Algorithmic management

Algorithmic management is a term used to describe certain labor management practices in the contemporary digital economy. In scholarly uses, the term was initially coined in 2015 by Min Kyung Lee, Daniel Kusbit, Evan Metsky, and Laura Dabbish to describe the managerial role played by algorithms on the Uber and Lyft platforms, but has since been taken up by other scholars to describe more generally the managerial and organisational characteristics of platform economies. However, digital direction of labor was present in manufacturing already since the 1970s and algorithmic management is becoming increasingly widespread across a wide range of industries.
The concept of algorithmic management can be broadly defined as the delegation of managerial functions to algorithmic and automated systems. Algorithmic management has been enabled by "recent advances in digital technologies" which allow for the real-time and "large-scale collection of data" which is then used to "improve learning algorithms that carry out learning and control functions traditionally performed by managers".
In the contemporary workplace, firms employ an ecology of accounting devices, such as “rankings, lists, classifications, stars and other symbols’ in order to effectively manage their operations and create value without the need for traditional forms of hierarchical control.” Many of these devices fall under the label of what is called algorithmic management, and were first developed by companies operating in the <a href="/facts/Sharing_economy/byxFUsNK">sharing economy</a> or <a href="/facts/Gig_economy/p9gCjQy3">gig economy</a>, functioning as effective labor and cost cutting measures. The Data&Society explainer of the term, for example, describes algorithmic management as ‘a diverse set of technological tools and techniques that structure the conditions of work and remotely manage workforces. Data&Society also provides a list of five typical features of algorithmic management:

<ul><li>Prolific data collection and surveillance of workers through technology;</li>
<li>Real-time responsiveness to data that informs management decisions;</li>
<li>Automated or semi-automated decision-making;</li>
<li>Transfer of performance evaluations to rating systems or other metrics; and</li>
<li>The use of “nudges” and penalties to indirectly incentivize worker behaviors.</li></ul>
Proponents of algorithmic management claim that it “creates new employment opportunities, better and cheaper consumer services, transparency and fairness in parts of the labour market that are characterised by inefficiency, opacity and capricious human bosses.” On the other hand, critics of algorithmic management claim that the practice leads to several issues, especially as it impacts the employment status of workers managed by its new array of tools and techniques.

Algorithmic management open-in-new

Algorithmic management