Human Resource Executive

Talent Management By Peter Cappelli/Talent Management Columnist

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Ever heard of the term “algorithmic management”? It came out of the world of academic computer science, as an attempt to explain how “gig” companies such as Uber manage their workers. It’s the idea that you can get workers to do what you want— essentially manage them—by sending them algorithm-based information about their performance and nudging them into using it to perform better.

Although many people seem to use the term “gig economy” to describe any casual employment relationship, it is used in a distinctive fashion to refer to working arrangements that are managed through electronic platforms. Current examples include rideshare giants Uber and Lyft, as well as Upwork—the consolidation of oDesk and Elance—which matches workers with clients that need IT tasks done, while newer operations like Task Rabbit connects local workers with homeowners who need small projects completed.

The gig economy is a whole lot smaller than the attention it receives; just 1 percent of the U.S. labor force is engaged in any meaningful way working in it. But it is new and different, and that gets a lot of attention.

The other important point about the gig economy is that all the workers are contractors, not employees, meaning employers aren’t supposed to supervise them. Their work is defined by a contract, which considerably limits flexibility to influence how they perform. Managers can monitor workers’ performance, but the work is being done far away from the company managing the platform, so how do they get the contractors to behave and perform well?

This is the idea behind algorithmic management. Think about the “surge pricing” in ride services—to entice drivers to come out and head to busy locations by raising how much they are paid—or “ rate-your-driver” requests that encourage passengers to monitor the performance of drivers whom the company other wise couldn’t see.

That’s only the beginning, though. Enter behavioral economics and further efforts to manage—or manipulate, depending on your perspective—the behavior

Are Algorithms Good Managers?

of these contractors. One technique familiar to users of TripAdvisor and Yelp is the creation of fake goals with honorific achievements for motivation: “Only one more ride/review/purchase to reach elite contributor level!” If you’re like me, you find yourself saying, “Well, why not just do one more?” (Of course, if you’re really like me, you’ll then say, “Nah, this is stupid.”)

What’s clever about
algorithmic management is
that it is about the only way
to influence workers on these
platforms and keep them in
contractor status. But what I find
puzzling is employers’ interest
in algorithmic management.

If they have employees, they can supervise them, direct their work and use modern-management tools to get them to do what they want. So why the interest in using electronic platforms?

I’ve got the feeling the
appeal is not as a complement
to supervision but as a
substitute for it. In other
words, if we can nudge
employees along with these
data-based tools, we don’t
need to supervise them. But
given how little time we spend
with supervision already, this
seems like a big mistake.

Peter Cappelli is the George W. Taylor Professor of Management and director of the Center for Human Resources at The Wharton School of the University of Pennsylvania in Philadelphia. Send questions or comments to hreletters@lrp.com.

In our daily lives, Apple’s
Siri navigates decisions
on everything from
our restaurant choices
to dialing friends, while Amazon’s Alexa helps
us make grocery lists, remember appointments
and, in general, run our homes. As leaders
shaping the culture of our workplaces, it’s
important to understand that workers are also
consumers. As they lead blended lives and often
work from anywhere, any time, they anticipate
the same artificial-intelligence- and technology-
enabled experiences that they receive as
consumers. One study found that a majority
(68 percent) of workers are ready to work with
AI and are positive about its potential impact on
their jobs.

HR professionals can guide leadership to
respond to these changing needs in three areas.

Let’s start with reimagining work. This is what an urban medical center did to respond to physician burnout, largely caused by doctors spending too much time behind computer screens doing reporting and administrative tasks.

How did AI help? It listened in on doctor-patient conversations and transferred relevant information into forms and medical records. Essentially, medical staff was armed with a note-taking assistant, which, in effect, strips away a doctor’s administrative duties, leaving more time for human interaction.

As AI develops, it opens new possibilities for growth—which brings me to the second area where we can encourage AI development: finding new opportunities for value creation. Consider a cruise-ship company that equips crew members with Wi-Fi medallions, allowing them to collect insights into what passengers want onboard. That information can be used to anticipate needs and discover new ones, enhancing both customers’ and employees’ satisfaction and experiences.

AI Is Changing the Workforce

By Eva Sage-Gavin/HR Leadership Columnist

Training and “reskilling” will serve as the foundation for reimagining work and creating these new sources of value. Our workforces require new skills and innovative approaches to training that use the technological advances causing this sea change. For example, one retailer is using Oculus Rift virtual-reality headsets to immerse its sales associates in real-world scenarios.

Retail and “tech-conscious” industries have had to react to these market shifts quickly. With the help of algorithmic-design software, an athletic apparel company optimized product development for light shoes with a stiff sole that is ideal for sprinters’ athletic needs. The company used 3-D printing on prototypes and tested them until they found the premier design. Great examples are emerging across industries, and leading companies are bringing innovative consumer insights into both their workplace strategies and worker experiences.

The workforce, conversant in using AI in its everyday life, is ready to engage. Leaders need to make the transition to these new technologies a priority since workers want to engage with companies where their skills will continue to grow. Investments in learning, technology-enabled tools and ways of staying relevant and competitive in the workplace are part of the changing social contract that workers expect. We know that the key to competitive advantage is to focus on areas that create new value by reskilling workers using AI and other technological advances.

Eva Sage-Gavin is a former CHRO with more than three decades of experience in Fortune 500 corporations. She currently serves as the senior managing director for Accenture’s global talent and organization consulting practice and as a technology board director. Send questions or comments to hreletters@lrp.com.