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Management
Automation and the future of middle management: It’s more complicated – and more manageable – than you might think
Projections of the impact of automation on middle managers run the gamut from bleak to hopeful. Recently published research revealed that what will matter are the nature of current tasks and the flexibility of managers themselves, says Tomoko Yokoi.
Intense debates over how a given new technology, or automation more generally, will affect the nature of employment have their own long history, going back to at least the advent of the typewriter and the assembly line. Whatever the particulars of the innovations in question, the range of views has tended to be remarkably similar, going from the apocalyptic, including the diminution of employment’s value – think Fritz Lang’s Metropolis – to the idyllic, with drudgery eliminated – think kitchen appliance advertisements in the century since that film was released. Academic work usually has more evidence-based arguments than popular output, but still displays a similar spectrum.
This is certainly the case for research papers that consider the recent and likely evolution of middle management jobs amid ongoing automation driven by information technology. Here, those at one extreme see automation as a danger which will eliminate much of the current work done at this level of employment, leading to the elimination or downgrading of mid-level positions. In contrast, other researchers argue that automation will provide middle managers with an opportunity to reshape job roles in ways that involve more high-value activity. [1]
Whichever side is more correct, the implications go far beyond the futures of the employees in question. Middle management is an essential conduit of information within the company between those responsible for making key decisions and the employees whose job is to carry them out. It is also a key training ground for future senior executives. A threat to this layer of employment is ultimately one to the company itself.
Insight from an important case study
A recent article in the Journal of Management Studies, however, suggests that rather than these ends of the spectrum presenting an either-or choice, the outcome is more likely to be a both-and one. [2] What will matter in the transformation, it suggests, are the kind of tasks which are automated and the experience which managers have built up through time in post.
The research focused on senior financial controllers in medium and large companies. Financial controllers are a quintessential middle management role, gathering and passing financial information from the wider company to senior executives and overseeing the execution of policies across the company. In this capacity, controllers can also play an important role in shaping the strategic environment in which a company is operating as well as the strategic choices which it makes.
The study considered, in particular, the automation of two activities – reporting and budgeting. Reporting is a so-called “formal-rational” job, or one almost entirely based on repeated tasks which follow clear rules. For reporting, controllers and their teams gather the same information and present it in the same way. Such activities are amenable to high levels of, and possibly complete, automation.
Budgeting, in contrast, is called a “substantive-rational” task because it involves far more than rule-based activities. Controllers have to bring to the budget-making process an ability to deal with uncertainty about the future evolution of the business and its environment, as well as a tacit understanding of how best to pursue senior leadership’s goals within those conditions. Some of the process can certainly be automated, but a nuanced human contribution also remains crucial.
The researchers then considered how automation of these two tasks affected the involvement of executives in strategy making, an important controller role and one which makes a good proxy for the high-value activities which middle managers could take on after automation reduces time spent on other tasks.
The results are illuminating. At companies which had seen automation of reporting, controllers with less experience of the role were likely to see a significant rise in engagement with strategy, but the opposite was true for those who had been controllers longer. The likely explanation is that, while automation gave more time to both, those with less of an experience-engrained idea of what being a controller involved were able to reshape their kinds of work involved in their employment more easily.
The opposite results, though, held for budgeting automation. When this occurred, longer-serving controllers ended up having had more engagement with strategy and their shorter-serving colleagues less. The explanation here seems to be that the former, who had gone through the budgeting process more often, found it easier to see the various places where, despite automation of part of the process, human input remained necessary. This insight allowed them to benefit from the saved time which automation brought. Those who lacked such experience presumably spent more time trying to learn what human input was still needed from them.
Technology from the middle manager perspective
While directly relevant to an important middle management role, the implications of these findings go beyond the position of financial controllers. Among middle managers, where automation might eliminate the need for human engagement with straightforward, formal-rational tasks, those with less experience of what their job “looks like” will likely be better able to see how it can change to their own and the company’s benefit. For automation which speeds up elements of complex, substantive-rational tasks, that very understanding of what the job, or at least the manager’s role in the relevant process, “looks like” lets longer-serving executives take advantage of the time savings of automation to focus on higher-value activity.
“Automation will provide middle managers with an opportunity to reshape job roles in ways that involve more high-value activity”
This insight, in turn, can help companies manage automation in order to benefit the business and its employees better.
Doing so, though, requires a nuanced understanding of what the new technology is doing from the middle manager’s perspective. Where its application is able to substantially reduce, if not eliminate, previously manual activities which were the purview of middle managers, businesses need to find ways to encourage those employees to focus more on higher-value activities, such as finding new, profitable uses for the insights which the technology can deliver more quickly than in the past. Where, in practice, machine learning can do part of a job, less experience middle managers may instead need help in seeing what still needs to be done.
Automation, then, is unlikely to bring a middle management dystopia, but the future will be more positive if companies manage the transition intelligently.
[1] For a detailed discussion of these views, see Sebastiaan Van Doorn et al., “Opportunity or Threat? Exploring Middle Manager Roles in the Face of Digital Transformation,” Journal of Management Studies, 2022.
[2] Sebastiaan Van Doorn et al., “Opportunity or Threat? Exploring Middle Manager Roles in the Face of Digital Transformation,” Journal of Management Studies, 2022.
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