In the age of AI, CEOs quietly signal that layoffs are a badge of honor

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  • In today’s CEO Daily: Geoff Colvin on how CEOs are becoming bolder about replacing human workers with AI.
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Good morning. The wave of layoff announcements over the past few weeks is telling us something, most importantly something that isn’t as easily measured as the number of jobs eliminated. It’s a change in the business environment. We can see it especially in big-company culture, a shift in what is OK and even virtuous to say out loud. Just maybe it’s signaling a new norm for employment and leadership. At its foundation, of course, is AI, regardless of whether companies say so directly.

Over the past two weeks we’ve learned that Amazon will eliminate 14,000 jobs with plans to eliminate more. Target will cut 1,800 corporate jobs, the company’s biggest layoff in a decade. United Parcel Service reported it had eliminated a staggering 48,000 jobs so far this year. Verizon will lay off 15,000. Nestle said it will cut 16,000 jobs, mostly white-collar, in the next two years. Why all those mega-layoff announcements in just a few weeks? The usual reasons don’t explain it. The economy hasn’t suddenly changed significantly. Companies could conceivably be bracing for a recession, though it’s far from clear when or if that might arrive; the Wall Street Journal’s October survey of economists shows growth increasing next year. The traditional season for general “slimming-down” layoffs is December and January.

The obvious explanation is AI. Amazon CEO Andy Jassy had already warned employees what was coming: “In the next few years,” he announced in June, Amazon “will reduce our total corporate workforce as we get efficiency gains from using AI extensively across the company.” The recent announcement emphasized “removing layers.” Target COO Michael Fiddelke (becoming CEO in February) didn’t say “AI,” but he said the company had “too many layers and overlapping work” and would “accelerate technology.” JPMorgan Chase isn’t announcing layoffs but is taking a stance to avoid hiring even as the company expects to grow. The company has “a very strong bias against having the reflexive response to any given need to hire more people,” CFO Jeremy Barnum told analysts recently. “There are definitely productivity tailwinds from AI.”

Note the language. It isn’t defensive or apologetic. Just the opposite—it’s direct and confident. Among Fortune 500 CEOs, having fewer employees is becoming a badge of honor. Call the new model Human Capital Lite, or from employees’ perspective, Right Sizing, Left Standing.

In January 2024, OpenAI CEO Sam Altman said, “In my little group chat with my tech CEO friends, there’s this betting pool for the first year when there’s a one-person billion-dollar company—which would have been unimaginable without AI and now will happen.”We’re not there yet, and we may never go there. But we’re getting closer.—Geoff Colvin

Contact CEO Daily via Diane Brady at diane.brady@fortune.com

This story was originally featured on Fortune.com



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