AI in the Workforce: Great Equalizer or Great Destabilizer?

Artificial intelligence is reshaping the workplace at an unprecedented pace. While some employees are seizing its potential, others are struggling to keep up — or ignoring it altogether. This divide isn’t just about technology adoption; it’s influencing productivity, retention, engagement, and workforce well-being in ways that organizations can no longer afford to overlook.

The 2025 Betterworks State of Performance Enablement report reveals that the impact of AI in the workforce is uneven. Senior leaders and other AI-savvy employees are gaining significant advantages, while many individual contributors feel left behind — unaware or even resistant to AI’s role in their work. Uneven adoption across the workforce and lack of a structured approach to using AI on the job are leading to discrepancies in employee sentiment that have tangible effects on everything from productivity and retention to upskilling and innovation. Companies now face a choice that requires a thoughtful response: to use AI as a tool to empower all employees or risk widening a talent gap that could destabilize the workforce.

The insights from this year’s report offer a roadmap for businesses looking to harness AI equitably as a force for productivity and innovation, rather than an agent of disruption that causes uncertainty. Explore some of the key challenges and opportunities AI presents for the workforce.

The AI divide: optimism, anxiety, and apathy

One of the most striking findings in this year’s report is the stark divide between AI power users and everyone else. Employees who regularly use AI— particularly senior leaders and managers — are overwhelmingly optimistic about its potential. They report higher productivity, increased efficiency, better quality, creativity, and accuracy in their work, and greater alignment between their work and business goals.

But that’s only half the story. A significant portion of the workforce remains disengaged from AI, either due to lack of awareness, lack of training, or outright skepticism. One-third of employees simply don’t understand how AI can help them in their roles, while approximately one-quarter don’t know how to use AI or aren’t trained in how to use it properly for their roles. 

But there is a “dark side” of AI, even for power users. While many see the opportunity that AI offers them in their careers, they also worry about job security, especially when restructuring or layoffs occur.

This paradox—where AI familiarity leads to both enthusiasm and heightened anxiety — is creating tension in the workforce. Employees who see AI’s potential also recognize its power to reshape job expectations, workflows, and even employment security: 49% of employees who are enthusiastic about AI also worry that it will replace them. Without a clear strategy to address these concerns, organizations risk losing trust and engagement from their workforce.

AI’s untapped potential: why companies still lag

AI profoundly changes the way people work. Yet, despite its rapid rise, many organizations are not leveraging its full capabilities. The report reveals that AI is primarily used for routine, operational tasks — such as drafting business communications, analyzing data, and transcribing documents. However, its transformative potential for strategic and creative applications remains largely untapped. Our survey found that 93% of employees who use AI daily believe it has unexplored potential for their roles.

The reason? A lack of structured AI adoption strategies, insufficient training, and concerns over job displacement. While the leaders of organizations tend to be AI power users, managers and, particularly, individual contributors use AI less frequently or sometimes not at all. Without equitable access to relevant AI tools, AI upskilling and training, and clear communication from leadership about the role of AI in an organization, underutilization and uneven adoption will persist. An uneven playing field will limit innovation and slow overall business growth.

“As AI rapidly reshapes the workplace, leaders have a unique opportunity to move beyond experimentation and low-hanging fruit using AI for routine tasks, and drive intentional AI adoption at all levels that will further business strategy and competitiveness,” said Doug Dennerline, CEO of Betterworks. “The key is democratizing AI skills and fostering career mobility for all — creating an environment where innovation thrives.”

The missed opportunity is clear: AI isn’t just a tool for automation — it’s a catalyst for strategic decision-making, workforce planning, and skills development. Companies that fail to embed AI into core business processes and talent strategies will struggle to compete in an AI-driven economy.

Retention, productivity, and engagement risks are real

The uneven adoption of AI is having direct consequences on employee engagement and retention. The most AI-savvy employees — those who actively integrate AI into their work — are also the most likely to seek new opportunities because they have highly marketable skills, likely want to work for AI forward-thinking companies, and are concerned about job obsolescence. Meanwhile, less engaged employees who use AI infrequently or not at all are more likely to stay in their current roles, often stagnating in productivity and growth. This year’s report reveals that 78% of high performers are actively seeking new jobs, while 65% of less-engaged employees plan to stay.

While most AI-power users are highly concerned about updating their skills, employees who use AI infrequently express far less concern about keeping their skills fresh. This talent imbalance poses a major risk: Companies could lose their most innovative, high-performing employees while retaining those who are less engaged and more resistant to change — or perhaps unaware of the need to evolve their skills. Organizations that don’t create clear pathways for AI learning, adoption, and career growth may find themselves with a workforce that lacks the necessary skills to remain competitive.

Additionally, many employees feel they are sitting on the sidelines when it comes to AI-driven innovation. If companies don’t make AI accessible and valuable for all employees, they risk deepening divisions between high-performing, AI-savvy talent and those who feel they lack the organizational direction, tools, and training.

Rethinking the manager’s role with AI

Managers are the linchpin of AI adoption and workforce transformation: They can convey their organization’s strategic goals, role model AI use and benefits, and encourage and incentivize team members to use AI to optimize their work. Yet, many managers feel overburdened by the increasing complexity of their roles and declining organizational support. Gartner’s Top 5 HR Trends and Priorities for 2025 confirmed that 75% of HR leaders report that managers feel overwhelmed by their expanding responsibilities. AI offers a powerful solution, enabling managers to automate routine tasks, provide more timely feedback, and focus on strategic coaching and development.

Our survey shows that employees increasingly trust AI to identify skill gaps and internal career development opportunities while they still rely on managers to provide the human connection and guidance needed to grow. Two-thirds or more trust AI to identify skills they need to develop while the vast majority want AI to assist in identifying career growth opportunities and mapping their career paths.

The marriage of AI for skills identification and career advancement with the human ability to provide finely-tuned coaching and build relationships may be the ideal path for empowering both managers and employees. Employees will be more likely to stay and grow in their roles and managers will spend less time on administrative tasks and more time empowering their teams.

By positioning AI as a tool that augments managerial effectiveness rather than replacing human leadership, companies can create a culture where employees feel supported, valued, and prepared for the future.

AI is improving performance management

AI can play a pivotal role in performance management and represents one of the most promising areas for AI-driven transformation. Traditional performance processes often feel incomplete, inconsistent, or frustrating — especially for individual contributors. AI can bridge these gaps by bringing greater accuracy, objectivity, and personalization to performance reviews, goal-setting, and feedback.

This year’s report reveals that employees and managers in AI-enhanced performance management environments report higher satisfaction, improved goal alignment, and a greater sense of fairness. Nine in 10 managers and employers who have AI integrated into their performance management processes report high satisfaction. AI can help ensure continuous feedback loops, track progress on key initiatives, and provide data-driven insights that help employees and managers make informed decisions.

However, organizations must be intentional about integrating AI into performance management. Employees are comfortable with AI assisting in evaluations, but they still want human oversight. Finding the right balance will be key to building a high-performing, AI-powered workforce.

89% of employees and managers with AI tools for performance management report high satisfaction vs. 49% of employees who feel positive about their current performance management processes.

Closing the AI gap at work

AI is not just a tool — it’s a strategic imperative for workforce transformation. But organizations must take deliberate action to ensure that AI serves as an equalizer rather than a destabilizer.

Businesses can unlock AI’s full potential by:

• Prioritizing AI training and literacy for all employees.
• Empowering managers as AI champions who model effective AI use and support employee growth.
• Leveraging AI for higher-order creative and strategic activities, not just as an automation tool
• Advancing skill identification and development, and promoting internal mobility through the combination of AI and human intelligence. 
• Usng AI to enhance comprehensiveness, fairness, transparency, and accuracy in performance management.

Companies that take a proactive, people-first approach to AI adoption will build more agile, future-ready workforces while retaining and attracting top talent.

Download the full 2025 State of Performance Enablement report from Betterworks’ digital version to explore the data and insights shaping the future of AI in the workplace.