Why replacing staff with AI backfires - and 5 ways smart leaders generate real value instead

When firms replace employees with AI, they often end up regretting their decision. In the first half of 2026, 126,000 US workers were laid off due to AI-related factors, according to jobloss.ai. Specialist site jobloss.ai reported that organizations that cut jobs due to AI are unlikely to generate the value they hoped for.

In fact, a study by Careerminds found that 75% of companies experienced increased costs rather than savings from AI layoffs. Moreover, nine out of 10 firms would reconsider their AI-driven job cuts if given the chance. Gartner predicts that 50% of companies that attributed headcount reduction to AI will rehire staff to perform similar functions by 2027.

Steve Lucas, CEO at Boomi, advises businesses to exercise caution when considering AI-enabled layoffs. While AI will undoubtedly change job roles and responsibilities, many of the job cuts attributed to AI are companies seeking a convenient excuse to cut costs. Lucas suggests that professionals question experts who claim AI will mean the end of work as we know it, emphasizing that we are still in the early stages of automation.

Stephen Wood, COO at Rathbones Asset Management, believes that the impact of AI on the workplace will be positive rather than negative. He cites the legal industry as an example where AI can assist with tasks but cannot replace human expertise. Wood sees AI as a tool that can enhance the capabilities of skilled professionals rather than replacing them.

Tim Chilton, Managing Geospatial Consultant at Ordnance Survey, is using AI to create new value for his organization. His initiative aims to provide staff with a chatbot-style interface that offers timely access to statistics, enabling them to work more efficiently. Chilton emphasizes that the objective is to empower existing staff through innovation, rather than replace them with AI.