Companies Are Spending More on AI—HR Leaders Question the Payoff

As companies find more tasks AI can tackle, it’s costing some employees their jobs. This increased use of AI is also costing something else: money.

“Tokens, seats, we have all these enterprise tools we haven’t basically budgeted for, and it’s expensive,” said Katya Laviolette, Chief People Officer at 1Password.

Business Insider invited Laviolette, along with 13 other executives, to participate in a roundtable discussion titled “Futureproofing Your Workforce in the Age of Ai,” presented by Indeed.

Others at the table agreed that as more employees experiment with AI tools, the costs of using those tools is skyrocketing. That presents a challenge for companies. Experimentation is needed to unlock new paths to productivity. But at some point leaders must prove the new workflows are paying off financially.

“At one point, the investors are going to say, “Are you gonna produce some profit?” Laviolette pointed out. “Because it’s one thing to grow your top line, but your OPEX is really, really important.”

The solution to this problem does not automatically lead to layoffs, according to BMO Financial Group’s CHRO, Technology & Operations, Jay Ferguson.

“You can take cost out, or you can give augmentation and multipliers to every person you have,” Ferguson said. “So hypothetically, if we looked around this table and we said, ‘Okay, well, I can take 30% out of my business,’ you could do that. Short-term thinking in my view, because I still think that if I can increase everyone’s productivity by 30%, we win on both the revenue side and the cost side.”

Here are other insights executives raised during the almost two-hour conversation.

While it makes sense to have all employees use AI, senior leaders must identify the tools’ true ROI

Kyle Trahair, Managing Director & Partner, BCG: What we’ve seen is there is a lot of benefit in AI-upskilling at the lower ranks of an organization. You tend to get improvements in employee experience. You get less toil, more joy because some of the more monotonous aspects of the job go away.

But what we typically hear at the CFO level is, ‘Yes, I’m hearing all those hours saved. I’m not seeing any change in the results.’

We found you need the senior levels of the organization to find the right problem for AI to solve that is sufficiently ambitious, that it’ll make a meaningful P&L impact. But they can’t do that without the AI literacy needed to understand what the art of the possible is.

It’s not just entry-level jobs that may be threatened by AI

Angella Alexander, Chief Human Resources Officer, ATS Corporation: At some point the level of experience that our middle management has will quickly become irrelevant experience. The way they’re accustomed to doing things and the way they’re accustomed to thinking about things will not flex sufficiently. And so we’re thinking that it’s probably that middle layer that’s going to start to vanish because you’re going to need these new talents coming in who have this ability to do all these amazing things and move quickly, but it requires you to think about process totally differently.

So it isn’t just re-engineering the way we’ve always done things, it’s totally reinventing the way we do things.

Many employees need a push to start using AI

Olivia Chiu, Head of Talent Management, Wealthsimple: Our CTO said, ‘I’m going to clear everybody’s calendar one afternoon and everyone’s gonna do a Claude installation party.’

And so they did that and the objective was, ‘We’re going to teach you how to use Claude and your job is to actually solve a real client problem that you have seen in your day-to-day.’

And so that in itself — when everybody’s doing it at the same time, that connectivity and what they saw they were able to do in an afternoon that would’ve (taken) them a week — is change management.

Tiny teams are a growing trend

Sanjana Basu, Partner, Radical Ventures: Today, we don’t have bloated 30-people teams that are pitching to us for funding. We have one person, we have 16 year-olds, 20 year-olds, 23 year-olds pitching to us all day, every day. And they are building companies with much less workforce.

I think that’s another massive change we’re going to see in the ecosystem, which is you will see people with much more high-agency autonomy who will either build their own companies, leveraging all of these AI tools in a much leaner fashion, and those same people will probably be hired into the larger companies because they can really move the needle.