Artificial intelligence (AI) is creating a new divide in the UK workplace as employees say it makes them feel less recognised and valued, even as employers see it as a tool for progress.
A nationwide study of 4,000 employees and 1,000 employers found that 69 percent of organisations believe AI is improving the employee experience, while 47 percent think it has no effect on how valued people feel. Yet only 38 percent of employees said AI tools make them feel more valued, 11 percent said they feel less valued, and 38 percent reported that automation has reduced their sense of personal accomplishment.
The findings are part of a Perkonomics Report by rewards platform Perkbox that explores how technology, recognition and wellbeing interact at work. It reveals that 42 percent of employees feel undervalued, 60 percent say this has harmed their mental health and one in three plan to look for a new job within the next year. Among those who already feel undervalued, more than half (54 percent) intend to leave their employer in 2026.
AI’s Role in the Recognition Gap
The research suggests that many employees experience automation as a loss of visibility and credit for their contributions. While employers view AI as a way to free up time for creative or strategic work, workers often report feeling that their efforts are less recognised when systems take over routine tasks.
Perkbox Vice President of Operations Pippa Van Praagh said AI could be an asset when introduced with intention, but it risked worsening the undervaluation problem if used without recognition frameworks.
“AI can be a great tool to automate routine tasks and free up time for more impactful contributions,” she said. “However, while employers see technology as a route to progress, many employees experience it as a loss of visibility and personal credit. Without a deliberate effort to connect its use to employee recognition, it risks making the undervaluation issue even worse.”
The report also found that employers consistently overestimate how valued their staff feel. On average, organisations rated employee sentiment at 7.4 out of 10, while employees themselves gave 6.75. This perception gap suggests that many companies believe they are doing well on recognition when the workforce feels otherwise.
The Mental Health Impact of Feeling Undervalued
The sense of being overlooked is taking a toll on employee wellbeing. Sixty percent of workers who feel undervalued said it has negatively affected their mental health, contributing to rising levels of stress and disengagement across industries.
Experts say this points to a broader cultural issue in the modern workplace. Employees increasingly associate recognition and visibility with meaning and purpose, and when that sense of contribution is undermined, mental health and motivation suffer. AI, if poorly implemented, risks accelerating this trend by shifting attention away from human effort.
Doug Butler, chief executive officer at Perkbox, said that recognition and communication were as important as technology itself in shaping the future of work.
“AI adoption is accelerating, but the human element must evolve with it,” he said. “Recognition and communication are as vital to progress as the technology itself. Technology alone won’t fix how people feel. It’s how employers implement it, with empathy, transparency and a focus on recognition, that will determine whether AI becomes a tool for value or a trigger for disengagement.”
How Employers Can Maintain Wellbeing in the Age of AI
Workplace wellbeing professionals say employers must approach AI not only as a productivity initiative but as a cultural shift that affects how people connect with their work. There are several ways organisations can prevent technology from eroding employee wellbeing:
- Link automation to visibility.
When AI takes over repetitive tasks, managers should ensure employees still see how their contributions matter to business outcomes. Recognition needs to remain personal and consistent, even if the nature of work changes. - Keep communication transparent.
Staff should understand why AI is being introduced, how it changes their role and what opportunities exist for growth or learning. Clear dialogue helps reduce anxiety and builds trust. - Invest in wellbeing alongside technology.
Recognition programmes, mental health resources and tailored benefits can counteract feelings of undervaluation. The report found that 79 percent of employees would feel more valued if their benefits were better suited to their needs. - Encourage human-led leadership.
Managers play a central role in reinforcing value through regular feedback, inclusion and support. Training leaders to handle change empathetically ensures AI strengthens, rather than weakens, team morale.
The Human Element of Progress
The findings reflect a growing consensus among HR and wellbeing experts: technology cannot replace the emotional drivers of motivation, meaning and connection at work. AI can increase efficiency, but without human oversight and recognition, it risks creating an invisible workforce that’s productive but disconnected.
For organisations navigating digital transformation, the challenge is to balance innovation with empathy. By embedding wellbeing, recognition and open communication into AI integration, employers can turn technology into a catalyst for engagement rather than a cause of disconnection.
The report concludes that the future of work will depend not on how advanced AI becomes, but on how thoughtfully it is applied to value the people behind it.