In the media and our AI leadership community, I see continued dual sentiments regarding AI. 

On one hand, it promises higher productivity, new business opportunities, and even joy (see our AI statistics here). On the other, it raises concerns about job security, ethics, and shifts in how we work at speeds we can’t keep up with. 

Recent high-profile layoffs by companies like Intuit and UKG underscore the complexity of AI's impact on employment. 

Are these layoffs a sign that AI is causing widespread job loss, or is AI fundamentally changing what is expected of employees? Likely both, but different from how you might expect.

Let’s dive in.

The first major AI layoffs: Intuit and UGK

We’ve seen AI-driven “opportunities to reduce headcount,” like Klarna’s AI layoffs and IBM’s plans to replace 8,000 people, but this week’s news goes further than that.

As you’ll likely have seen, Intuit recently laid off 1,800 employees, or 10% of its workforce, as part of a strategic realignment towards AI. 

The company's CEO, Sasan Goodarzi, emphasized that the layoffs are not about cutting costs but reallocating resources towards AI and data investment. 

This move involves hiring 1,800 new employees with engineering, product development, and customer-facing skills, resulting in a net headcount growth.

Sasan shared in an all-staff email: 

"To fulfill our mission to power the prosperity of our customers around the world and strengthen our leadership position, we must accelerate our innovation and investments in the areas most important to our future success." – Intuit CEO Sasan Goodarzi

And Intuit is not the only company reducing headcount not to cut costs but to strategically shift its investments to AI initiatives.

UKG, an HRIS provider, announced layoffs of 2,100 employees, or 14% of its workforce, to double down on AI investments and other strategic areas.

Companies Shifting Investments to AI

Underscoring a new trend, HR Tech guru Josh Bersin noted that these layoffs do not indicate a market slowdown but rather a strategic reallocation of resources toward costly growth areas driven by AI.

In a recent podcast, he added that the costs of AI are significant and that companies, knowing they need AI to compete, are proactively shifting resources, including hiring AI-proficient people and upskilling existing talent.

Tangible investments are indeed necessary, says Rebecca Hinds, a Stanford PhD who heads up Asana’s Work Innovation Lab. In an upcoming interview, she told me that in the context of training & development:

“AI cannot be a hobby at your company. It needs to be an investment. This is a transformative technology with vast potential.” – Rebecca Hinds, Head of The Work Innovation Lab, Asana

Investing seriously means avoiding gaps and falling behind, even between people. Recent Asana and Anthropic data on the State of AI at Work shows that significant gaps in how much people benefit from AI are emerging. 

UKG and Intuit certainly seem to be seeing AI as serious business. Intuit, for one, noted in their announcement that it’s better to get ahead now, stating: 

“For over 40 years, we’ve had a successful track record of self-disruption and reinvention, transforming through multiple technological shifts.” – Intuit CEO Sasan Goodarzi

Changing Workforce Expectations

But as Josh also mentions, AI is not just reducing jobs; it's changing the nature of work itself. 

At Intuit, a significant portion of the layoffs involved underperforming employees, raising questions about how AI sets new performance benchmarks and reshapes job expectations.

If AI takes over 20-40% of tasks easily delegated to an intelligent generalist, it could raise the baseline performance for many jobs, leading to employees having to perform significantly above the level of AI to justify their roles.

It also means that AI skills, already in incredibly high demand, with 66% of leaders not wanting to hire people without them, will become even more valuable.  

And, that the small group of “AI Power User,” as Microsoft labeled them in their recent Work Index study, will have plenty of well-paying jobs to choose from.

Overall, the pace of upskilling may be too slow, prompting companies to replace existing employees with new hires who already possess the necessary AI expertise.

Competing with Fully AI Employees

But it doesn’t stop at upskilling and supercharging existing employees.

More companies may want to hire fully AI team members besides hiring people skilled in AI. 

Lattice, another HR software company that previously added AI in their HRIS, made a move in this direction by allowing HR teams to manage AI employees alongside human ones.

Not unsurprisingly, they faced significant backlash. Fortune’s Sasha Rogelberg reports that a surge of online pushback led Lattice to no longer pursue the project mere days after the announcement. 

She quotes Sawyer Middeleer, chief of staff at AI sales platform Aomni, who summarized the issue people took with the change:

“Treating AI agents as employees disrespects the humanity of your real employees. Worse, it implies that you view humans simply as ‘resources’ to be optimized and measured against machines.” – Sawyer Middeleer, Chief of Staff, Aomni

This is a good reminder that no matter how much benefit AI could bring to companies, we need to find the delicate balance between innovation and maintaining a humane workplace. 

Layoffs to Invest in AI?

Integrating AI into the workforce presents several challenges, including ethical considerations, the need for reskilling, and managing workforce transitions. 

You’ll need to navigate these challenges strategically to ensure a smooth transition to an AI-augmented future.

One major challenge is the ethical implications of AI-driven layoffs. Debbie Lovich, a Managing Partner at BCG, cautioned us that integrating AI thoughtfully is crucial to maintaining employee satisfaction and joy at work, echoing concerns about the human impact of rapid technological changes. 

As her colleague, global BCG X CTO Matt Kropp, said in my interview with him, this starts by looking at end-to-end workflows and finding where toil is present. These are the areas where AI makes the most sense. 

In the process, maintaining transparent communication with employees about the role of AI and its impact on their jobs can help mitigate fears and build trust.

Starting with Ourselves

If the Intuit news spooked you a bit, that’s completely understandable. Perhaps it needs to feel closer to home before we take action.

To me, it’s clear that most people are still taking a too relaxed stance on upskilling. 

Understanding the history of AI, as AJ Thomas prescribes, mapping out which tasks AI can take over, and getting hands-on with building AI applications will soon be table stakes. 

The UKG and Intuit layoffs are not about cutting jobs but transforming them to meet the demands of an AI-driven world, ensuring that the workforce is prepared for the future.

But I’m worried about people who are fearful of AI or using it in secret. This fear hampers their ability and willingness to upskill, creating a cycle of stagnation. 

Companies are best positioned to address this by providing training and clear pathways for upskilling to ensure these employees are not left behind. (See our recommendations for the best generative AI courses.)

At the core of all this is the fundamental question: are we just waiting for AI to disrupt our business and replace our jobs?

Or are we taking this challenge head-on, even if we need to make additional investments or short-term painful changes?

I’d go for the latter.

See you next week!

– Daan