AI at Wharton


How Algorithmic Management Affects Employee Helpfulness

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Imagine a workplace where robots manage your tasks and performance. Sounds futuristic? It’s already happening. Companies are increasingly relying on algorithms to automate managerial roles, promising efficiency and profitability. But what does this mean for the human element? A new study co-authored by Wharton faculty Stefano Puntoni, reveals that employees managed by algorithms are less likely to help their colleagues.

Large companies such as Microsoft, Nestle, Aldi, and AirBnB, among others, are using algorithms to oversee everything from employee performance to delivery routes, via marketing optimization to customer outreach. While this offers cost-cutting benefits, it raises concerns about the impact on employee well-being and team collaboration.

Unexpected Findings

The Wharton study, led by Armin Granulo, Sara Caprioli, Christoph Fuchs, and Stefano Puntoni, delves into the impact of algorithmic management on “prosocial motivation,” the willingness to help others. They found a significant decrease in helpfulness among employees managed by algorithms compared to those managed by humans. The negative impact is strongest when algorithms are used for performance evaluation.

These discoveries challenge the assumption that algorithmic management affects only productivity, highlighting the broader social and psychological consequences that potentially impact creativity, innovation, and overall workplace well-being.

The Solution: Fostering Connections

The good news is that the researchers identified a solution: encouraging social interactions among employees. This can include common breakrooms, team rotations, and social events. Companies using algorithmic management should also prioritize transparency, communication, and employee involvement.

Algorithmic management offers undeniable benefits, but it is crucial to understand its potential downsides. Striking the right balance is key to harnessing the power of algorithms while preserving the human element in the workplace. By fostering a sense of community, companies can mitigate the negative effects of algorithmic management.

Key Takeaways

  • Algorithmic management can decrease employee helpfulness.
  • Fostering social interaction can mitigate this effect.
  • Human involvement is crucial in sensitive areas like performance evaluation.
  • Companies need to find the balance between efficiency and human well-being.