AI and the Future of Public-Sector Leadership in City of Helsinki

Abstract

The purpose of this thesis is to examine how artificial intelligence (AI) is changing future leadership in the public sector. The study focuses on the City of Helsinki as an organization which is the largest employer in whole Finland. The work was carried out in collaboration with the city’s central administration, which will benefit from the results by receiving practical guidance for developing leadership and for the responsible adoption of AI. The aim is to understand how AI reshapes the work of managers and leaders, what new competencies are required and how leaders can ensure that technological development supports ethical, transparent and resident-centered public services. The thesis includes a development task: to produce AI guidelines for the future managers and leaders of the City of Helsinki. The purpose of these guidelines is to strengthen leadership capability by helping managers address the ethical, strategic and operational issues involved in adopting AI, while maintaining public trust and accountability. In this way, the development task and the study advance this broader objective.

The thesis’s theoretical foundation brings together perspectives related to digital transformation, the societal challenges of digitalization and the development of leadership competencies in the public sector. It is grounded in international guidance on AI ethics and regulation, such as the OECD AI Principles, the EU Artificial Intelligence Act (AI Act) and IEEE guidelines. In addition, it examines the capabilities future leaders will need to make use of AI in working life.

The master thesis was conducted as a qualitative case study using semi-structured interviews with managers and leaders from the City of Helsinki’s Communications and Economic Development departments. The data were analyzed using thematic analysis to identify themes, opportunities and challenges related to AI adoption and to connect the observations to the theoretical framework.

The results show that AI adoption in the City of Helsinki is still at an early stage and current use focuses on productivity tools that support tasks such as translation, summarization and drafting text. Managers view AI as an opportunity to streamline decision-making, improve data-driven management and enhance accessibility. At the same time, they recognize significant challenges related to ethics, data protection, skills development and regulatory uncertainties. Leaders emphasize the importance of human judgment, critical thinking and cross-departmental collaboration to ensure the responsible use of AI. The study concludes that future public-sector leadership requires combining technological understanding with ethical deliberation and adaptive, change-oriented leadership. The framework developed in the thesis provides a structured model that supports this transition and advances the City of Helsinki’s aim to build a responsible, human-centered and innovative public administration.