Algorithmic management is the strategic tracking, evaluating, and managing of workers through

algorithms. Such algorithms take over tasks that used to be performed by human managers
(Duggan et al., 2020).  For example, platforms like Uber manage and closely monitor their
global workforce with algorithms. The algorithms assign tasks and rate performance. They also
give feedback and provide recommendations on how to improve performance (Kellogg et al.,
2019)
Big Data and automation are high on the agenda of most departments with HR directing its focus
towards data-driven decision-making, too. Algorithms used in HR can increase efficiency and
even out-perform human decision-making (e.g., Cowgill, 2019). In fact, 40% of HR
departments in international companies use AI-based tools.
benefits of algorithmic management 
1. Kick-starting organizational performance
Increasing productivity and efficiency is one of the most significant advantages of algorithmic
management. For example, imagine how many CVs an algorithm vs. one recruiter can scan in an
hour? The difference is considerable and can help companies to stay on top of the talent game.

Automating manual tasks will also give managers more time and resources to focus on strategic
undertakings. Together, this can increase organizational performance. Firms that fail to integrate
analytics and AI into their strategy run the risk of falling behind.

2. Improving managerial decision-making & remote management

Evidence-based and data-driven decision-making has become more common in recent years.
Algorithms can help deal with the increasing complexity of issues that managers deal with every
day. Data processing capabilities of algorithmic systems go far beyond the human possible. They
can take into account all relevant data and exclude irrelevant factors. This enables objective and
fair, data-driven decision-making. What’s more, it can reduce bias in decision-making.
Algorithms can also be beneficial for remote work. Workforces will become more and more
distributed, and remote and hybrid working will, to some degree, become the norm. This may
come with great benefits for employees. Yet, managers may struggle to stay up to date with their
employees’ progress and performance. Algorithms for performance monitoring can be an
essential tool to enable successful remote management. 
3. Receiving personalized insights & feedback
Algorithmic management does not only offer benefits for managers but also for employees.
Algorithms can provide personalized performance feedback. Algorithms can create insights into
employee’s progress, to-do’s, and projects. They are also used to improve employee wellbeing.
Such algorithms analyze employee needs and goals and recommend training and developmental
programs. Algorithms can also track and evaluate what matters most to employees’ wellbeing
and motivation. Based on that, they can give recommendations to managers on how to increase
employee wellbeing (Buck & Marrow, 2018).

challenges of algorithmic management 

1. How fair is algorithmic management? 
Besides the benefits of algorithmic management, there are several important ethical issues.

The main goal of algorithms is to improve decision-making and make it more objective and fair.
However, just the opposite may be the case. Algorithms remove or reduce human involvement in
decision-making. As a result, people might see algorithms as unfair (Dietvorst & Bharti, 2020;
Lee, 2018; Newman, 2020).

The main concern is the data that algorithms base their decisions on. Algorithms are trained on
sample data to predict events and make decisions. Thus, the quality of the data is an important
factor. For example, an organization could train an algorithm on historical talent data where very
few women hold management positions. Then, the algorithm may predict women to be less
likely to succeed in management positions. As a result, women might be excluded from talent
management initiatives.
2. Algorithmic management challenges the roles of management & HR
Algorithmic management reduces or replaces human involvement and interaction in different
processes. This poses challenges to managers and HR. How does people management change
when the personal and empathetic side is removed?

Both managers and HR practitioners need to adapt to the new dynamics that come with
algorithmic management. They need new skills and competencies that prepare them for the
responsible use of algorithms (Angrave et al., 2016).

Managers and HR also need to adopt the perspective of (potential) employees. For example,
algorithms used in recruiting can become problematic when candidates do not believe that the
algorithms see how unique they are (Narayanan et al., 2018).

3. The risk of algorithmic management for employee wellbeing

Algorithmic management can also pose a risk to employee wellbeing. Some even compare the
real-time behavioral tracking, feedback, and evaluation to Taylorist surveillance. Algorithmic
management can be seen as an invasive form of control over employees (Kellogg et al., 2020).

It also appears to conflict with the trend to give employees more autonomy, enable flexible work
and schedules. Companies have to closely monitor how employees react to the introduction of
algorithmic management. Some employees may see it as a threat to their psychological safety
and autonomy. Then, wellbeing could decrease as a result of algorithmic management.

Recommendations for implementing algorithmic management

1. Strategy
First, it is crucial to determine the degree of algorithmic management. Gig platforms rely
entirely on algorithmic management, but this might not be the right solution for more traditional
companies. Consequently, it is not a question of either/or but rather where and to what degree.
Companies could identify processes that are costly and relatively standardized and start there.
There, you can expect the biggest gains of algorithmic management. In any case, integrating
algorithms into business and decision processes requires a clear strategy: determining whether
they augment or automate human decision-making. 

2. Change management
In implementing algorithmic management, it is also important to consider employee wellbeing.
Introducing algorithms in organizations is a substantial transformation. A change
management perspective can be helpful. Proactive change management is a deciding success
factor in the introduction of algorithms. You need to make sure that there is readiness for change.
By helping your employees and managers understand the value added by the algorithm, you can
prepare them to welcome the change.
People may also feel threatened by the introduction of algorithmic management. This can come
from a lack of communication about the algorithm. Similarly, employees might fear that
machines are replacing them. To overcome this, it is important to include employees and
managers early on in the change process. Setting up open lines of communication helps tackle
the concerns people have. This includes active communication about what the data is used for
and who is accountable for algorithmic decisions. It prevents employees or managers from
feeling left behind. 

Communication and change management should go hand in hand with training. Training allows
people to feel comfortable working with algorithms and hand over decision-making. If people
don’t understand how the algorithm works, they may not want to use it. It is vital to train
employees and managers on the skills and competencies necessary to work with algorithms.

3. Constant evaluation 
companies need to adopt a culture of constant evaluation. It is necessary to track how
algorithms perform. Only when the decisions are accurate and of high quality will people accept
the value added by the algorithm.

Not every algorithm increases efficiency, so it is important to monitor its quality. The effect of
the change on employees also needs to be tracked. Organizations could provide opportunities for
employees to voice concerns and provide feedback. In particular, those employees who are
(partly) managed by algorithms. This gives organizations valuable information for adjusting and
improving algorithmic management. 

References
Angrave, D., Charlwood, A., Kirkpatrick, I., Lawrence, M., & Stuart, M. (2016). HR and
analytics: why HR is set to fail the big data challenge. Human Resource Management Journal,
26(1), 1–11. https://doi.org/10.1111/1748-8583.12090
Buck, B. and Morrow, J. (2018), “AI, performance management and engagement: keeping your
best their best”. Strategic HR Review, 17(5), 261-262. https://doi.org/10.1108/SHR-10-2018-145
Cowgill, B. (2019). Bias and Productivity in Humans and Machines (SSRN Scholarly Paper ID
3584916). Social Science Research Network. https://doi.org/10.2139/ssrn.3584916 
Dietvorst, B. J., & Bharti, S. (2020). People Reject Algorithms in Uncertain Decision Domains
Because They Have Diminishing Sensitivity to Forecasting Error. Psychological Science,
0956797620948841. https://doi.org/10.1177/0956797620948841 
Duggan, J., Sherman, U., Carbery, R., & McDonnell, A. (2020). Algorithmic management and
app-work in the gig economy: A research agenda for employment relations and HRM. Human
Resource Management Journal, 30(1), 114–132. https://doi.org/10.1111/1748-8583.12258
Kellogg, K. C., Valentine, M. A., & Christin, A. (2019). Algorithms at Work: The New
Contested Terrain of Control. Academy of Management Annals, 14(1), 366–
410. https://doi.org/10.5465/annals.2018.0174