Party of five
Last year, I looked at the growth signals from 180 different startups, and I found that companies with teams of about 5 employees per manager perform best. If you're going to err on one side or the other, it is better to have bigger teams than smaller ones.
Today, most companies have too many managers, especially in technology companies. But how will this change as agentic AI enters the workforce? How many managers are enough, and how many are too many?
What is agentic AI?
Agentic AI is designed to act autonomously to complete tasks without continuous human oversight. It is typically focused on completing a domain-specific task. For instance, agentic AI might independently respond to customer help queries or order product inventory based on recent buyer demand.
Last year, I shared that more than 75% of the AI startups I saw were explicitly pitching job replacement in their fundraising decks. The majority of these were building some kind of agentic AI.
Not all workers are employees
The agentic AI transition is not only happening, but it is happening quite rapidly for certain roles. In many organizations, humans will work alongside AI agents for tasks as soon as this year. But AI agents stop short of being traditional employees.
The traditional employer-employee relationship is like this: In exchange for completing certain tasks for their employer on a defined schedule, employees receive financial compensation, health benefits and time off, and legal worker protections that are grounded in a shared social understanding of fairness and human rights.
The promise of agentic AI is that it can complete its tasks without receiving any of these things (notwithstanding the fees that companies will pay to AI vendors for the use of their products). In other words, AI agents may be workers, but they aren't traditional employees in any other way.
This has me thinking about what kind of management AI agent workers need, and what this means for traditional people managers.
Low oversight doesn't mean no oversight
Look, no one is deploying AI agents without some oversight. Yes, AI agents will complete discrete, individual tasks autonomously. However, agent performance will be reviewed with the same metrics that managers should already be using to assess employee performance today. For instance:
- AI agents will answer customer help questions autonomously. A customer support leader will monitor NPS on these interactions.
- AI agents will make automatic inventory adjustments. A supervising buyer will review the agent's inventory forecast accuracy.
- AI agents will autonomously run payroll tasks. An accountant will review tax statements before filing to make sure they are accurate.
In all of these cases, the AI agent functions autonomously to complete individual tasks. The supervising human then uses metrics to assess agent performance. Based on that performance, the supervising human can refine its AI agents by supplementing with new training data or prompt guidance.
An AI supervisor? Is that like a people manager?
In our prior data, we saw that human teams work best when managers have teams of about five people. Five is big enough to provide a range of skills and perspectives and build a team culture around, but small enough that the manager can engage meaningfully with every individual.
To my knowledge, no one has collected data yet about how AI agent workers will change this dynamic. I'm working with teams to collect data about this and will report back later this year.
What I can tell you is this:
1/ Each AI task will be associated with a performance metric. AI may perform the task, but a human supervisor will be accountable for the performance metric. They will use and tune AI agents as necessary to hit the metric.
2/ Great managers already use clear metrics to assess team and individual performance. However, most managers are not great and do not have these skills today. Managers who are already good at this are best positioned to make the jump to overseeing AI agents.
3/ As AI agents come online, it's hard to see organizations needing as many people managers. Not because human teams will get bigger; I don't think this will happen. But because there will be fewer humans to manage overall.
The bottom line: A lot of people are trying to sell you courses and workshops on how to be ready for AI in your career. Most of this material is trash.
In my view, the most useful thing you can do to prepare yourself is to get more metrics-driven in your area of expertise.
Thanks for reading!
Kieran
I wrote down three of my tried-and-true prompts for team meetings that drive team connection and performance. No big budget required!
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