IMPACT OF ARTIFICIAL INTELLIGENCE IN MODERN

MANAGEMENT
AUTHOR: V.V. CHANJANA,
III-BBA,
vvchanjana@gmail.com

ABSTRACT:
Technological development of society, and in particular the universal digitization of
the economy, will have a significant impact on the labour market and on the manager’s job
functions. The use of Artificial Intelligence systems and robotics carries with it both
tremendous opportunities and threats of changes and even disappearance of certain
professions. The ability to redesign the management system in accordance with new
opportunities and challenges will be a key factor in adapting organizations to the new
conditions in the interests of workers, employers and society. This study includes the analysis
of the Artificial Intelligence usage trends and its influence on the labour market and
manager's job roles. It also highlights the opportunities which AI provides to business and
employees and main challenges of its implementation in the organization's management
system.

INTRODUCTION:
Artificial Intelligence (AI) is a changeover transformation in organizations,
transforming businesses to reach their full potential in the business world due to its
effectiveness, productivity, and innovative relevance. Achieving the organization's goal,
which is helping them grow in their careers, has been its significant acclaim since its
existence. For this reason, organizations can make decisions very fast and process and power
their products to the public with the availability of AI-instrumented technology.

KEYWORDS
Artificial intelligence, AI, Innovation, Review, Literature review, Innovation management,
Machine learning, Information processing

MODERN MANAGEMENT:

The modern management theory believes that employees work for numerous reasons,
including to achieve satisfaction, happiness and desired lifestyles. With this theory, managers
understand employees' behaviours and needs and can implement strategies to meet those
needs and support their skill development over time.

For example, a manager that uses the Modern Management Theory will look at a
development such as working from home on two fronts. They will analyse the costs and
benefits of having employees work from home, and they will also ask individuals how
working from home benefits their own lifestyle.

DEFINITIONS:
 According to Harold Koontz “Management is the art of getting things done through
and with formally organized groups”.

According to Peter F. Drucker. “A Multipurpose organ that manages a business and

manages managers and manages workers and works”.

According to J. Lundy “Management is what management does. It is the task of

planning executing and controlling”.

According to Lawrence Appley “Management is the development of people and not the
direction of things”.

MODERN MANAGEMENT THEORY:

Modern Management Theory was created in direct response to the Classical

Management Theory that states employees are only motivated by money. The Modern
Management Theory recognizes that workers are complex and have many reasons for
wanting to succeed in their job. The Modern Management Theory also believes that rapidly
changing technology can both cause and solve many problems in the workplace.

This theory combines mathematical analysis with an understanding of human emotions

and motivation in order to create a working environment that is maximally productive. A
manager using the Modern Management Theory will use statistics to measure employee
performance and productivity and also try to understand what makes their employees
satisfied at their jobs.

Modern Management Theory is actually comprised of three other management

theories — Quantitative Theory, Systems Theory, and Contingency Theory.

QUANTITATIVE THEORY:
This theory based on efficiency and mathematical equations came out of the necessity
for managerial excellence in World War II. This is a simple number-based theory that relies
on calculating the risks, benefits, and drawbacks of any action before it is taken. This
approach applies statistics, computer simulations, information models, and other quantitative
techniques to the management of a company. This theory is usually not used to manage a
business on its own. Instead, the Quantitative Theory must be used with more humanistic
theories, in order to run a company.

SYSTEMS THEORY:
This theory treats companies like a living organism, with all parts necessary for the
company to survive. Developed by Ludwig von Bertalanffy, this theory states that all parts of
a company, from the CEO to the entry-level employee, must work in harmony for the
company to survive. Companies using this theory think that departments and employees must
work as a collective group and not an isolated unit. Synergy and interconnectedness between
departments are key with this theory.
 While striving for harmony between departments is important in a company, most
companies don’t need to rely on synergy so much for their day-to-day functions. For
example, the accounting department of a small company doesn’t need to be totally in sync
with the HR department. This management theory is more of a way you can view the
company, not an exact management style.

CONTINGENCY THEORY:
The Contingency Management Theory holds that every situation requires a different
leadership style, and therefore no one theory can work for an entire office. Created by Fred
Fiedler in the 1960s, this theory states that it is up to the leaders of a company to assess a
situation and use the best leadership strategy. Fiedler believed there are three main variables
for determining what leadership strategy to employ — organization size, technology being
used, and the overall style of leadership in the company.

This theory puts a lot of responsibility on the leaders of a company. Fiedler believed
that a leader’s traits directly affected how they managed people. This theory is also a more
useable theory for modern workplaces, as it understands that as technology and companies
change, so must the leadership styles.

IMPACTS OF ARTIFICIAL INTELLIGENCE

Enhanced Decision-Making:

AI has revolutionized decision-making in modern management by providing data-

driven insights and predictive analytics. Through advanced algorithms, AI systems analyze
vast amounts of data to identify trends, patterns, and correlations that might otherwise remain
unnoticed. This enables managers to make informed and strategic decisions based on real-
time information, ultimately improving organizational efficiency and performance.

Data-Driven Insights:

The integration of AI-powered analytics allows managers to gain deep insights into
consumer behaviour, market trends, and operational performance. This data-driven approach
empowers managers to identify opportunities for growth, anticipate shifts in the market, and
tailor their strategies to meet evolving customer demands. Consequently, organizations can
proactively adjust their business models, leading to better customer satisfaction and sustained
competitiveness.

Optimized Operations:
 AI technologies, such as robotic process automation (RPA), have streamlined routine
tasks and processes within organizations. This automation reduces the risk of errors, enhances
operational efficiency, and frees up human resources for more creative and strategic
endeavours. By delegating repetitive tasks to AI-driven systems, managers can focus on
higher-level decision-making and innovation.

Predictive Maintenance:

AI-enabled predictive maintenance has significantly impacted industries that rely on

complex machinery and equipment. By analysing real-time data from sensors, AI can forecast
equipment failures and recommend maintenance schedules. This proactive approach
minimizes downtime, increases asset lifespan, and reduces operational costs, illustrating AI's
contribution to efficient resource management.

Innovative Product Development:

AI has facilitated innovative product development by augmenting the ideation and

design processes. Machine learning algorithms can sift through vast amounts of data to
identify consumer preferences and market gaps, aiding managers in creating products that
resonate with target audiences. This innovation-driven approach has accelerated product
cycles and led to the creation of new revenue streams.

Enhanced Customer Experience:

AI-powered chatbots and virtual assistants have transformed customer interactions by

providing instant and personalized support. These systems can handle a multitude of queries
simultaneously, ensuring round-the-clock customer service. Consequently, organizations can
improve customer satisfaction and loyalty while reallocating human resources to more
complex customer interactions.

Conclusion:

In conclusion, the impact of AI on modern management is undeniably transformative.

From revolutionizing decision-making with data-driven insights to optimizing operations
through automation and predictive maintenance, AI has reshaped the way organization’s
function. The integration of AI technologies has empowered managers to navigate complex
business landscapes, foster innovation, and elevate the overall customer experience. As AI
continues to evolve, its role in modern management will undoubtedly expand, shaping the
future of organizations and their strategies.

References:

Artificial Intelligence Trends

CB Insights (2019)
New York
https://www.cbinsights.com/research/ai-trends-2019/

The importance of having an AI-powered business strategy

Forbes. (2018)
https://www.mckinsey.com/featured-insights/artificial-intelligence/ai-adoption-advances-but-
foundational-barriers-remain

Exploring the impact of artificial intelligence: prediction versus judgment (No.

24626)
NBER Working Paper, NBER Working Paper, Cambridge, MA (2018)
https://doi.org/10.3386/w24626