Boos, AI-washing, and ‘low-value human capital’: The psychological traps CEOs are falling into when they botch their AI messaging
· Fortune
Is there a right way for CEOs to communicate AI-related layoffs? We certainly know there’s a wrong way.
Standard Chartered CEO Bill Winters proved that last week when he said the London-based bank would replace “low-value human capital” with artificial intelligence. The dismissive language triggered outrage from the public, condemnation from unions, and questions from regulators about the extent of potential job cuts. Winters spent several days trying to clean up the mess he’d created, but his attempt at an apology came across to many as weak.
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Winters joins a long line of CEOs who just can’t get the messaging around AI right. They’re often too clinical or too apocalyptic; they come off as disingenuous and have been accused of “AI-washing” layoffs done for other reasons; or they’re so tone deaf about the public’s AI anxiety that they’ve been booed during commencement addresses.
Across the various foot-in-mouth episodes, CEOs are falling into a similar trap: They’re using boardroom language to discuss the very human experience of work and job losses, and failing to recognize the full distance their messages travel, explains Sandra Sucher, a professor of management practice at Harvard Business School who studies trust. “What happens with some of these CEO announcements is that they are addressing one audience but harming their relations with another,” she says.
When C-suite talk backfires
The very political job of leading a company requires an agile communication style and the ability to quickly tailor language and messaging to meet the moment at hand. And here’s where Winters made his first mistake, says Denise Rousseau, a professor of organizational behavior and public policy at Carnegie Mellon’s Tepper School of Business. “He’s talking with a kind of a C-suite language,” she tells Fortune. She heard Winters’ language—particularly the term “low-valued employees”—as a misreading of the room: “He’s talking to other CEOs, he’s talking to the marketplace; he’s not talking to his workers.”
Indeed, such language is not uncommon in the boardroom. “It makes sense to say, ‘I’m swapping this for that,’ and even to refer to the fact that some jobs require higher levels of skill and therefore are of higher and lower value to the corporation,” says Sucher. “It’s when you port that over to the public domain that you get the kind of reaction that he did.”
CEOs also seem to be gearing talk of AI-related layoffs to investors, seeking to prove that they too are embracing the technology and already reaping the productivity gains and cost savings it promises. Sometimes that strategy pays off. In fact, after Winters made his remarks, Standard Chartered’s shares rose in Hong Kong trading. But the longer-term fate of this framing is mixed: A recent analysis from CNBC found that just over half of firms that cited AI in layoffs have traded in the red since their announcements.
The human cost of dehumanizing language
Dehumanizing language can also be a psychological crutch that CEOs don’t realize they’re using. Sucher described the phenomenon of “moral disengagement”—an unconscious process in which our brains justify morally-problematic decisions while protecting our view that we are a good person. Framing a layoff as a matter of adjusting resources—versus stripping a person of their livelihood—can make that tough call easier to stomach.
Those most affected by flubs in AI-related layoff messaging are the employees who still work at a company. Such comments can breed a sense of job insecurity among survivors, and even create a toxic workplace culture, leading to tougher recruitment, more attrition, and employees who are totally checked out, Sucher says.
“That’s actually why the profitability goes down,” she says. “The big personal harm is for the people who immediately lose their jobs, but the bigger corporate harm is because of the disengagement of the people who remain behind.”
Good, careful, human-centric communication around AI-related layoffs or AI disruption can help retain the workers CEOs need to tackle the technological revolution that lies ahead. Buried in Winters’ comments last week was a fact employees may have been happy to hear: Standard Chartered has reskilled some workers who’d been displaced by a technology upgrade project in Hong Kong.
“Unlike a lot of other companies, [the bank] actually had a good story to tell,” Sucher says. But Winters’ “low-value” comment derailed the narrative. “All of a sudden he becomes The Guy Who Said That. The things I study are full of examples of becoming The Guy Who Said That, and it’s rarely a good thing.”
This story was originally featured on Fortune.com