Why Robots Will Displace Managers — and Create Other Jobs
While robot-adopting companies may shed some management and middle-skilled jobs, research shows that robots will increase employee head counts overall.
Carolyn Geason-Beissel/MIT SMR | Getty Images
Companies’ increased use of robots is changing the skills employees need and how their performance is measured. Research shows that the efficiencies that the use of robots delivers are reducing the need for some middle management jobs. Meanwhile, roles for nonmanagerial employees who can support robot technologies or perform tasks robots can’t yet do are expanding faster than middle-skilled jobs — those that robots can do — are being lost.
Recent, dramatic growth in robot adoption across an increasing number of global industries has sparked avid interest in the impact robots will have in the workplace — particularly which jobs they will replace and whether any new jobs will be created for humans.1 Our recent research focused primarily on physical robots, including both industrial and collaborative robots, used in production processes. Our data confirms that companies are indeed eliminating some human jobs in favor of robots — but that robot adoption is increasing the total number of nonmanagerial employees while reducing the number of middle managers needed.2
Even with rapid technological advancements, robots aren’t yet capable of managing human employees. So why are managerial positions being eliminated when the robots arrive? Our research highlights two significant changes robots bring to the workplace that can explain this shift. One is the radical transformation in managers’ ability to measure and reward the performance of individual employees who work with robots. The other is a change in the skills required of nonmanagerial employees, which is affecting the nature of managerial work itself. When companies invest in robots, the combined effect of these two changes leads to reductions in managerial head count that can be dramatic.
How Efficiency Gains Impact Managers
In a previous MIT SMR article, we described how robot adoption is transforming organizations by making human performance measurement easier, thus enabling organizations to reward and manage talent more easily and effectively.
More accurate performance measurement enabled by robots makes supervisors much more efficient at managing employee performance.
Managers expend a significant amount of effort on people management — almost a third of their time, according to a recent McKinsey survey. When work is primarily done in teams, each individual employee’s contribution to group performance can be hard to discern.3 But robot adoption reduces the amount of time and effort required to compare individuals’ productivity levels, in many cases substantially so. This can be explained by a simple stylized example: If two humans work with the same type of robot but their levels of productivity differ, the consistency and transparency of the robot’s performance when working with both employees allows a manager to more easily observe the contribution of each person in isolation.
References
1. D. Acemoglu, D. Autor, J. Hazell, et al., “Artificial Intelligence and Jobs: Evidence from Online Vacancies,” Journal of Labor Economics 40, no. S1 (April 2022): S293-S340; E. Brynjolfsson, W. Jin, and K. McElheran, “The Power of Prediction: Predictive Analytics, Workplace Complements, and Business Performance,” Business Economics 56, no. 4 (October 2021): 217-239; K. Eggleston, Y.S. Lee, and T. Iizuka, “Robots and Labor in the Service Sector: Evidence From Nursing Homes,” working paper 28322, National Bureau of Economic Research, Cambridge, Massachusetts, January 2021; and A. Stahl, “Will ChatGPT Replace Your Job?” Forbes, March 3, 2023, www.forbes.com.
2. J. Dixon, B. Hong, and L. Wu, “The Robot Revolution: Managerial and Employment Consequences for Firms,” Management Science 67, no. 9 (September 2021): 5586-5605.
3. A.A. Alchian and H. Demsetz, “Production, Information Costs, and Economic Organization,” The American Economic Review 62, no. 5 (December 1972): 777-795.
4. C. Perrow, “A Framework for the Comparative Analysis of Organizations,” American Sociological Review 32, no. 2 (April 1967): 194-208.
5. J.P. MacDuffie, “The Road to ‘Root Cause’: Shop-Floor Problem-Solving at Three Auto Assembly Plants,” Management Science 43, no. 4 (April1997): 479-502; and S. Helper and R. Henderson, “Management Practices, Relational Contracts, and the Decline of GeneralMotors,” Journal of Economic Perspectives 28, no. 1 (winter 2014): 49-72.
6. S. Helper, J.P. MacDuffie, and C. Sabel, “Pragmatic Collaborations: Advancing Knowledge While Controlling Opportunism,” Industrial and Corporate Change 9, no. 3 (September 2000): 443-488; M. Kenny and R. Florida, “Beyond Mass Production: The Japanese System and Its Transfer to the U.S.” (New York: Oxford University Press, 1993); H. Mintzberg, “The Nature of Managerial Work” (New York: Harper & Row, 1973); and H. Mintzberg, “Simply Managing: What Managers Do — and Can Do Better” (San Francisco: Berrett-Koehler, 2013).