Employee Perceptions, Psychological Well-Being, and the Automation-Augmentation Paradox in the Age of Generative AI – A Qualitative Study

Automation boosts productivity but may endanger professional identity and well-being when generative and agentic AI enter knowledge jobs quickly. Human elements of AI adoption are understudied, especially qualitative methodologies that capture lived experiences. Productivity improvements are clearly established. Explore knowledge workers' emotional and psychological reactions to AI-driven developments and how they handle the automation-augmentation conundrum. This study contrasts technology-focused research with employee psychological adaption. Semi-structured interviews with 25 knowledge workers in financial services, creative industries, and professional services. Data evaluated using reflexive thematic analysis to discover perceptual, affective, and coping tendencies. Ambivalent acceptance – excitement and anxiety; identity friction – perceived deskilling versus augmented creativity; coping through re-crafting – proactive role redesign; and organisational buffers – psychological safety and transparent communication mitigate negative outcomes. Employee psychological adaptation to AI is modelled in this research, expanding the automation-augmentation conundrum with unique coping mechanisms and practical suggestions for human-centered AI governance. Organisational support, effective communication, and identity rebuilding are crucial to optimal adaption results.