Companies are rethinking manager pay as AI agents replace staff

In short: As more companies use AI agents to do tasks once done by people, HR teams are starting to question how manager pay should work.

What's going on

Companies are increasingly using “AI agents”, which are AI systems that can take actions by themselves, like checking an invoice, browsing the web, or sending an email (think of them like digital assistants that can run errands without being asked each step).

McKinsey says AI agents are now used widely in about 40 percent of companies with $1 billion or more in revenue, up from 27 percent last year. Among smaller companies, the share is flatter, but still around 22 percent.

This shift creates a people problem, not just a software problem. Many managers are graded and paid partly on how many people they manage. If some of those “direct reports” become AI agents instead of employees, some companies are asking whether managing bots should count the same.

HR leaders told the Financial Times this is already a live issue at some organisations. Kit Krugman, chief people officer at Altana, said companies will have to rethink how people are compensated.

Managing agents can also be hard in new ways. One challenge is mental overload from monitoring several agents at once, since they can work very fast and never take breaks. Another issue is safety and control, since agents can make mistakes quietly, or behave unpredictably during testing.

What to watch

So far, people interviewed in the piece did not expect existing managers to see pay cuts if they replace part of a human team with agents. But as more work shifts to agents, companies may change job titles, performance reviews, and what “managing” means, including new rules for keeping agents under control.

Source: Financial Times