CEOs using AI avatars and mass layoffs risk eroding trust. Learn how miscommunicated AI adoption strategies can damage employee and customer relationships.
Recent headlines have been full of companies laying off workers as they introduce new AI tools. The layoffs align with many expert predictions about how AI will disrupt the workforce, eliminating some jobs even as it creates new ones. Still, few expected CEOs to be among the first to start phasing themselves out.
Yet that’s essentially what happened in recent weeks when the CEOs of Zoom and Klarna sent AI avatars—essentially, deepfakes versions of themselves—to lead major video calls, including quarterly earnings presentations. The response was swift and overwhelmingly negative. Employees, investors, and the public criticized the move as cold, performative, and tone-deaf. The backlash made one painfully clear: when leaders outsource their presence, they risk losing the trust that holds their companies together.
How to alienate the entire workforce
These high-profile AI missteps aren’t isolated incidents – they reflect a broader failure in how some companies roll out their AI strategies. When leadership treats AI adoption as purely a cost-cutting measure and overlooks the human impact, it erodes trust from the inside out.
For example, Duolingo recently came under heavy fire after the CEO announced the company would be going “AI-first” by phasing out many of its contractors in favor of bots, and that AI could replace nearly every aspect of what teachers do with the exception of childcare. Klarna has experienced similar backlash both internally and externally between major AI-driven layoffs and the AI avatar earnings call debacle.
These incidents reveal a deeper issue: a wrongly communicated AI adoption strategy can seriously damage employee and customer trust. Almost half of CEOs say their employees range from hesitant to outright hostile to AI adoption in the workplace. When companies use AI to replace human roles without preserving human relationships, they deepen that hostility by sending a clear message that people are optional.
That’s why AI avatars in meetings provoke such a visceral reaction. They strip leadership of its most important quality: human presence. Avatars can’t meet someone’s eyes, show genuine emotion, or build trust in the room. The communication feels scripted, hollow, and easy to ignore. It shows that employers value efficiency more than human connection, which damages trust.
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To worsen the trust problem, there’s also no way to know whether what’s being communicated is genuinely in the “voice” of the CEO, or whether it’s a hallucination or even a fraudulent message. If that seems far-fetched, one has only to look at recent examples of executives’ voices being spoofed to steal large amounts of money from companies to understand the concern. This erosion of confidence in communication only adds fuel to a longstanding issue. Eight years ago, 60 percent of employees already said they didn’t trust CEOs. By 2023, that number had increased to 79 percent and continues to grow.
The more leaders appear to hide behind automation, the less credible they seem, and the more isolated and suspicious their teams start to feel. And yet, the irony is that more than 9 in 10 business leaders say employee trust directly affects company performance. It improves morale, boosts retention, and even drives revenue. So when CEOs focus solely on efficiency and start handing off human communication to machines, they’re undermining the very outcomes they say they care about most.
When to use AI
Fortunately, using AI doesn’t have to come at the expense of trust. In fact, when applied thoughtfully, AI can free up leaders to spend more time doing what only humans can do – listening, connecting, and showing up when it matters most.
That starts with recognizing the difference between transactional and relational communication. Transactional communication is task-focused – things like scheduling meetings, logging support tickets, answering FAQs, or summarizing notes. These exchanges are mostly about efficiency, and AI is well-suited to handle them.
Relational communication is something else entirely. It includes performance reviews, company-wide updates, strategy rollouts, layoffs, or even simple one-on-one conversations. These moments aren’t just about information – they’re about trust. They require empathy, emotional intelligence, and presence, none of which AI can convincingly offer.
When leaders treat relational communication as if it were transactional, they risk weakening the employee-employer relationship. And if that continues, it’s not just trust that suffers – it’s engagement, productivity, and the bottom line.
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It’s time for CEOs to reconnect
Trust isn’t built through avatars. It’s built by showing up, and no AI can do that for you. In practice, AI will only magnify what’s already there. If your company values efficiency more than connection, AI will make that obvious fast. But if you use AI intentionally by automating the background tasks and showing up for the human ones, you can ensure speed and productivity as well as sincerity and presence.
