Whether Dell, Amazon, or now Microsoft, technology companies are going through a wave of workforce reductions they label “AI layoffs.” At first glance, it seems like a tidy explanation. Artificial intelligence is advancing, and companies must adapt. Yet, this framing is misleading. Worse, this strategic misstep risks eroding trust, damaging culture, and undermining long-term value creation. As a board member, advisor, executive, and mentor, I urge everyone to reconsider the narrative. The way we talk about these changes matters for our people and our organizations’ futures.
Why the “AI Layoff” Label Misses the Mark
Let’s be clear: AI is reshaping the business landscape. Automation and machine learning transform workflows, eliminate some tasks, and create new opportunities. However, calling a round of firings “AI layoffs” oversimplifies a complex reality. In many cases, companies are not laying off employees because AI has directly replaced their jobs. Instead, we’re seeing a confluence of factors. Pandemic overhiring, shifting business priorities, and pressure to boost profitability drive these decisions much more than AI. Executives may say it is AI, but the underlying motivations are broader and more nuanced.
Labeling these workforce reductions as “AI layoffs” can also be a convenient way to deflect responsibility. It suggests inevitability, as if the decision was made by the relentless march of technology rather than by leadership choices. This narrative absolves boards and executives of accountability. It can erode trust among remaining employees, who may feel their fate is subject to forces beyond anyone’s control. We blame the algorithm and lose sight of the human agency behind strategic decisions.
AI Layoffs: A Risk to Trust, Culture, and Reputation
We must remember that trust is the bedrock of any high-performing organization. When boards and executives frame layoffs as the unavoidable result of AI, they risk undermining this trust. Employees are not naive, especially not in the tech world, where they build the very tools. Employees know when a narrative doesn’t match reality. Many of those affected by recent layoffs have shared stories of positive performance reviews and strong contributions, only to be told their roles were obsolete due to AI. This disconnect breeds skepticism and disengagement among those who remain.
Moreover, the “AI layoff” label can stigmatize those who are let go. Labeling employees as “low performers” during layoffs damages their reputations and hinders future opportunities. The same applies to suggesting their skills are no longer relevant in an AI-driven world. It is not simply a matter of fairness but of long-term brand and talent strategy. Companies like Airbnb, which handled layoffs transparently, have set a positive example. They preserved the dignity of departing employees and strengthened their employer brand.
Externally, the narrative also shapes how investors, customers, and the public perceive your organization. Beyond damaging the reputation as an employer, the messaging can also be a risk to the stock price. Hyping AI as the reason for layoffs can create short-term excitement in the markets but also raise expectations. The backlash can be swift if the promised productivity gains fail to materialize or the company struggles to deliver with a smaller, less experienced workforce. Overstating AI’s current capabilities risks your credibility and the trust of key stakeholders.
Strategic Shortcomings and the Danger of Hype in Layoffs
Perhaps most concerning is that the “AI layoff” framing often masks a lack of strategic planning. More than half of the companies that replaced employees with AI now regret the decision. The issues that arise for many include lost institutional knowledge, decreased productivity, and poor change management. In the rush to signal innovation and cost savings, many organizations underestimated the complexity of integrating AI into their operations. They failed to invest in reskilling, neglected the importance of human expertise, and overlooked the need for well-defined governance and controls.
AI is not a magic bullet. It excels at automating repetitive tasks and augmenting decision-making. However, it is not a wholesale replacement for human ingenuity, creativity, and judgment. The most successful companies are those that combine AI with human skills, creating new roles and opportunities rather than simply cutting headcount. When boards and C-suites attribute layoffs to AI alone, they miss the chance to engage in a deeper conversation about how to balance technology and talent for sustainable growth.
A Call for Responsible Leadership
As stewards of our organizations, we are responsible for leading with clarity, transparency, and empathy. We must be honest about the reasons for workforce changes and resist the urge to hide behind the AI narrative. We must invest in reskilling and upskilling so employees can thrive alongside new technologies. We must recognize that the future of work is not about humans versus machines, but about humans and machines working together to create value.
Boards and executives set the tone for how change is managed and communicated. By taking ownership of our decisions and focusing on long-term value creation, you can build trust, preserve culture, and position your organization as a leader in the age of AI. The easy path is to blame the algorithm. The right path is to lead with integrity.
Ultimately, the story you tell about your organization’s transformation will shape its future. Choose your words and your strategy wisely.