Blaming AI for mass layoffs has become common, as companies like Oracle, Meta and Amazon point to increased efficiencies and the need for new investments as reasons for slashing headcount. Yet, that narrative is facing increasing pushback. Industry analyst Josh Bersin, for instance, says companies are miscalculating by focusing on cost reduction over performance improvement, while Wharton’s Peter Cappelli recently wrote for HR Executive that most companies are choosing layoffs to fund data centers or manage financial troubles.
Nobel Prize-winning economic Demis Hassabis, CEO of Google’s DeepMind, an Alphabet subsidiary, has also chimed in. Cutting humans out of the workforce to make way for AI—instead of finding new opportunities for their talent—shows a “lack of imagination,” he recently said.
Yet despite the shifting narrative, layoffs have picked up considerable steam, especially in the tech sector. The real driver? According to Hassabis, it’s the “fear of missing out.”
“Layoffs are the result of imitative behavior,” he told the audience at a recent Google I/O event. Companies that are slashing headcount and saying it’s because of AI are “doing it because other companies are doing it.”
When headlines share a consistent story—for instance, that competing in the future will mean cutting jobs today—it can create a cascade effect, Hassabis said, where organizations start to see AI advances and layoffs going hand in hand. It’s a perspective, he said, that is “super worrying.”
Writing for Inc.com about Hassabis’ take, Jessica Stillman says organizations that fall into that trap aren’t envisioning the long-term; they can see the immediate cost-cutting boost from layoffs but not the talent potential they’re missing.
“What profit-making possibilities will you not pursue because of those job losses?” Stillman asks. “How will the departure of their colleagues affect the state of mind and productivity of those left behind?”
Those questions are becoming more salient, as employee burnout soars, and middle management—particularly hard-hit in ongoing layoffs—reports that leaner, AI-equipped teams are driving up stress.
What can HR leaders do to pump the brakes on the layoff cascade? At IBM, CHRO Nickle LaMoreaux has made the HR function a leader when it comes to integrating AI, but not at the expense of human talent.
For instance, she recently told an audience of HR execs at The Wall Street Journal’s CPO Council Summit that early-in-career HR talent, who used to handle employee inquiries in call centers, are now layered on top of IBM’s Ask HR chatbot. Their work is helping the organization train the AI, give new talent meaningful skills, drive employee engagement and buck the trend of dialing back on entry-level hiring.
She urged CHROs to avoid “missing the moment” of AI restructuring by focusing on cost-cutting and instead think big: “What growth can AI drive?” she questioned. “What can we do differently?”
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