CEOs tout layoffs as a path to productivity, yet many are simply reallocating budgets from labor to AI. As companies invest heavily in automation, fears among employees grow, complicating the transition. The discussion emphasizes the need for strategic organizational design to truly enhance productivity, rather than relying on individual employee efficiency. Recent economic data showcases a broader slowdown, making these layoffs both a calculated risk and a safety net. Navigating this new landscape requires thoughtful HR strategies to maintain company culture.
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insights INSIGHT
CEOs Proud of Layoffs
CEOs publicly express pride in layoffs as a signal of productivity and profitability to Wall Street.
HR departments are deeply involved, sometimes losing staff themselves, as workforce reductions continue.
insights INSIGHT
Layoffs Reflect Economy and AI
Layoffs are driven not only by AI automation but also as a hedge against an economic slowdown.
Many industries besides tech are experiencing reduced hiring and economic deceleration.
volunteer_activism ADVICE
Rethink Productivity Systemically
Improve productivity by re-engineering business processes, teams, and roles holistically.
Avoid asking employees to individually figure out productivity gains without systemic change.
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This week the WSJ highlighted the latest trends. CEOs proudly announcing layoffs and hiring freezes, only to see their stock price go up in celebration. The AI Superworker era has arrived, and companies are now plowing ahead with automation-induced workforce reductions.
All this is not as simple as it sounds. AI budgets are skyrocketing (EY survey shows that 21% of large companies are spending more than $10M already on AI agents), well before the productivity benefits have occurred. So while many great AI use-cases exist, a lot of the headcount cuts are just budget-reallocation from labor to capital, with hopes for productivity to come.
I have no concerns that massive Superworker productivity is coming, but the process is spotty, messy, and uneven. So in this podcast I discuss our newest research on AI transformation and give you some perspectives on all these announcements. A few nuggets to think about:
The economy is slowing, so most headcount freezes are not only AI automation bets, they’re also insurance against a slowdown
AI strategies that ask “employees to figure out how to become more productive” have some but limited impact, while strategic projects are working better
The HR focus on “task analysis” is interesting and useful, but not the optimum approach
Companies are starting to get real about AI spending, so the “blank checkbook” to buy enterprise AI is slowing
Companies that lay people off have plenty of other issues to consider, including brand, culture, and long term growth.
The Josh Bersin Company