BEYOND THE BLACK BOX: AI PERFORMANCE MANAGEMENT AND ITS CONSEQUENCES FOR EMPLOYEE MOTIVATION AND ENGAGEMENT IN THE IT SECTOR

The integration of AI into HR, particularly for performance management, is shifting from traditional, subjective appraisals to a data-driven approach. While this offers benets like objectivity and efciency, its application in the IT sector raises concerns about employee well-being. This paper argues that the "black box" nature of AI systems, along with their potential for bias and dehumanizing effects, can harm intrinsic motivation and engagement among a workforce that values autonomy and purpose. By reviewing literature on Self-Determination Theory and algorithmic management, the paper identies a gap in understanding the psychological impact of these systems. It concludes that for AI to be effective and sustainable in performance management, organizations must move beyond a purely metrics-based approach. The systems should be transparent, designed to support human judgment, and actively cater to the psychological needs of a motivated and engaged IT workforce.