Why CEOs are using AI to scare workers

Axios

5 hours ago

Chief executives are giving employees an AI fright — warning them the new technology could make many workers obsolete, while at the same time urging them to start using it right away.
Why it matters: That's a scary and mixed message, and fear is generally considered to have a bad track record as a management technique. At the extremes, managers could actually wind up inhibiting workers from adapting to AI.
Catch up quick: In a post earlier this week, Amazon CEO Andy Jassy offered his thoughts on generative AI. In paragraph 15, he gets to the scary bit:
The transformation will likely" reduce our total corporate workforce."
Jassy is echoing the message of many other leaders. JPMorgan's consumer chief recently told investors AI would allow for a 10% headcount reduction. Other companies have already blamed AI for layoffs.
Meanwhile, there's a constant barrage of surveys and dark warnings about AI taking jobs.
Zoom out: Here are a few explanations for the wave of hard-nosed AI messaging:
🙏 Genuine belief: Executives are concerned about AI's impact. They believe employees aren't taking it seriously enough, says Brian Elliott, a leadership consultant.
Some lean toward "a more balanced message," he says. They suggest they'll be slowing or stopping hiring, while imploring workers to adapt.
Shopify CEO Toby Lutke did this in an email to employees. Rather than threaten layoffs, he says using AI is now a "baseline expectation" at the company. Before any new hiring, managers would have to demonstrate that AI couldn't fill the role.
Lutke ultimately posted this internal message publicly.
📋 Setting expectations: It's a way to make chief executives look more transparent, and gives them cover to conduct future layoffs without shocking employees, says Jeffrey Sonnenfeld, a professor at Yale School of Management.
All this talk has an "inoculation effect," he says. "A warning with an anticipatory alert that preempts later trauma going viral."
📈Appealing to investors: The tough talk is for Wall Street, a signal that a company is on trend. (It doesn't hurt that investors tend to like layoffs.)
📖 Talking their book: AI companies, and the firms making massive investments in the tech, have a story to sell about how valuable it is.
"Some of the loudest voices are the AI arms merchants," Elliott points out.
They need to free up revenue to pay astronomical sums for AI power and talent.
Friction point: Managing through fear doesn't usually work, decades of research has shown.
Scaring employees could inspire them to action. But there are "toxic effects over the long run," as Wharton professor Andrew Carton explained in a post a few years ago.
It can stifle creativity, inhibit collaboration and lead to burnout, he said.