#496 AI Layoffs: Transformation or Leadership Failure?
AI Layoffs: Transformation or Leadership Failure?
By Niels Brabandt
Artificial intelligence is often portrayed as the force that will inevitably eliminate jobs.
In recent months, headlines across global media have suggested that AI-driven productivity gains are already leading to large-scale layoffs. Yet the reality behind these narratives is far more complex.
The question business leaders must ask is not whether artificial intelligence can increase productivity. The evidence clearly shows that it can. The real question is whether layoffs attributed to AI are genuinely caused by technology or whether they reflect deeper strategic decisions within organisations.
A recent case illustrates this distinction. The fintech company Block, led by CEO Jack Dorsey, announced layoffs affecting approximately 4,000 employees. Public communication suggested that the company was shifting towards artificial intelligence, enabling smaller teams to achieve higher productivity. This narrative quickly fuelled a broader discussion about so-called “AI layoffs”.
However, when analysing the situation from a leadership perspective, it becomes clear that artificial intelligence alone rarely explains such large workforce reductions.
First, it is important to acknowledge that AI can indeed improve productivity. When organisations invest in proper training and ensure that employees understand how to deploy AI tools effectively, teams can work faster, automate routine processes and focus on higher-value activities.
Yet productivity gains alone rarely explain sudden workforce reductions on such a scale. Timing matters. Artificial intelligence technologies have existed for years in enterprise environments. Machine learning, adaptive learning systems and automation tools have long been part of modern IT ecosystems. If AI alone were responsible for mass redundancies, these layoffs would likely have occurred much earlier.
Instead, other structural factors often play a significant role.
One of the most important factors is overhiring. During periods of strong economic growth and abundant venture capital, many technology companies expanded their workforce rapidly. Access to funding encouraged aggressive hiring strategies. Organisations built large teams in anticipation of continued growth.
When market conditions change, companies inevitably reassess these staffing levels. Layoffs then become part of a broader correction process.
Financial exposure also plays a role. In the case of Block, significant exposure to Bitcoin created additional pressure when cryptocurrency markets declined. Sudden fluctuations in asset values inevitably affect balance sheets, investor expectations and ultimately corporate decision-making.
Another factor that cannot be ignored is the share price. For publicly listed companies, shareholder expectations are an unavoidable element of leadership responsibility. Executives must consider the financial health of the organisation and its market valuation. When revenues slow or asset values decline, cost structures inevitably come under scrutiny.
In this context, attributing layoffs solely to artificial intelligence risks oversimplifying a far more complex strategic reality.
This leads to a crucial leadership lesson.
Organisations undergoing technological transformation must communicate with clarity and credibility. When leaders attribute decisions to external technological forces without explaining the broader context, trust inside the organisation can erode quickly.
Professional communication therefore becomes essential. Leaders must provide a complete explanation of the factors influencing their decisions. This includes market conditions, strategic adjustments, financial pressures and technological shifts.
Equally important is professional qualification. If organisations claim that artificial intelligence allows smaller teams to achieve higher productivity, employees will reasonably ask how they were trained to use these tools. Genuine transformation requires structured learning, not superficial training sessions or brief online tutorials.
Finally, leadership requires transparent reasoning. Employees want to understand the thinking behind strategic decisions. Even when the outcome is difficult, clarity about the reasoning process significantly increases acceptance.
Artificial intelligence will undoubtedly reshape organisations in the coming years. Yet technology itself does not make decisions. Leadership does.
For decision-makers in business, the central question is therefore not whether AI will eliminate jobs. The more relevant question is how leaders guide their organisations through technological transformation with honesty, competence and strategic clarity.
In the end, the future of work will not be determined solely by artificial intelligence. It will be determined by the quality of leadership that governs its use.
Niels Brabandt
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More on this topic in this week's videocast and podcast with Niels Brabandt: Videocast / Apple Podcasts / Spotify
For the videocast’s and podcast’s transcript, read below this article.
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Niels Brabandt is an expert in sustainable leadership with more than 20 years of experience in practice and science.
Niels Brabandt: Professional Training, Speaking, Coaching, Consulting, Mentoring, Project & Interim Management. Event host, MC, Moderator.
Podcast and Videocast Transcript
Niels Brabandt
AI is going to make you unemployed. Maybe you heard that phrase, and maybe you thought either, "Yes, I think so," or you thought, "Nonsense. This is not going to happen." The question is—and this is what we're getting to today because I received quite a number of emails from people who said, "Okay, you're talking about AI for a while." I invited external guests. I got my own qualification on the matter quite some time ago. I work in the IT space, and of course, many, many questions at the moment, especially from leaders and people who work with leaders or are led in a good or not so good way, say, "What is the future with AI? Are there actually AI layoffs?" I tried to avoid this topic for quite a while because I do not want to stir up a pot or cause anger. This is not about being controversial or saying anything that causes anger with people. We have to stick to the facts because, especially in the last week, we had a couple of articles where CEOs explicitly referred to AI being the reason for layoffs. And the question now is, was it really the reason? And we have to look behind the story. What is it that really happened? So hello and welcome. We are going to talk about AI layoffs. Is it a transformation or a leadership failure? This is the topic of this week's episode. Very important is here, I'm going to quote real-world articles as well. And again, under fair deal, fair usage, fair use under UK and US law, I'm allowed to do that. And the German Urhebergesetze, Urheberrechtsgesetze, I'm allowed to quote as well. So everything I show here is in full compliance with the law.
Niels Brabandt
When we talk about AI layoffs, the main issue always is people think some AI is going to magically appear, and then my job is just gone. And when you think this is going to happen, here are the news. This is not how it works. And when you now say, "How can you be so confident about that?" Well, AI is there for a while. When I worked for Microsoft's largest learning partner, New Horizon Computer Learning Centers, we worked together with Microsoft on countless projects from script learning, adapted learning, machine learning, tons of different terms being carried along for years and years where they said everything is going to replace that. When e-learning happened, they said every single teacher is going to be unemployed. Everything will just be video. Everything, everything, everything will disappear. Sales will disappear. Marketing disappears. Everything disappears by tomorrow when any kind of disruption happens. And they always say it just disappears like this. And here are the news. It doesn't. Because otherwise, I would not sit here. You wouldn't sit with your job.
Niels Brabandt
The question is, what does really happen? Because there are things happening on the market, and you should be aware of them. However, what is it that is really going on? When we look at the situation that I'm now talking about, what just happened with a company where 4,000 people were laid off, and the CEO explicitly said this was due to AI. This is the article by The Guardian here. And the CEO, in this case, Jack Dorsey, said that he had to cut 4,000 jobs due to higher productivity with AI. The company is Block. And when you now say, "I never heard of Block," you probably know some brands. For example, the Cash app or Square. You most likely have seen them somewhere. It's a payment provider, amongst other things, but that's what most people know it for. So the CEO—and by the way, don't blame CEOs when they say, "We had to lay off people." No CEO wants to step up in front of press and say, "We have to lay off people," because you always know it's going to drag along for weeks. So don't say, "Oh, this is just to raise the bonus of Mr. Dorsey." We are not going down the route of that kind of discussion. So we have to look at what really happened. So the facts are 4,000 people were laid off. And when people wondered why they were laid off, the communication was that Jack Dorsey said it is a strategic shift to AI. So smaller teams can do more with AI. Can smaller teams do more with AI so you can lay off 4,000 people? And now we have to look at not only is this the real question, but also is the story that they transport here the real story? So looking behind the story right now.
Niels Brabandt
First, of course, let's look at the facts. When someone says, "We laid off people because smaller teams can be more productive with AI," looking at the facts, AI and productivity, of course, correlates. You can be more productive when you use AI wisely, which means you're fully qualified, you know what you're doing, you know what the tool is able to do, what the tool's not able to do, and then you use it in hopefully the best way possible. When you use it that way, yes, then AI and productivity correlate, and you probably can say you can have less people on board compared to what you had before.
Niels Brabandt
And let's look at the tech industry. What happened before? Do you think that just magically AI—because why is it right now? AI is there for a while. So why didn't they lay off 4,000 people a year ago when AI was also there and the tools were—I don't want to say the same, but many tools were already there—were already in productive mode, were already implemented in organization, and suddenly they lay off people? The question is, why does it happen right now? Why doesn't it happen earlier?
Niels Brabandt
And when we now look at what happened before in the tech industry, it was quite simple. The economy was booming. Money was available anywhere. You could get enough money at very attractive rates. You could hire people left, right, and center. So what happened was you overhired, and that frequently happened. And by the way, don't blame them. If someone tells you, "Hey, there's someone knocking at your door and they want to throw money at your business, but you have to hire people for it," what are you going to do? You're not saying, "Oh, sorry, the money. No, thank you. I think the bank account is pretty full. Not me this time." You probably take the money, hire people, and see where it goes from there.
Niels Brabandt
And also, that's another aspect, the company Block is heavily exposed to Bitcoin. Bitcoin for a long time—and I'm not going down the tech bro route of cryptocurrencies here—Bitcoin for a long time was a good investment. It went up, up, up, up, up, and then it crashed. It doesn't mean that it never recovers. It probably will. I'm not a cryptocurrency expert, so I'm not going to claim I am. The point is that when you are heavily exposed to Bitcoin and it suddenly crashes by one-third, that doesn't pass your organization, especially on the balance sheet, without being unnoticed by investors and shareholders.
Niels Brabandt
And now we come to a point where I know that people will get angry as soon as someone says, "Oh, the share price also plays a role." And I have to make a strong statement here. When you say share prices should not play a role, here are the news. Then never work for a stock exchange-listed company. Because many people say, "Oh, look at these stock exchange-listed companies: FTSE 100, Nasdaq, the German DAX, the CAC 40 in France, and whatnot else, the Nikkei in Japan." I take all these big advantages of these large corporations making my life as an employee very comfortable. So I take all the advantages, and as soon as the economy gets tight and the share price goes down, where clearly a CEO has to see what do we do on the cost side of the business, then you get very angry and say, "Oh, it can't be all about the share price, can it?" When you do not want that a share price plays any role, never hire with any stock exchange-listed company. Never be employed by any stock exchange-listed company. Never work for any stock exchange-listed company. I am really fed up with people who join up for the largest, most capitalist—and capitalism isn't bad, in my opinion—so the most capitalist companies taking the highest salary, all the benefits, everything they offer. And as soon as everything becomes a bit tight, they say, "What do you mean with you focus on the share price? Oh, I never knew." Well, wake-up call. It's a two-sided medal. Who could have thought?
Niels Brabandt
So the share price, of course, you can say overhiring wasn't great. Fully agree. Financial exposure to Bitcoin wasn't smart. For a long time, people said, "Great, great, great." Now they say, "Not so much." This is how it happens when causes and when certain values go up and down on the stock exchange or the cryptocurrency market, and then you have to do things to make things right again. Maybe when everything recovers in a couple of years, Block is going to hire 4,000 people again. And I'm pretty sure no one is going to put that in the news and say, "Oh, look at the amazing CEO creating more jobs." They say, "Job creation? Uh-huh. Oh, layoffs? Catastrophic. No, immoral. Shouldn't be."
Niels Brabandt
So AI and productivity play a role here, of course, but it's not the only part of the story. The CEO did not highlight the overhiring practices that happen in almost any tech business, especially in the fintech industry. But in almost any tech business, overhiring happens. The financial exposure usually doesn't get discussed at all until it goes wrong, which happens sooner or later. And the share price will always play a role, whether you like it or not. If you do not want this to happen, do not work for stock exchange-listed companies where the share price will always be in the focus of management. I do not talk about bringing back shareholder value only, but shareholder value is one part of the game an executive has to do.
Niels Brabandt
The question now is, how can you do it better? How can you bring the right story across? And the first aspect, of course, is professional communication. The professional communication here is that you simply tell people in a way that they understand what really happened here. When you say—and you always have to be aware of that—when you're a CEO and you step up and say, "I'm laying off 4,000 people due to AI," you will face press. And let's look at that. People who work at The Guardian are not people who struggle to put an article together. These are not people who struggle to pass their A levels. These are highly educated people who are able to do proper research, whether you like it or not. I am most likely not the political direction that The Guardian usually tends to take, but factual evidence is factual evidence, whether you like it or not. So professional communication means include the real part of the story before someone else calls you out on it. Because as soon as that happens, usually communication gets a bit more tough, a lot more tough from there.
Niels Brabandt
On top of that, of course, it means part of professional communication is when you want to keep people into what really happens, you need to qualify them professionally, professional qualification. So when you talk about AI making people more productive, then people will ask, "How did you qualify them?" And when the answer is, "Oh, yeah, I remember when we had this online class you couldn't do during your lunch break. Yeah, I think that was it." Not great. So professional qualification, education is probably one of the highest values you could ever have, especially in today's times, because then people know you're really up to doing something and you really understand something just you understand something beyond Googling it or putting it into an AI to get a gist of it by three bullet points. So you go beyond bullet point knowledge. Professional qualification is always an amazing asset for every human being.
Niels Brabandt
In addition to that, you need to add professional reasoning. And reasoning means when people say, "Okay, professional qualification, done this. Good." What is the professional reasoning behind it? Why did you really do it? And here we have multiple aspects. It can be AI making teams more productive. It can be overhiring practices in the first place. It can be cryptocurrency going down. It can be share price. It can be new investors. It can be new market. It can be transformation. It can be different direction. It can be investment for new products. It can be complete change of IT. It can be anything. But the reasoning needs to be displayed. Because when you leave the gap, you trigger the so-called overthinking effect where people simply say, "I have a gap in the understanding here." I ask you, and when you don't give me a proper answer, I'm going to close that gap by myself with whatever I think is correct. And that usually doesn't go too well.
Niels Brabandt
So when you do it the proper way, just as we figured out here today, right now, on this list, then your communication will be a lot better. And I wish you all the best putting that into practice in your organization. And when you now say, "I have a couple of things to discuss here," feel free to do so. As a first, of course, when you look at me on YouTube, leave a like here, subscribe to my channel. Thank you very much. And feel free to leave a comment here as well. We can discuss everything there as well. Also, when you listen to me on Apple Podcasts or Spotify, feel free to leave a review there, five stars. Thank you very much for doing so as well. And recommend the podcast and video cast anywhere you like, amongst your friends, colleagues, online, offline, social media, anywhere. Thank you very much for any help provided here. In addition, as promised, we restarted the YouTube Shorts very successfully. And you probably saw that only since the beginning of this year, we almost doubled the amount of subscribers. It's still growing slowly and steadily, but it is growing.
Niels Brabandt
Podcast is still going strong. We had amazing rankings again last week. Thank you very much for supporting me here. And when you really put the subscribe button, when you press the subscribe button on YouTube, be sure to also put a little bell in there because it's really important that you do not miss out on future episodes because we have a lot planned here and we have amazing external experts. So we really invest a lot here into YouTube and the podcast right now.
Niels Brabandt
We heard what you wanted. You want external expertise. You want book recommendation. You want vetted experts. I've done all of that all on this channel. So feel free to listen to all the interviews we have. And we keep everything very spot-on, so very short. You're not going to have the hour-and-a-half interview. You have the short and snappy interview that you wanted to. We listen to you and we deliver it on the promise.
Niels Brabandt
Of course, you can also follow me on Apple Podcasts and Spotify. I'll go to my website, nb-networks.com. So when you say, "Hey, we'd like to have you as a trainer, coach, consultant, or we'd like to have you to speak at our conference," feel free to reach out, nb@nb-networks.com. Feel free to reach out and then we take it from there.
Niels Brabandt
Of course, when you say, "Hey, I have something very specific via email to tell you. We need a trainer, coach, mentor, consultant, project intro manager." Cool. Let's talk about that. When you say, "I just like to have a chat via email," cool. Let's do that as well. So I'm looking always forward to hearing from you. Thank you very much for the respectful communication we had during the last couple of months and years, now in the sixth year running with this podcast.
Niels Brabandt
Live sessions we have as well, expert.nb-networks.com. Go to that domain. When you go to expert.nb-networks.com, put your email address there. You receive only one email every Wednesday morning. It's 100% content, guaranteed ad-free, ad-free guarantee.
Niels Brabandt
What you get in there is full access to all the podcasts, video casts, all the articles, all without paywall via the leadership letter and also only via the leadership letter. It's only available on there. The live sessions are only announced via the leadership letter. Date, time, and the access link is there. And that is completely for free for our listeners and subscribers to our part of the leadership letter. Thank you very much for joining us here as well.
Niels Brabandt
And of course, what you can do is feel free to connect with me on LinkedIn. Feel free to, by the way, do the proper connect thing. Don't do the follow thing. You can properly connect with me. I'm looking forward to being connected with my listeners here. You can follow me on Instagram if you like. You can like me on Facebook. And of course, you can subscribe to my podcast channel. Thank you very much for doing so as well.
Niels Brabandt
The most important thing, however, is always the last thing that I mention. Apply, apply, apply what you heard in this podcast because only when you apply what you heard, you will see the positive aspects that you obviously want to see in your organization. I wish you all the best doing so. Very important now is get in touch if you have anything to discuss with me. I'm answering every single message within 24 hours. So I'm looking forward to hearing from you. And at the end of this podcast, as well as at the end of the video cast, there's only one thing left for me to say. Thank you very much for your time.