Companies Are Rehiring Human Workers After AI-Fueled Layoffs

“Companies are discovering that workforce transformation is more complex than simply replacing roles with technology.”
— Sue Holloway, content director, WorldatWork

“AI is coming for my job!” The familiar fear lurks in many employees’ minds — but some businesses that put it to the test, swapping out humans for machines, are now reconsidering their stance.

Several large companies that laid off employees due to artificial intelligence (AI) implementation learned the automated tools couldn’t completely replace those human roles — in engineering, customer service, HR and more — and have since rehired many of their dismissed workers.

Other organizations find themselves in the same boat:

• Of the 39% of business leaders who told organizational design and planning software platform Orgvue they made AI-related cuts, 55% admitted they’d made the wrong call.
• Similarly, research and consulting firm Forrester found that 55% of employers who restructured their workforce after deploying AI said they regret that choice and plan to reverse it.
• Among organizations that eliminated roles following AI implementation, 32% ended up rehiring staff, according to similar findings from Orgvue and staffing and business consulting firm Robert Half.

The recent rehiring for customer service, technical support and troubleshooting positions makes sense, noted Sue Holloway, CCP, CECP, a content director at WorldatWork: Those roles depend on human empathy, nuance, and the ability to react to unique and ambiguous circumstances.

“AI is proving highly effective at handling routine tasks but less effective when work requires judgment, context, relationship-building or exception handling,” she said. “What looks like remorse is often just organizational learning. Companies are discovering that workforce transformation is more complex than simply replacing roles with technology.”

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The Costs of the Layoffs-to-Rehiring Pendulum

Eliminating positions drains institutional knowledge, said Joshua Lemon, the co-founder of benefits communication platform FlashBenefits, as well as a Rewards leader and speaker on applied AI in the workplace. He stated that when AI is the reason for those cuts, the remaining workforce and potential candidates begin worrying about the security of their own positions, denting the employer brand and hampering recruitment.

Tapping former employees and alumni networks to help refill positions as “boomerang” hires can shorten onboarding, fast-track productivity and recoup some of that institutional knowledge, Lemon and Holloway both noted — but businesses will have to regain some ground with workers.

“Companies should not treat former employees as an emergency workforce that can simply be switched back on,” Lemon said. “Organizations must rebuild trust, offer fair compensation and acknowledge why the earlier workforce decision fell short.”

A New Measure of AI’s Value

The news headlines and insights show organizations are reformulating their AI efficiency equations.

“The conversation is increasingly shifting from cost reduction to return on investment,” Holloway said. “Leading organizations are looking beyond labor savings — and evaluating quality, customer satisfaction, risk, compliance and business outcomes.”

The technology price tag is an incomplete measure of the true cost of AI deployment, Lemon said. He recommended that you factor in:

• Implementation and integration;
• Customer dissatisfaction and process reworking;
• Compliance exposure;
• Productivity losses;
• Employee turnover, recruitment, rehiring and retraining; and,
• Opportunity costs of unsuccessful AI adoption.

Similarly, he advised to not depend on reduced labor to demonstrate the worth of your AI investment. Also account for:

• Improved outcomes and customer experience;
• Sustained quality; and,
• The creation of — and productive use of — additional capacity.

It’s your people who will help you avoid miscalculations.

“AI can provide broad knowledge across many subjects, but a person with deep domain expertise knows what questions matter, what a credible result looks like, where the risks are and when an answer does not make sense,” Lemon said. “The absence of that expertise can turn an apparently inexpensive automation project into a costly experiment.”

Editor’s Note: Additional Content

For more information and resources related to this article, see the pages below, which offer quick access to all WorldatWork content on these topics:

• Finance and Budgeting
• Organizational Performance
• People Analytics