The AI layoff trap: How cutting headcount could backfire on corporate America

Are layoffs really the answer to increased AI adoption? That question has been top of mind for most people leaders I’ve spoken to recently.

“The thing that keeps me up at night is this notion of the immediacy, of you can just use AI, get efficiencies, and release talent,” one senior HR executive said at a dinner I cohosted with IBM earlier this month in New York.

This is certainly the ethos many companies have adopted. Just last week, Snap cited rapid AI advancements as part of its rationale to eliminate some 1,000 jobs, joining companies like Atlassian and Block that have made similar moves.

The HR leaders at that dinner expressed unease. Several others shared stories of recent AI-related layoffs, and one said there was “no doubt” the decision had damaged company culture. Another Fortune 500 CHRO was even more blunt: “We didn’t have a lot of strategic intent when [our] layoffs were done.”

And therein lies the problem: not AI itself, but the lack of a coherent talent strategy. At a conference last week, I spoke with Niki Armstrong, chief administrative and legal officer of data storage company Everpure, and Jolen Anderson, BetterUp’s chief people and community officer. Both argued that companies should think less about cuts and instead focus on redeployment. 

AI can’t replace human judgement, Armstrong said, and companies that use it as a cover for massive layoffs are being “shortsighted.”

Anderson advises HR leaders to first determine which tasks can be automated by AI, then think more critically about the skills their employees already have—and how those capabilities can be redeployed toward more uniquely human tasks. For example, she recently delegated candidate interview scheduling to AI and moved the employees who managed that work into what she describes as a a “candidate experience-focused” role. Now, they spend their time partnering with hiring managers on more in-depth, post-interview feedback and sourcing additional high-quality candidates. 

“This is not an expense game, it’s a value game,” Anderson cautioned. “This race to the bottom line is just not sustainable.”

Kristin Stoller
Editorial Director, Fortune Live Media
kristin.stoller@fortune.com

Around the Table

A round-up of the most important HR headlines.

The office bar may be back in style, as employers hope to boost employee morale. Financial Times

Sophisticated scammers are stealing recruiters’ identities to trick job hunters out of money or data. Wall Street Journal

Parents are paying more than $30,000 for career coaches promising to help their kids land a job. Bloomberg

Watercooler

Everything you need to know from Fortune.

Attendance reward. A political group in Germany has proposed instituting a bonus for workers who take five or fewer sick days. —Orianna Rosa Royle

Broken structures. Boards are expecting more rapid transformations, but most company org charts are stuck in the past. —Nick Lichtenberg

Skills solution. This CEO is building an AI-focused bachelor degree program—and it will cost only $10,000 to attend. —Preston Fore