2.CEOs shift messaging around AI and layoffs

CEOs shift messaging around AI and layoffs. Add Axios as your preferred source to.

Key points

• 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.
• Last year, Salesforce CEO Marc Benioff remarked AI assisted reduce backing headcount from 9, 000 to concerning 5, 000 "because I need less heads."
• This year, employers have attributed almost 113, 000 unveiled job cuts – regarding 24% of all unveiled cuts – to AI.
• In 2024, Klarna remarked its AI assistant was doing the work of 700 full-time agents.
• Etsy CEO Kruti Patel Goyal remarked this month's 220 job cuts "weren't driven by AI, " while acknowledging the technology is changing the skills and capabilities Etsy needs.

What happened

In practice, the major picture: The way leaders talk concerning 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 remarked its AI assistant was doing the work of 700 full-time agents. CEO Sebastian Siemiatkowski afterwards boasted: "Not only can we do more with less, but we can do much more with less."

Last year, Salesforce CEO Marc Benioff remarked AI assisted reduce backing headcount from 9, 000 to concerning 5, 000 "because I need less heads."

In May, Coinbase cut regarding 700 jobs while CEO Brian Armstrong outlined aims to rebuild around smaller, "AI-native" teams.

Between the lines: That rhetoric is increasingly risky as anxiety around AI and employment grows.

The key numbers

61% of adults in the U.S. Believe AI will ultimately mean fewer economic opportunities for most individuals, vs. 21% who expect more, according to an CBS News and YouGov poll of 2, 287 individuals 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 regarding AI-related news at work, states 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 notes.

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.

Official response

This year, employers have attributed almost 113, 000 unveiled job cuts – regarding 24% of all unveiled 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 remarked this month's 220 job cuts "weren't driven by AI, " while acknowledging the technology is changing the skills and capabilities Etsy needs.

While acknowledging AI has "fundamentally transformed" how Patreon operates, patreon CEO Jack Conte remarked its 20% reduction wasn't based on a belief AI could replace humans.

Microsoft chief individuals officer Amy Coleman similarly stated 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.

What comes next

"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 notes.

"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, commence telling the story before the cuts. Leaders must be open regarding AI adoption, evolving roles and required skills long before announcing layoffs.

Offer employees the opportunity to adapt "before the email goes out. And before the press release hits the wire, " states Kelsie Gwin, former Fortune 500 CEO chief of staff with 15 years of experience in tech comms.

Why it matters

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 firm 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" remarked 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 throughout 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.

Notably, the bottom line: The fundamentals of communicating layoffs haven't changed, but AI has created the risk of taking a reputational hit higher.

The bottom line

In short, 2.CEOs shift messaging around AI and layoffs is the central thread here, and readers can expect follow-up reporting as the picture becomes clearer.