There’s constant hubbub around various companies and sectors conducting mass layoffs with a mind to replace the laid off roles with AI. Whether it’s an attempt at 1-to-1 replacement with an agent, or pushing the workload onto someone else to do “more efficiently” with the help of automation, technology will replace the worker. Hypothetically, productivity will rise or at least stay the same, while you save money on salaries. Great!
Following this logic, you check your accounts and call your investors. You’ve got the capital to invest in AI, so you reduce headcount. That’ll make the shareholders happy! And they will be happy… Until the point token price increases (which it will), full-service agentic capability plateaus (which it will), and your pipeline of internal promotions begins to dry up (which it will).
And you’re left with less brains, less ideas, less communication, and a stagnant business.
Here's the first reality: Growth isn’t efficient
A mass redundancy at a profitable company for any reason is a sign that, at best, leadership lacks either the will or the ability to grow. Instead of looking at the world with an opportunist’s perspective, they’re focused on cutting corners, simplifying structures, and essentially retreating into their existing sector.
They’re not willing to cultivate a new speciality, to invest in a startup or side venture, to empower their existing employees to experiment, or (god forbid) to take a risk with a new product or service. The company is dormant at best, and on the precipice of decline at worst.
For an established company, you’re going to need to research, experiment, and fail. It’s going to be an inconvenient road at best, but that’s the only way to actually grow, not just improve ROI.
Is there a balance? Of course; I’m not suggesting that caution be thrown to the wind and you forget about profitability altogether. But you’ve been handed the keys to the most powerful informational tool since the dawn of the internet, and your use-case is to put it in the hands of less people? Pardon?
Yes, there’ll be stress. There will always be people resistant to change, who care about today’s bottom line more than tomorrow, people who don’t want to branch out, entertain new ideas, or take risks.
But here's the second reality: Growth isn’t comfortable
I dare say that, as a whole, we’ve become paradoxically complacent in a lot of our company culture. The indices have generally performed well over the past decade, we’ve got more capital investment than we really know what to do with, but many companies have retreated to their own safe space, with many market leaders cutting headcount and retaining strong revenue in the name of higher margins.
To point fingers, Optus, Block Inc., Commbank, and Telstra - none of whom are struggling financially! - have all made significant layoffs because they claim to be on the receiving end of “AI-powered efficiencies”. Grow up. Without the pressure to improve products, services, or capabilities, we’ve settled for efficiency instead of growth. It’s so much more comfortable to choose optimisation over innovation, and what could be more streamlined than adopting technology that does exactly what you’re already doing but cheaper than employees (for now…).
It almost pains me to unequivocally praise a major company, but look at Canva: They’ve had six acquisitions in 2026 so far, they’ve consolidated the Leonardo.AI team into their core business rather than laying them off, and (so far) have been abstinently against using AI as an excuse to downsize.
I know, I know - not everyone is a company in an explosive, hyperscaling sector. But if you’ve got the size and the profits, then invest in yourself! Grow! At the very least, invest in others. You’re not scaling by cutting costs, you’re decimating your human capital at the expense of opportunity.
The comfort of short-term improvements on the balance sheet is a safety blanket when you don’t know what else to do. Cast it aside, use your human capital, back yourself and your employees. I’ve been part of discussions with companies for whom the three-month rolling forecast is more important than planning for one, three, five years in the future, and have seen first-hand how stifling the quarter-to-quarter mindset can be.
Be prepared to fail. Take two steps forward and one step back. AI is being sold to us by marketing hype as almost risk-free, a way to “transform” your business by… uh… doing exactly what it does now, but with less salary expenditure. That’s not transformation, it’s barely even mutation. Leave the complacency mindset behind - we’ve got work to do.
To use a bit of a grotesque analogy, claiming productivity improvements as a result of layoffs is like improving your BMI but cutting off a limb - the metrics look good, but you’ve severely hampered your ability to actually improve from there. I won’t trust any company that sees AI as a magic bullet to improve their balance sheets, especially after said bullet has been shot into its own workforce, because all that tells me is that the leadership has failed to see any way to actually grow their business with the resources that they have.
Luke is a Co-Founder and Head of Growth at Hard Refresh. He wouldn't describe himself as anti-AI, but he is definitely pro-people. You can connect with him on LinkedIn here and see how much trouble he gets himself in.