Rollout of AI could lead to many middle management jobs being axed

Many middle managers have told their top executives that working from home is an “entitlement” and are refusing to give it up.

But artificial intelligence is going to change the middle management game dramatically, and those who don’t come into the office are now in grave danger of losing their jobs.

And the looming reduction in the numbers of middle managers in the workforce will make it hard to gain employment elsewhere at previous salary rates.

Obviously, there are many situations in the workplace where it makes total sense for the person to undertake a task at home or even work full-time at home. And some enterprises have reorganised their operations to be totally remote.

But in large organisations if too many work from home it substantially reduces productivity and makes it very difficult to train new people.

Middle managers value the sharp reductions in the time spent travelling to and from the office and the flexibility that working from home delivers in minding children.

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The official line in most companies is that there will be a reallocation of duties and other changes.

In recent years, there has been a shortage of middle managers and so many have been able to insist on working to work from home at least two days a week.

Chief executives tell me that when talking with institutions they are regularly asked how AI will change their business and when will it reduce their costs.

Obviously each enterprise is different, but there is a common theme. The tasks currently being performed by middle managers can very often be replaced by AI with considerable reductions in cost. Remember we are not talking about robots but rather greatly enhanced computer power.

The official line in most companies is that there will be a reallocation of duties and other changes. There will also be training to equip managers to operate the greatly increased computer power.

But what the institutions want to hear from CEOs is that there will also be sharp cost reductions. The only way that can happen is for the ranks of middle managers to be substantially reduced.

Middle managers who have skills that are essential in the enterprise but who work from home should hold their jobs, but sometimes in widespread “reconstruction” operations that does not happen.

But there will be large numbers who will not be essential and in choosing who is to be trained to use the new computer power, those demanding to work at home may be the first to be retrenched.

The general view in the corporate community is that it will be some years before AI changes the way enterprises are managed. But the pressure being applied to CEOs by the institutions means that it is likely that fundamental changes will start next financial year and then gather pace.

I don’t think the institutions fully appreciate that the pressure they are applying to companies to use AI will also reduce their membership base.

A 3D rendering robot working with a monitor in a factory.

What is about to happen in the “white collar” area has already taken place in “blue collar” jobs.

In many enterprises where workers refused to give up their conditions and work practices, the companies simply shut down and imported the goods.

The motor industry was a good example.

Banks, retailers and others may not shut down but will substantially revamp their operations, including performing more activities overseas.

The state and federal public services are highly unionised and, like those in the motor industry, they will fight hard to keep their working from home “entitlement”.

Change will therefore take longer in the public service, but rising debt levels in governments mean that unless they become more efficient they will not be able to afford to perform the current level of activity.

And as Victoria has found, spraying the state with new and higher taxes to pay public service salaries and can have devastating effects on the economy.

Around Australia, a rising number of nurses and paramedics are waking up to the fact that the Australian medical industry has far too many administrators.

If administration ranks were slashed, there would be room for more operational nurses and paramedics and those on the frontline would get much better pay at no cost to the community.

With the help of AI, the operation would also be far more efficient. But the administrators also happen to be part of the leading union.

The operating nurses and paramedics are beginning to wake up that they are being ripped off and are starting to organise a separate union to the administrative staff. In time, that awakening will spread to many other areas of the public service.