The psychology of work in the AI era

The changing times we live in lead to a potentially disruptive, volatile, and unpredictable work environment. Jobs have undergone a paradigm shift, and the question it leaves humans with is how organisations and leaders will cope.

People operate under the assumption that change is fundamentally technological and that it drives industrial productivity. Work disruption has, however, caused humans to realise that it is not just technological but highly rooted in psychology. From an Applied Behavioural Psychology perspective, we are witnessing a profound shift in how individuals experience work, identity, and meaning.

During COVID-19, the sudden transition to working from home prompted this realisation. Organisations, however, focus on continuity while employees or individuals grapple with psychological issues that are far more profound. The loss of social reinforcement shows that humans, as social animals, perform far better in groups. Workplaces, hence, are known not just for productivity but for microinteractions, feedback loops, and social cues that shape motivation and well-being. When social interactions were absent, it left an important psychological scaffold. Humans learn through modelling, and when social interactions are limited, the scope for learning diminishes significantly. Remote work has resulted in an enhanced sense of psychological isolation, leading to increased levels of anxiety.

Just as humans began adapting, the next disruption arrived—Artificial Intelligence.

From a behavioural lens, AI is creating a different kind of disruption. A seeming lack of cognitive load coupled with rising boredom and anxiety. AI systems are taking over not just repetitive work, but increasingly cognitive tasks. While this boosts productivity, it also reduces the sense of agency individuals derive from effortful work. As one hi-tech worker told me recently, he watches AI work! In human history, this is an unprecedented moment.

As Mihaly Csikszentmihalyi observed, “Growth happens at the edge of our limits, not at our comfort zones.”

When AI removes that stretch, work risks becoming easier, but less meaningful, faster but less engaging, less efficient, and psychologically hollow. This turns motivation theory on its head and challenges us to arrive at new solutions for the world of work. Peak life experiences are often achieved not in states of relaxation, but when individuals extend their physical or mental capacities to their limits.

It is also well known that AI threatens jobs, and many individuals face job loss. Humans are wired to respond strongly to uncertainty and loss. As Daniel Kahneman noted, "Individuals experience the psychological or emotional impact of losses more intensely than that of equivalent gains.”

Even the possibility of job displacement can trigger Anxiety and reduced innovation.  So we now face a paradox: AI is enhancing productivity but potentially eroding intrinsic motivation and psychological safety. Driven by big bucks, psychological safety was a casualty. It now faces almost certain demise.

This shift is strongly reinforced by empirical evidence. Journal of Applied Psychology research highlight that workplace support is the strongest predictor of engagement. Moreover, Nature Human Behaviour sheds light on how social isolation increases anxiety. This rose by 30% during the pandemic. Further, observational learning—central to human development—declines by over 20% in remote settings.

AI usage and its rising popularity create a different paradox: 64% of employees report reduced cognitive effort with AI tools. More than 40% report increased disengagement, which aligns with Csikszentmihalyi’s concept of flow, in which optimal performance emerges from the balance between challenge and skill. When challenge diminishes, so does meaning.

From an Applied Behavioural Psychology standpoint, the challenge for organisations is clear:

It calls for the redesign of work along with workflows. Leaders must intentionally reintroduce challenge and mastery. Create social connection loops and reinforce purpose and identity at work.