Will automation make retail teams less efficient?
Presented here for discussion is an excerpt of a current article published with permission from Knowledge@Wharton, the online research and business analysis journal of the Wharton School of the University of Pennsylvania.
While the arrival of AI-supported automation in the workplace has led to concern about the potential loss of jobs, a new paper by a Wharton marketing professor explores the fate of those who keep their jobs but count robots instead of humans among their co-workers.
In “Men and Machine: When Should a Firm Adopt Automation?,” Wharton’s Pinar Yildirim and co-author Mustafa Dogan, a postdoctoral researcher at Carnegie Mellon University, show that in some cases, automation can actually lead to increased costs and inefficiencies because of its dysfunctional impact on human teams.
The professors explored a scenario in which a manager oversees a task completed by two humans and one in which it is carried out by one human and one machine. Automation was found to be the lesser of the two approaches if it makes the remaining human workers “more expensive” or requires changes in the way human workers are assessed and compensated in order to create gains.
Workers who aren’t displaced by automation may react with feelings of powerlessness or fear, Ms. Yildirim notes, or they could become less motivated because they are unable to perform tasks as flawlessly as a machine. “When a machine is working next to you, the incentive for you to exert effort changes,” she points out.
For managers, pairing a human with a machine will likely reduce their ability to understand whether any underperformance is due to a lack of effort or external factors (i.e., recession). She adds, “And knowing that the monitoring ability of a manager is reduced also increases the incentive the employee has to shirk because he or she knows it will be less likely to be detected.”
Companies that do rely on a lot of team interaction, the research shows, can mitigate the human costs by setting up compensation structures that are more competitive rather than cooperative. And yet the downsides to humans working in more competitive environments would have to be explored.
Said Ms. Yildirim, “People need to realize that organizations will have to be redesigned around automation. We have to think about what’s happening to the individuals who keep their jobs — their lives are changing, too. Nobody is talking about that.”
DISCUSSION QUESTIONS: Do you see increased automation and AI having an adverse effect on the performance of human associates on selling floors? How might management need to change the way it motivates, assesses and compensates employees? What potential side effects should retailers be most concerned about?