(This column originally appeared in The Hill)
Everyone’s wringing their hands about the latest rounds of corporate layoffs. But no one is talking about the real reason these people are being laid off.
For example, between 2022 and 2023, Amazon laid off 27,000 employees. The company’s revenues increased the following year from approximately $574 million to $637 million, and its profits doubled.
Disney laid off 7,000 people in 2023 and then saw both revenues and profits jump the following year. CVS laid off 5,000 corporate workers that same year, and its revenues rose from $357 million to $372 million.
3M laid off about 8,500 people in 2023, and the following year its revenues and profits rose. UBS Warburg announced layoffs of 35,000 people in 2023, then saw both revenues and profits skyrocket.
I have more examples, but I think you get the point. The companies that had significant layoffs in 2023 went on to make a lot more money in 2024. Not only that, but they grew revenues. Which invites the question: What were these workers doing?
Not much, apparently — or at least, not much of value.
I work with a lot of big companies. And the employees I interact with are good people, smart people. But, as many small-business owners will agree, I’m always amazed at the number of humans involved in doing just about everything these larger businesses do.
I have never had an online meeting with a corporate client that involved fewer than 10 people on their side. I get emails with a dozen names copied, most of whom I have never heard of. And these people aren’t exactly cheap — most white-collar employees working at corporations that are managers or above are pulling down hundreds of thousands of dollars a year in compensation and benefits.
Corporate employees work hard, I’m sure. But they love their time off, too. Want to get something done with a large corporation? Forget about August, or most of the summer — or December, or most of the holiday season. And forget the first part of January, for that matter, or any holiday, be it in this country or the country where they reside.
I get out-of-office replies from corporate clients for time off that can range anywhere from a few days to more than a month. Most of the replies basically tell the sender to forget about doing anything with them until they return. Is this the behavior of someone valuable to shareholders? Can workers just disappear for weeks on end and everything continues as is?
If that describes you, it’s not a great sign.
When I visit larger companies, I am frequently astonished by what I see. Vast amounts of space with empty cubicles once occupied by workers who are now working from home (especially on Mondays and Fridays, wink wink). I see software systems that date back decades, paper forms for sign-offs, and invoices keyed into accounting programs. I see employees added to payroll over the phone, benefits changes submitted by hand, reports generated weeks after the fact and circulated via email. I also see conference rooms filled with employees in meetings and meetings … and meetings.
I am a small-business owner. My world doesn’t operate that way. We meet on the fly and in the hall. In the 20-plus years I’ve been running my business, I have never used an out-of-office message.
Business owners and key employees can never really be out of the office. I get annoyed when we have meetings with more than two people, because I know that means something isn’t getting done somewhere else. And like many other business owners, I am obsessed with any technology that can save my people time and earn me money. I am constantly looking to change things. Losing just one employee is extremely disruptive. My corporate counterparts seem to do that and blissfully carry on without notice.
Everyone is blaming AI. But, as many reports will tell you, most companies are failing miserably at implementing AI. The real reason corporations have been laying off people comes down to one word: bloat. They are cutting the fat that has built up since the pandemic and restructuring themselves for the future.
And there’s even worse news for corporate employees: The big-time layoffs are just getting started.
It is inevitable that AI is going to replace many, many corporate employees. Anything done digitally will be replaced by a bot. Agents will soon be processing payroll, placing orders, paying suppliers, creating policies, sending out contracts, creating marketing materials, answering customer questions, analyzing profitability, filling out compliance forms, reconciling accounts and posting on social media.
If you are a corporate employee whose job is reliant on a computer, there is a high probability that you will someday be replaced by AI. This will happen.
But there is something you can do to avoid this fate: Be valuable.
The actual work isn’t going away. Corporate executives will need smart, innovative, flexible and fearless people to manage the bots and supervise the automation. They will want people who are experts with technology and power-users. They want people who are not hesitant to jump into challenges and who will solve their problems. They need workers who say “yes.” If you’re that type of person and can leverage AI to do the job of three people, then you have a higher chance of job security.
If you do lose your corporate job, don’t panic. There are always new start-ups that will always need people.
There are countless opportunities to do things on your own with technology as your assistant. There will be a growing need for people that do work that doesn’t involve a computer — engineers, pipefitters, plumbers, electricians, landscapers, roofers, psychologists, salespersons, flight attendants. The robots won’t be coming for these jobs any time soon.
Hopefully you will have learned that every organization wants valuable people. And they will always cut the ones who aren’t. As they are doing right now.
