Business

Don't fire your workers. Fire the wrong workers and maintain headcount.

AI winners don't cut headcount, they transform it. Replace employees who can't leverage AI, maintain total headcount, and double output. Companies that shrink will lose.

T Jackson

20 Jan 2026 — 4 min read

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Abstract

AI winners don't cut headcount, they transform it. Replace employees who can't leverage AI, maintain total headcount, and double output. Companies that shrink will lose.

CEO’s are saying, "AI will let us do more with less." Many plan to cut their workforce by 20% or even 30%. They believe this is a smart move, but it will actually harm their companies.

Here's why:

The Efficiency Trap

Imagine you run a company with 100 employees. After adopting AI tools, you will find that you can achieve the same results with only 70 people. You lay off 30 workers and save money. The board and investors are happy and proud. But this is actually a big mistake.

Why is this a mistake? Your competitors can use the same AI tools you have. In six months, they will reach your production levels at similar costs. Your efficiency edge is gone. Now, with only 70 employees instead of 100, you have reduced your company's ability to grow as a major opportunity arises.

You decided to shrink your company when you should have been growing it.

The Real Opportunity

AI isn't about doing the same work with fewer people. It can help you do twice as much with the same team, but only if your employees know how to use it.

This is the main point that many leaders overlook. The question is not about how many employees you need, but whether you have the right ones.

Some of your workers will embrace AI. A McKinsey study shows that workers using generative AI tools can complete tasks twice as fast. This speed allows them to experiment more and boost their output. A skilled AI worker will use AI to complete projects that once took a month in a week. Give a talented marketer an AI writing assistant, and they will produce campaigns that would have required a whole team.

Yet, some employees won't adapt. They might resist new tools, struggle to learn them, or not want to change their work habits. This isn't a personal failing; it is how things are. Not everyone succeeds in every wave of technology.

Here's what winners do:

The companies that will lead in five years aren't those cutting jobs. They are the ones taking on the task of transforming their workforce.

They are doing three things:

First, they figure out which employees can boost their output with AI and invest a lot in training them.

Second, they are honest about who isn't adapting. They make the tough choice to replace these employees with people who already know how to use AI tools.

Third, they use their increased productivity to grow, not shrink. They launch new products, enter new markets, and develop capabilities that their competitors cannot match.

Consider this:

You have 100 employees. Option A is to keep all 100 and maintain your current output. Option B is to reduce the number of employees to 70 and keep the same output. Option C is to change your team. You can either train your current workers or replace them with people who can adapt to AI. This way, you could double your output or even more.

Option C is the right choice; it is the only way to succeed.

The Clock Is Ticking

Here's the urgent part: there is a limited window of opportunity, and it is closing quickly.

At the moment, you can still find employees skilled in AI. In two years, your competitors may have already hired them. Right now, your market is still open. In two years, faster companies could double their output and win over your customers.

The companies that adapt the quickest will gain a juggernaut advantage. Those who wait or fail to transform will lose like Kmart of old.

The Hard Truth

I know what you are thinking. "This sounds harsh. What about loyalty to long-term employees?"

Here's a tougher truth: companies that ignore how AI will change work processes are most likely to fail, leading to the loss of all those jobs. Companies that adapt and transform their workforce can create more jobs through growth.

You can handle this transition with skill or without focus. But you cannot avoid it.

What You Must Do as fast as possible

Stop focusing on cutting jobs. Start focusing on transforming your workforce.

Find your best employees who are eager to use AI and invest in them. Notice who is struggling or resisting, and make the hard decisions. Keep or grow your team with people who can use these tools.

Then use your increased productivity to grow your business, not shrink it. Build more, deliver more, and achieve more.

Right now

Your competitors are making a choice. Many are choosing efficiency over growth and downsizing.

Don't be silly by following their example.

References:

https://apnews.com/article/amazon-layoff-ai-14000-artificial-intelligence-cb64af47ebb794541fbdfa8fd264932c
https://www.pwc.com/id/en/media-centre/press-release/2025/english/ai-linked-to-fourfold-productivity-growth-and-56-percent-wage-premium-jobs-grow-despite-automation-pwc-2025-global-ai-jobs-barometer.html
https://arxiv.org/pdf/2409.10106
https://businessintelligence.mo/2025/12/08/ai-adoption-reshaping-workforce-structures-half-of-employers-use-it-to-optimise-headcount/?cst=&query-a9eb9e89-page=20
https://www.mckinsey.com/capabilities/tech-and-ai/our-insights/unleashing-developer-productivity-with-generative-ai
https://market.us/report/ai-in-workforce-management-market/
https://www.pwc.com/gx/en/issues/workforce/hopes-and-fears.html
https://www.businesswire.com/news/home/20250717239434/en/AI-Adoption-Among-Small-Businesses-Surges-41-in-2025-According-to-New-Survey-from-Thryv