the tools to automate them in the exact same way we have the tools to automate order-taking or payment-processing.
And this is already happening. For example, software company Genesys is already integrating management AI functions into its call center operations packages.
In another example, American Express is currently utilizing AI for software applications that help to free up managerial time on the job. Anthony Mavromatis, vice president of customer data science and platforms at American Express, said back in 2019 that “AI is increasingly freeing up [managers’] time and allowing them to focus on the essence of their job.”
And in a third instance, analytics company Kensho Technologies is using AI to help investment managers make better, more informed, and more efficient decisions with their portfolios.
Technology and Automation Will Likely Alleviate a Lot of Mundane Managerial Tasks
So what does this all mean for managers? It means that technology and automation will likely alleviate a lot of mundane managerial tasks and liberate managers to focus on more important “big picture” objectives. To be fair, it also means that companies will probably be able to accomplish more with less management infrastructure, as various levels of leadership are able to work smarter with their resources. So personnel cuts are likely.
For managers today, this use of technology and automation means that honing their value contribution within the context of their position will remain critical to their continued employment. After all, you don’t want to be viewed as the most expendable member of your team when the time comes for your company to make personnel cuts. You will need to find a way to make yourself essential once again.