When Jack Dorsey announced last week that his fintech company Block was laying off 40% of its workforce due to AI, I immediately thought of two other newsmaking tech CEOs: Elon Musk laying off 80% of Twitter in 2023, saying “drastic action” was needed to restructure the company, and Andy Jassy saying Amazon employees had to return to the office five days a week in 2024.
Both events generated a rash of headlines, shifted the Overton window for what was considered acceptable, and were followed by moves that, while less extreme, would have felt shocking just months before. After Musk’s move, large tech companies like Amazon, Salesforce, Dell, and others laid off 10% to 20% of their employees, with many workers notified through impersonal midnight emails. And while Jassy’s full-time office return news didn’t inspire many exact copycats, other tech companies still followed, mandating three-day-a-week returns.
In both cases, the leaders who followed may not have taken things to the same extreme. But they still made major changes that impacted tens of thousands of employees’ lives.
The evening Dorsey’s news broke, I was at an event focused on AI and work design, and the HR leaders I was with had similar concerns. Many worried their CEOs, already under tremendous pressure to deliver results by leveraging AI—one survey found half of all CEOs fear for their job security if they don’t get AI right—would be emboldened by Dorsey’s move. If Block cut 40% of workers, their CEOs might see a 10% or even 20% cut as restrained rather than reckless. Dorsey moved the goalposts, and they worried their CEOs may have noticed.
To be sure, many CEOs are unlikely to see Jack Dorsey—who’s well known for his eccentricities and even blamed himself for staffing excesses while CEO at Twitter—as a bellwether. Many leaders also know that layoffs can lead to long-term performance issues and may not generate the kind of stock market reaction that Block initially saw. Regardless, a move this large creates space for CEOs to be bolder than they might have been before.
If you’re a people leader grappling with how to talk to executives who are feeling increasingly pressured, here are four factors to keep in mind.
Your company isn’t Block. As Charter’s Jacob Clemente reported Thursday, Block’s stock price is down 75% from five years ago, and employment doubled between 2020 to 2025. Even after a 40% cut, it will be 20% larger than it was in 2020. Block, which sells AI-based technology products, also has market-based incentives to take big swings. As its web site puts it, “The next era of computing will run itself.”
Block is placing a bet that the acceleration of AI capabilities will help it build a growing tech company with fewer people. But Klarna’s CEO placed similar bets starting three years ago. He’s made at least two major pivots in his talent strategy since, bringing back humans for some customer support roles, and moving from thinking he only needs to hire engineers to valuing people who know the business as AI coding tools have improved. What works now might not in a few years.
Headlines aren’t reality. When Jassy announced his return to office drive, many expected a wide following. But while the headlines touted some high-profile shifts—and some companies did make bolder moves—the reality is most companies have maintained hybrid policies. Flex Index data from last fall shows two-thirds of US-based companies provide workplace flexibility, and only two percent have returned to the office five days a week.
The same is true when it comes to AI and layoffs. Martha Gimbel, who leads the Budget Lab at Yale University, points to biases in coverage: No one covers a lack of layoffs, and CEOs generally don’t blame layoffs on their own strategy mistakes.
Most companies aren’t software companies. Layoffs became a social contagion in tech even though research shows they can lead to decreased employee engagement and organizational performance. The Big Tech firms that conducted the largest layoffs in 2023 had also massively hired in the prior years. Most firms aren’t cash-flush tech giants that, like Google pre-2023, could hoard talent.
As Walmart chief people officer Donna Morris said at last week’s Leading with AI Summit, the Bay Area tech scene “is a bubble,” noting “this is not reflective of what the entire economy is.” AI may be making software developers feel faster, but software engineering isn’t the epicenter of most companies.
Alternate profitable paths exist. Efficiency is only one part of AI’s potential upside. Increasingly, many leaders are talking about how AI can be leveraged for growth, innovation and improved quality. As we heard from many leaders at our recent Charter AI summits, the potential for AI to improve business results doesn’t just come through efficiency—it can come through growth, innovation, and performance improvements that leverage employees.
Walmart’s Morris, for one, reinforced that Walmart is using AI to enable its 2.1 million employees to grow their skills and improve its business, while Anthropic chief people officer Hannah Pritchett reframed what customer service work is really about: “Is someone’s job to answer tickets…or is their job to help customers?” Meanwhile, IBM’s Nickle LaMoreaux called the shift from efficiency to growth “the big pivot for 2026,” saying “the productivity story has probably played out.”