CEOs shift messaging around AI and layoffs
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CEOs used to talk up AI progress and efficiency by the number of workers it could replace, but with economic worries climbing, they're being more careful about linking AI to job cuts.
Why it matters: Communicators face competing pressures: Investors want proof AI spending is paying off, while employees don't want to hear that leaders are considering replacing them.
The big picture: The way leaders talk about AI and job cuts has shifted from touting how much labor the technology can replace to more nuanced takes on AI's role in workforce transformation.
- In 2024, Klarna said its AI assistant was doing the work of 700 full-time agents. CEO Sebastian Siemiatkowski later boasted: "Not only can we do more with less, but we can do much more with less."
- Last year, Salesforce CEO Marc Benioff said AI helped reduce support headcount from 9,000 to about 5,000 "because I need less heads."
- In May, Coinbase cut about 700 jobs while CEO Brian Armstrong outlined plans to rebuild around smaller, "AI-native" teams.
Between the lines: That rhetoric is increasingly risky as anxiety around AI and employment grows.
- 61% of adults in the U.S. believe AI will ultimately mean fewer economic opportunities for most people, vs. 21% who expect more, according to an CBS News and YouGov poll of 2,287 people conducted between Aug. 12-14.
- Among Americans under 30, 73% expect it to lead to fewer jobs over the next two decades, according to a Pew survey of 3,488 adults from June 22-28.
- This all contributes to how employees process and think about AI-related news at work, says Gartner senior director analyst Catherine Donnelly.
- "I can't think of a change in my career where the information about it is coming from so many different external sources," she says.
Driving the news: AI was the most commonly cited reason for U.S. job cuts in July, the fifth consecutive month, according to a report by Challenger, Gray & Christmas,
- This year, employers have attributed nearly 113,000 announced job cuts — about 24% of all announced cuts — to AI.
Zoom in: Leaders are now carefully wording their statements to distinguish between "AI is reshaping how we work" and "AI is replacing workers."
- Etsy CEO Kruti Patel Goyal said this month's 220 job cuts "weren't driven by AI," while acknowledging the technology is changing the skills and capabilities Etsy needs.
- Patreon CEO Jack Conte said its 20% reduction wasn't based on a belief AI could replace humans, while acknowledging AI has "fundamentally transformed" how Patreon operates.
- Microsoft chief people officer Amy Coleman similarly said the 4,800 roles eliminated last month were "not being replaced by AI," while adding that AI is changing how work gets done.
What we're hearing: Etsy landed on this framing intentionally.
- "We wanted to find a way to acknowledge those two truths — this is not a reduction because we're replacing people, but also, there are skills that are needed as AI becomes expected," an Etsy spokesperson says.
- "This moment is forcing leaders to be very specific and intentional with why they're doing what they're doing, if you don't want to be perceived as just one of the many."
What they're saying: In conversations with practitioners and other C-suite advisors, three lessons for communicators emerged:
- First, begin telling the story before the cuts. Leaders must be open about AI adoption, evolving roles and required skills long before announcing layoffs.
- Give employees the opportunity to adapt "before the email goes out... and before the press release hits the wire," says Kelsie Gwin, former Fortune 500 CEO chief of staff with 15 years of experience in tech comms.
- Second, don't turn layoffs into an AI victory lap. Combining the two messages can turn an ROI story for investors into something that feels callous to the rest of the company and turn off prospective employees.
- Being seen as a place that's "working hard to replace employees with software" can "taint a company with a really negative perception" said Andy Challenger, chief revenue officer at Challenger, Gray & Christmas.
- Third, tell one coherent story. Town hall messages leak and employees pay close attention to earnings calls. The rationale for reorganization must stay consistent across all audiences and align with workplace realities.
- "Employees can handle complexity. What they struggle with is a narrative that doesn't add up," notes Gartner's Donnelly.
The bottom line: The fundamentals of communicating layoffs haven't changed, but AI has made the risk of taking a reputational hit higher.
