The most important question that companies face in deploying Artificial Intelligence (AI) is not technological but organizational: Should they use AI to increase the power of high-up managers or liberate front-line workers? I suspect that the bulk of them will give the wrong answer to the question — and that we will be dealing with the consequences of their mistakes for decades to come, not just economically, as companies lose their creative flair, but also politically, as professional elites join the ranks of the angry and alienated.

Companies will evolve in radically different directions according to the answer that they give to this question. Choose the first answer and they will evolve into “panopticons.” Managers will use AI’s growing powers to divide jobs into identical units, monitor and measure workers in terms of their ability to fulfill their assigned roles and get rid of surplus workers. The faster you work, the more you will be rewarded.

This type of organization is hardly new. The father of utilitarianism, Jeremy Bentham, coined the term “panopticon” in 1791 to describe his ideal prison in which a few managers could monitor everything that their inmates did. The father of scientific management, Frederick Taylor, taught employers the importance of standardization and measurement of workflows in the early 20th century. But today’s digital Taylorism takes all this to a new level. It ensures that the managerial eye is all-seeing, enabling employers to monitor not just your every movement but your fleeting emotions. And it hands enormous power to algorithms that are untouched by human emotion.

Choose the second, however, and you will evolve into a human-centric organization. Put the power of AI into the workers’ hands and they will be able to use it to do remarkable things: improve the quality of their jobs by automating routine tasks (organizing their diaries or booking travel) but also improve the quality of their organizations by collaborating with other employees. AI makes it easier for teams to organize themselves by setting collective goals and breaking them down into individual tasks. It also helps senior managers to devolve tasks to front-line workers without losing the power of control and coordination.

The first approach is superficially much more appealing than the second because it provides companies with lots of low-hanging fruit. You can get rid of surplus employees: This week, Amazon.com Inc., one of the most enthusiastic practitioners of digital Taylorism, announced that it is cutting its corporate workforce by 14,000. You can satisfy your worry that too many workers are skiving by monitoring their comings and goings. You can reward “performance” rather than “presence” by measuring workers’ precise contribution.

Yet these low-hanging fruit will eventually prove to be rotten. Studies of human motivation are remarkably consistent about what people want from organizations: They want to feel that they belong to a community, that their contribution is valued, that they can grow in their jobs, that they have a chance to exercise their creative faculties and that they are not constantly being micro-managed by higher-ups. Most people are willing to sacrifice a certain amount of pay if they can get these things.

There is evidence that these soft values are becoming more important in an age of digital atomization. A survey of Glassdoor LLC entries by Phanish Puranam, of INSEAD Business School, found that the most important thing that employees want is a sense of community (“collegiality” and “relatedness” in the surveys). The World Values Survey found that people of all ages are putting increasing value on autonomy in decision-making (i.e., not being told what to do by distant managers).

But can companies resist plucking low-hanging fruit even if they are rotten? Management gurus predicted that the digital age would lead to the triumph of a new age of entrepreneurial capitalism — challengers would shake up incumbents and incumbents would respond by delayering. In the new edition of Humanocracy, Gary Hamel and Michele Zanini demonstrate that we got the opposite — the triumph of top-down managerialism. The number of people classified as “managers” or “administrators” doubled from 1983 to 2024 even as the rest of the workforce increased by 40%. The proportion of US employees working for companies with more than 5,000 employees increased from 28.8% in 1987 to 36.4% in 2021. The result of growing bureaucratization: 51% of US employees claim that they are not engaged with their work while 16% claim that they are “actively disengaged.”

So far, this pattern is being repeated with AI. The companies that have made the running — platform capitalists such as Uber Technologies Inc. and digital giants such as Amazon — have invariably used the technology to create panopticons. The platform companies promised that they would give workers more control over their own lives. In reality, workers complain that their every move is monitored by algorithms — and that they lack even the compensation of being able to complain to co-workers.

Amazon has been dogged by accusations of insensitive management despite paying higher than average wages. The pace of activity can be relentless: A 2020 study found that Amazon warehouse workers suffered from almost twice the rate of serious injuries as the industry average. But even more dispiriting is the monitoring of every tiny detail of your daily routine, including the amount of time that you spend in the bathroom.

Similar complaints follow wherever the algorithms are unleashed. Truck drivers complain that their employers use AI-enabled tracking tools to spy on them. Fast-food employees complain that their schedules are being determined by algorithms, which measure demand, rather than by conventions such as regular hours. A 2024 review of 172 academic articles on “algorithm-driven management” found that what employees found most galling is that algorithms know almost everything about them, but they know nothing about the algorithms.

Perhaps there is a limit to how much autonomy you can enjoy in providing taxi services or stacking boxes. But management by algorithm is being introduced into professional services that have traditionally placed a premium on self-management and self-improvement.

The same pattern is being repeated. Companies are exerting ever more minute control over employees: They can measure your keystrokes per minute, figure out how “collegial” you are in Zoom calls and bundle dozens of different performance measurements to determine your pay. Companies are also extending automation into intimate human judgments. JPMorgan Chase & Co., which is the pacemaker in using AI in the banking sector with an AI budget of $2 billion a year, allows managers to use AI to write performance reviews.

There are some sparks of resistance. Young workers can vote with their feet by choosing companies that use AI to empower them rather than turn them into cogs in a machine. Some companies are recognizing the dangers of, say, automating entry-level jobs that provide you with your future stars. Yet the race to adopt AI is so fast-paced and the FOMO so all-consuming that companies, in their obsession with hitting the metrics, are forgetting about subtle things such as creativity. And AI-driven management is self-reinforcing: The more the smart machines take over, the more skills atrophy and self-direction withers, creating yet more demand for smart machines.

The walls of the Panopticon are closing all around us — and the managerial eye is becoming at once ever more penetrating and ever less discerning.

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