The developments in AI technology have not left any sphere untouched. With Artificial Intelligence (AI) tools taking over the day-to-day work along with creative tasks, people are only thinking about when and not if AI will replace the human workforce in different industries. While some may think that AI is going to replace human workers in all industries, in this article we shall find out why managers are more likely to be replaced from their jobs ‘first’. The conversation about AI replacing middle management rose recently with the news of how Even MBAs from the mighty Harvard University and other IVY League schools are struggling to land jobs in top firms of the world.
Gartner in its recent report predicted that by 2026, 20% of organizations will use AI to restructure their hierarchy, eliminating more than half of current middle management positions. This only shows how there has been a shift in how organizations think about their work and operational capacity while also keeping a focus on cutting costs. In a global survey by Pega, 78% of the executives surveyed believe that increasing the use of AI and robots will dramatically reduce the middle management ranks. A 2020 BCG survey says that “traditional management has reached a breaking point.” Let us explore whether this shift presents an opportunity for companies to redefine their middle management’s role or simply accept its decline.
Economics of middle management
Let us look at it simply. Most employees in middle management have tons of experience. However, they are usually costlier than their subordinate individual contributors. Companies offer them a higher pay package for their expertise and knowledge and in return the manager takes on the responsibility of completing the projects or tasks assigned to him with efficiency and precision. Thus, the higher the risk, the higher the reward.
Now look at this situation with a different lens. AI tools these days are cost-effective. While hiring a human manager can cost a pretty penny, a one-time investment in AI tools lowers the cost of project management by a great margin thus, making middle management’s role scarce. The lack of EQ in AI would also mean that it is also very less likely to ask for a raise.
Why AI is better at forecasting the success and failures of projects than human managers?
Stanford has conducted multiple studies that have proven why human managers are not always the best at forecasting successful ideas. According to the studies “When we generate ideas, we first engage in divergent thinking, which involves searching for novel connections or combinations that may be valuable. After we generate possible ideas, we engage in convergent thinking as we evaluate the ideas based on our previous knowledge and experience. Since managers evaluate ideas after creators have generated them, they skip divergent thinking and go straight to convergent thinking.” In evaluating ideas, “convergent thinking alone is dangerous because you’re just relying on the past,”. “What will succeed in the future may not resemble what succeeded in the past. Divergent thinking helps people stay more open-minded about new ways ideas may succeed.”
The individual human manager who works in a team, in the same studies, was shown to have better results at predicting successful ideas generated by their peers. That does not mean a manager magically loses creativity in that position, they simply don’t have the most efficient and thoughtful evaluation process. Thus, high skilled workers may not require as much supervision as business owners think. AI tools that empower individual creators, creatives and professionals will be able to equip them for proper reporting, self-management and data-backed decision-making, further eliminating a need for middle management.
Can middle management improve using AI?
Following are the suggestions in various aspects that can help middle management improve:
Change the role of managers from information gatekeepers to insight architects
The traditional middle management role of information gathering and reporting is exactly what AI is good at. Thus the new role of managers should be to shift from being information conduits to becoming insight architects who:
- Turn AI-generated data into easily explainable business narratives.
- Identify patterns that algorithms might miss due to organizational nuance.
- Transform AI-generated insights into strategies that can be used by companies.
Master the human-AI partnership
Tomorrow’s valuable middle managers will be those who can:
- Effectively translate executive vision into AI-implementable frameworks.
- Identify which tasks should be AI-driven versus human-led.
- Create seamless workflows that maximize both human and AI capabilities.
- Bridge the gap between AI systems and human teams.
- Develop human capital skills
Focus on capabilities that AI cannot possess at the moment to get an edge
Getting better at qualities that AI doesn’t have can offer advantages to middle management:
- Complex stakeholder management.
- Cultural intelligence and emotional leadership.
- Creative problem-solving in doubtful situations.
- Building trust and psychological safety in teams.
What lies ahead?
The world’s first software AI engineer, Cognition AI’s Devin, can successfully resolve only 13.86% of issues. Even if and when the success rates go up, companies will always need humans and “AI middle managers” will perhaps find it difficult to flatten hierarchies and completely remove the human managers. Having said that, this does not mean that managers do not need to upgrade themselves. They must upskill and get adept with the AI tools that may benefit their teams and be in sync with their organizational ambitions. Thus, in today’s day and age, the choice is not either humans or AI, it is rather the human-AI collaboration.
