Happy Sunday {{first_name|friend}}!
This is part two out of three in a series about the implications of AI for work. Here was part one.
I can’t stop thinking about this chart:
What did HR do to deserve being the most reduced department in the past three years??
And it’s not just HR professionals getting reduced. It’s managers too:
Managers are overseeing more people as companies large and small gut layers of middle managers in the name of cutting bloat and creating nimbler yet larger teams. Bosses who survive the cuts now oversee roughly triple the people they did almost a decade ago, according to data from research and advisory firm Gartner. There was one manager for every five employees in 2017. That median ratio increased to one manager for every 15 employees by 2023, and it appears to be growing further today, Gartner says.
Google recently said it had cut 35% of its managers of small teams following a restructuring. Amazon, one of the U.S.’s largest employers, told investors earlier this year that it is working to increase the ratio of employees to managers. Many other employers want to flatten hierarchies. Intel eliminated 50% of its management layers. Estée Lauder and dating-app operator Match Group said they had each cut around 20% of their managers. Citi, Bank of America and United Parcel Service cut management tiers or supervisors in recent years, too.
Okay so…that’s fine right? Middle management is surely bad, let’s cut em out! We don’t need them, everyone is totally capable of figuring out how to work effectively by themselves right? It’s a totally normal, stable, chill moment in most workplaces right now anyway right?
No. It is not.
It is in fact the weirdest and most intense moment at work in a generation - two generations? A century? All time?
Especially at white collar / professional services / knowledge worker jobs, the ones most likely to have layers of management and HR - these are the companies who are deepest in the weird and intense vibes right now.
For example:
Salesforce announced that the theme for their annual conference is "The Agentic Enterprise.” An absolutely thrilling1 phrase, yet another tremendous branding accomplishment2 from Salesforce.
This concept refers to the idea that you can pump your company full of “agents” to run around and do stuff next to the humans. Microsoft is predicting by next year most companies will have more agents than humans. And of course these “agentic coworkers” work 24 hours a day 7 days a week and they never, ever clog your office toilets or file complaints with HR. Wonderful!
I think technically it should be “fewer heads”? Unless you think of your workforce as a block of cheese where you can just slice of part of it and then you have less cheese.
Benioff is all in on this “blended workforce” vision and likes to say he is in “the last generation of CEOs that only had human employees.”
Introducing digital employees to the enterprise means also introducing new language. Three examples I’ve learned about in the past two weeks:
Work chart instead of org chart: instead of an organizational chart showing each person’s relationship to each other, companies are starting to use Work Charts which shows workflows in relationship to each other. When some of your labor is completed digitally, it’s more important to map how information and action flows across workstreams (which are composed of a bunch of humans and agents) rather than mapping the hierarchy of humans.
Loop instead of lane: similarly, humans and agents working together makes for a loop: humans prompt the agents, agents talk to each other and take some actions, humans receive the response or give further guidance, agents keep working, etc. Figuring out where the humans fit in the AI loop is an increasingly important part of strategic planning for corporate leaders right now. Hubspot’s brand new “Loop Marketing” framework is a good example of this structure.
Minimum viable organization: McKinsey is all fired up about the idea of reducing departments to the smallest possible configuration of humans plus as many agents as they need - or even no humans.
These are not small wording tweaks. These are radical experiments that carry a profoundly different approach to work.
The thing is, all of this might actually be very cool! Org charts with power hierarchies, departmental lanes with politics-driven boundaries, middle management trying to protect their own fiefdoms: good riddance to all that. We are living through a revolution in how work happens and it might turn out to have a ton of upside when compared to the industrial-style corporate structures of the past several decades.
But the path to get there is going to involve a ridiculous level of change in how work happens for most people over the next several years. As a species we generally suck at navigating change with grace, curiosity, humility, openness, and confidence. Two organizational strategies that could really help with that are:
Making sure we have managers who actually have time to be with their people 1-1, coach them through change, get to know their lives in a substantive way
Making sure we have HR leaders who can bring intentional design to people operations and company culture. How will it feel for humans to navigate their agentic coworkers and each other? How will we help humans chart their career paths and incorporate feedback? Where does responsibility lie when things go poorly? These are questions for smart HR professionals.
But instead, we’re seeing companies gleefully go the Less Heads route with both managers and HR. I think this will lead to chaos. How could it not?? All of a sudden your company has more agents than people, everyone is asked to work in a different way, there is one manager for every 15 humans (and that manager has to manage their own agents), etc. PLUS all the other political, societal, economic, and environmental changes we are all dealing with now every day outside of a work context. We are fundamentally unprepared.
You could look at all that and yearn for just not needing to worry about the humans, just go the Minimum Viable Organization route and have the computer run your whole business.
You could look at all that and declare “IT is the new HR” like NVIDIA CEO Jensen Huang has said. (It’s like…dude…no disrespect but have you met the guys in IT??)
Nah. I think the companies that will win in 5-10 years are the ones who are investing now in reinforcing the fabric of their culture, who are going all in on mentoring and coaching their humans, who see HR and managers as core to increasing the agility and speed of the whole enterprise.
When everyone has AI, it’s the humans who make the difference.
1 sarcastic
2 failure