Since 2023, frequent AI usage among workers in leadership positions has risen from 14% to 44%, according to recent research, highlighting just how significant AI adoption in the workplace is. Therefore, it’s unsurprising that as artificial intelligence adoption rises, so does AI-driven restructuring, with more organizations rethinking roles, responsibilities, and headcount.
With this in mind, Careerminds surveyed 600 HR Leaders who have overseen layoffs in the last 12 months to reveal the lasting impact AI-driven workforce restructures have had.
The data revealed that more than three-quarters of HR professionals (78.8%) whose organization had layoffs in the last 12 months said that they were due to technological advancements, such as AI replacing roles and responsibilities. Entry-level roles appear to have been hit the hardest, with almost one in three HR leaders (31.5%) identifying them as the most affected by AI-related workforce reductions.
Despite the rapid rise in AI-driven layoffs in the past year, the data found that only 8.4% of HR leaders say their AI-driven restructure delivered on its promises and that they would repeat the process without any changes. In other words, an overwhelming nine in 10 admit they would do things differently if given the chance.
AI automation falls short of expectations
While automation was intended to eliminate the roles, Careerminds’ research found the results to be mixed. Two-thirds of HR teams say some roles were successfully replaced with automation, but only 21.4% report that AI fully replaced roles without operational issues. More concerning, one in eight organizations (12.3%) say the problems created by AI-led layoffs outweigh the problems they were meant to solve.
A third of organizations lost critical skills
What became clear after the layoffs was the value of human expertise that had been removed by the reliance on automation. Careerminds found that one in three HR professionals (32.9%) said they lost critical skills and expertise following AI-driven layoffs. Additionally, 28.1% said that their remaining workforce didn’t have the skills to fill the knowledge gap left by the layoffs.
Roles originally eliminated by AI are already being refilled
As a result, the research revealed that many companies are reversing these decisions. More than a third of organizations (35.6%) that conducted these AI-led layoffs have already rehired for more than half of the roles that were initially eliminated, while 32.7% have rehired between 25% and 50%.
Also, the rehiring is happening quickly. More than half of HR leaders (52.1%) said that their organization rehired for previously eliminated roles within just six months, while a further 17.8% did so within three months. Only 2.1% of companies waited over a year, highlighting just how quickly these skill gaps became evident.
75% of organizations found AI-driven layoffs cost their bottom line
Although AI-driven layoffs were thought to save money, Careerminds found that nearly a third of U.S. organizations (30.9%) found that rehiring costs exceeded any savings generated by the layoffs, leaving them financially worse off. A further 42.4% broke even, with rehiring costs cancelling out any initial savings. Only 26.7% came out ahead.
“The data shows that many organizations made restructuring decisions based on job titles rather than the full capabilities of their workforce. Employees often bring valuable skills that extend far beyond their current role, but if companies don’t have visibility into those capabilities, they risk eliminating talent they actually still need,” Amanda Augustine, resident career expert for Careerminds and a certified professional career coach, said in a statement. “Before turning to layoffs, organizations should take a comprehensive inventory of the skills already present within their workforce and explore internal mobility opportunities. Not only can this preserve institutional knowledge and morale, but it can also be far more cost-effective than eliminating roles only to realize months later that the expertise still needs to be replaced.”
Photo credit: Freepik
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