The frameworks and safeguards that make boards feel AI risk is handled usually leave out the one defense that actually holds the line: employees. Social scientist Caterina Bulgarella explains why the uncertainty and job insecurity AI provokes erode the very resources that keep people vigilant and honest, making an ethically engaged workforce a strategic priority.
The job apocalypse many predicted may be postponed, but AI is on pace to reshape both work and the workplace. Call it co-intelligence, hybrid execution, integration or human-in-the-loop, the use of machines to replace, complement or, at best, supplement human performance is a vision that merely lacks scale. The only fuzzy point? Employees’ role in it.
Amid shiny promises and alarmed safety calls, AI is already bringing change, not only to how people work but also to the values they share — each new prompt a rewrite of the human code we used to hold. The urgency of disruptive technology may shape the business agenda, but it doesn’t erase the need for alignment, not only between AI and what defines humanity but between humans and their moral compass. Even if senior leaders defer the question of what principles their business stands for, a business without an ethical core is only as capable as an algorithm generating output it cannot understand.
Philosophy aside, it’s AI’s behavior that demands a full-court risk-and-ethics posture. In equal parts dangerously wondrous and disruptive, “artificial” intelligence hallucinates, fabricates, cheats, breaks rules and gets out of control. Putting in place governance frameworks, implementing technological safeguards, even waiting for machines to control machines may give boards and organizations the impression that risk is under control. But without employees acting as the first line of defense, businesses’ exposure remains too high.
If anything, in the AI era, creating an ethically engaged workforce is not only desirable but a top strategic priority. For without people discerning and anticipating the ripple effects of today’s change, no business moat can fill the gap of what we don’t yet know.
So, what does it take to build ethical engagement?
At a time of weak shared values, eroding trust, dwindling attention and scarce empathy, organizations must start by managing the emotional blind spots, cognitive risks and cultural gaps weighing on employees.
Mitigating the emotional toll of change
Three factors keep depleting people’s emotional resources: uncertainty, job insecurity and fear of irrelevancy. Technological change is unfolding against the backdrop of broader geopolitical, economic and societal shifts. This means that, while AI is forcing people to constantly second-guess changes to their jobs and work environment, macro uncertainty is fueling a state of generalized anxiety. Among Gen Z, the newest entrants to the workforce, the toll couldn’t be higher — low well-being combined with increasingly pessimistic career expectations.
Uncertainty doesn’t simply consume employees’ emotional resources; it also reduces their ability to remain vigilant, discerning and willing to do the right thing. Studies show that uncertainty shifts attention to the short-term and heightens self-concern, two crippling conditions that increase the risk of unethical behavior.
Even more dangerously, job insecurity creates emotional exhaustion, a form of depletion that, both directly and indirectly, boosts the risk of misconduct. On a different level, fear of becoming unemployed and/or potentially unemployable triggers not only shame but a genuine sense of unfairness, making it easier for employees to rationalize unethical conduct.
When job insecurity is fueled by fear of irrelevancy — such as the loss of career prospects or the need for a career change — the perception of unfairness grows even deeper. Take, for example, reports that Gen Z employees have started sabotaging AI in the workplace. These statistics are not only a mirror of the negative emotions spreading across the workforce; they also document a willingness to break rules and norms at odds with organizations’ need for ethical engagement.
Though companies cannot control external sources of uncertainty, they have a plethora of tools to manage the emotional toll of change. They can use dialogue to build a climate of transparency and honesty. They can choose to stay away from promises they are unable to deliver. They can invest in behavioral integrity — showcasing how they walk the walk. They can structure the employee experience to help people navigate and manage change, from regular check-ins to effective feedback channels and design initiatives. Finally, they can help employees develop and practice new skills, transition into new roles and feel valued for their problem-solving and initiative-taking.
These actions may not fully heal the negative consequences of change, but they can mitigate them, thereby rebuilding emotional resources. More importantly, they turn the employer from antagonist into ally, helping employees form a genuine sense of attachment and ownership toward the organization.
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Read moreDetailsPreparing for AI’s cognitive risks
As AI keeps scaling across business, the cognitive risks of continued and sustained AI use present organizations with both an ethical and talent dilemma. From an ethical standpoint, the long-term question is whether business should be held responsible for AI’s potentially harmful effects on employees. As of today, known risks include hallucinations, cognitive offloading and linguistic homogeneity. Worse, as AI use becomes further entrenched in the workplace and scientific research advances, we may discover that its cognitive toll is far greater than currently understood.
From a talent standpoint, AI’s negative cognitive effects not only represent a threat to business competitiveness but also run at odds with the goal of building workforce capacity, including ethical engagement.
While the impact of hallucinating and cognitive offloading on ethical awareness and moral engagement is intuitive, linguistic and stylistic homogeneity pose risks as well. On the one hand, they create the appearance of rule-abiding conduct — irrespective of actual conduct. On the other, they may numb attention to language and behavior, two critical indicators of conduct risk.
Unlike other challenges, organizations do not yet have a toolkit to address AI’s cognitive risks. What’s more, the solutions that have been floated so far not only fail to mitigate the threat but raise additional ethical questions. Take, for example, the suggestion that demonstrating intellectual curiosity is a precondition for surviving AI’s cognitive toll, or the proposition that some jobs should be reserved for humans.
While both approaches assume that selectively preserving human value is a good enough solution, neither one is a tested mitigation strategy for cognitive risk. Nor does either proposition address the fact that continuing to expose entire swaths of the workforce to AI’s potentially harmful effects creates talent constraints, opens the door to new business risks and raises difficult ethical questions, starting with who should be in the cognitively preserved group — and why.
So, how can organizations manage AI’s cognitive risks at scale while entrenching AI use deep and wide into their operations? Instead of looking merely at workflows, companies should focus on the cognitive processes through which people engage with, consume and use information, problem-solve, experience authorship, learn and develop. Redesigning these aspects of work may not only prove the more effective way to put cognitive safeguards in place, but it may be the only way to ensure ethical AI adoption.
Re-writing the psychological contract
In introducing a technology that reshapes nearly everything, businesses must do more than tinker at the edges of the old psychological contract. Redesigning organizational processes and workflows is important, but it is not sufficient. What’s changing today is not only how we work but — more fundamentally — the expectations around work.
Prognostications about who will and will not survive professionally in the age of AI are mere distractions and part of a faulty calculation. Before making any transfer to technology, organizations should first figure out the value of today’s human moat, whether and how they want to invest in human capital and what type of relationship they want to build with employees. In short, they should re-write the old psychological contract well ahead of the awaited job apocalypse.
This is not a purely ethical or philosophical stance. As firms may increasingly discover, unlike past change cycles, AI adoption is poised to unleash a level of resistance proportional to its disruption, with costs for both business operations and corporate culture. Consider the need for employee engagement, including ethical engagement, and the implications of failing to reframe the psychological contract first become immediately clear — from escalating tension between self and organizational interests to an increased risk of corporate failure.
Indeed, for today’s organization, the question of whether the business can survive and thrive is deeply intertwined with its workforce, whether senior leaders want to acknowledge it or not.
Caterina Bulgarella is co-founder and managing director of Be Thread, a platform of advisory services and apps to enable the future of ethical work. She’s helped businesses address some of today’s most fundamental challenges: engaging employees, building work processes on the foundations of trust and purpose; developing a strong ethical culture; creating leadership capacities for an era of fast change and deep complexity; and nurturing inclusive belonging. A social scientist with deep expertise in culture measurement and the design of data-driven organizational practices, Bulgarella has contributed to organizations’ understanding of conduct risk through theoretical and applied research interventions. She holds a Ph.D. in organizational psychology from New York University (NYU). She is a leadership strategy fellow at the American College’s Maguire Center for Ethics. She also teaches leadership strategy in the I/O psychology master program at NYU. 
