Is automation a threat or opportunity for middle managers? Research indicates no simple answer to this fundamental question. Automation can be a threat or an opportunity depending on the type of tasks and responsibilities of the middle managers and how long they have been in their positions.
The evolving sophistication and scope of automation and AI technology will impact the jobs of individuals at all levels of the organization. For middle managers, automation can threaten to render their jobs obsolete, leading to redundancy and the thinning of middle management ranks. From a more positive perspective, automation can free up middle managers from routine and repetitive tasks and allow them to take on additional and more complex roles in the organization, including greater participation in corporate strategy.
Companies benefit when middle managers provide their bottom-up perspectives to strategic formulation and decisions. In addition, given that middle managers form a pool of potential executive-level leaders of the future, their involvement in strategic decisions contributes to their leadership development.
A study of middle managers in Germany, Austria, and Switzerland used potential strategic involvement as a measure of the positive or negative impact of automation. The study focused on controllers and middle managers whose accounting tasks and responsibilities might be easily impacted by automation.
The results of the study were mixed and depended to some extent on the specific tasks involved. Specifically, the results showed that automating reporting tasks slightly increased the strategic involvement of middle managers, while automating budgeting tasks had a slightly negative impact on a manager’s strategic influence.
Why the difference? Reporting that is, collecting and disseminating financial figures is known as a formal-rational task. These are tasks that are rule-based and repetitive and can be relatively easy to automate. Once automated, these tasks require little human oversight, freeing middle managers to take on different roles.
Budgeting falls into the category of substantive-rational tasks more complex, non-repetitive, future-oriented tasks that cannot be fully automated. Automation of such tasks adds to the responsibilities as managers must now efficiently and effectively manage the interface of humans and the system.
While the nature of the tasks impacted to some extent the strategic participation and influence of middle managers as described above, this impact was not significant until another factor was added to the research: the position tenure of the managers, that is, how long the managers have been in their jobs.
Short-tenure managers and long-tenure have different strengths and weaknesses. Short-tenured managers don’t have the expertise of long-tenured managers but are also not as attached to the old ways of doing things and can adapt to change better. Long-tenured managers have the expertise from their years of experience but are also embedded in the ways of the past.
The study showed that tenure combined with the nature of the tasks significantly influenced the impact of automation on strategic involvement.
Automating formal-rational reporting tasks increased the strategic involvement of short-tenured managers compared to their long-tenured counterparts. In contrast, long-tenured managers become significantly more involved in the strategy of the firm compared to short-tenured managers when substantive-rational budgeting tasks are automated (as much as they could be).
As the authors of the study explain, when formal-rational reporting tasks are fully or almost fully automated, long-tenured managers can find their expertise becoming obsolete and they have greater difficulty than short-tenured managers in dealing with transitioning to a new post-automation role. Short-tenured managers, on the other hand, will welcome the greater opportunity for strategic involvement when their basic tasks are automated, bringing to the company perspectives that are not tied to the past.
For the automation of substantive-rational tasks, long-tenured managers can use their expertise to ensure the efficiency and effectiveness of the newly created human-system interface. They can also better draw from the new process inferences that can impact the company’s strategy. Short-tenured managers will be less able to make sense of the human-system post-automation interface.
The data for the research was gathered from surveys conducted by WHU Otto Besheim School of Business several times a year. These surveys are sent to controllers and senior financial managers throughout Germany, Austria, and Switzerland and include questions on the respondents’ tenure as well as the level of automation in their companies and which tasks have been automated. A series of nine questions in the survey measures the respondents’ strategic influence.
Although this study focused on financial middle managers, all functions in a company will have formal-rational and substantive-rational types of tasks as well as experienced or less-experienced managers whose contribution to the company’s strategy and leadership development will be impacted in different ways by automation of such tasks. Companies should take these factors into account as they decide which tasks to automate.
This study also highlights the importance of helping managers transition to different ways of adding value post-automation. If basic formal-rational tasks are fully automated, companies should give their managers enough time and support to let go of the soon-to-be-obsolete tasks of the past and find new ways of adding value. For substantive-rational tasks, managers must be given the time to establish processes that define how the automated side and the human side of the tasks will work together.
Sebastiaan Van Doorn’s profile at University of Western Australia
https://research-repository.uwa.edu.au/en/persons/sebastiaan-van-doorn
Dimitrios Georgakakis’ profile at Leeds University Business School
Jana Oehmichen’s profile at University of Mainz
https://www.orga.bwl.uni-mainz.de/prof-dr-jana-oehmichen/
Marko Reimer’s profile at WHU Otto Beisheim School of Management
Opportunity or Threat? Exploring Middle Manager Roles in the Face of Digital Transformation. Sebastiaan Van Doorn, Dimitrios Georgakakis, Jana Oehmichen, and Marko Reimer. Journal of Management Studies (November 2023).
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