Human Agency Is The Only Answer

According to the Wall Street Journal (CEOs Are Shrinking Their Workforces—and They Couldn’t Be Prouder - WSJ), public companies in the United States have reduced their white-collar workforces by a collective 3.5% over the last 3 years.

We are just getting started.

Ford CEO, JimFarley, warned recently (Ford CEO says new technologies like AI are leaving many workers behind, and companies need a plan | Fortune) that half of knowledge jobs in the workforce will be wiped out with aggressive AI adoption over the next few years.

This Time It’s Different

So, what’s new?

We have seen large scale workforce reductions before. Several waves of enterprise technology and automation have generated a fairly straight-forward playbook for CEOs to conduct and harmonize the shrinkage orchestra.

With the advent of Agentic AI, however, there is one crucial difference.

CEOs are looking to grow the top line and shrink the headcount … aggressively …at the same time.

Take Microsoft. In its recent earnings (Q4 FY25), they reported 3 interesting datapoints

-      Revenue grew YoY at 18%

-      Headcount for FY25 remained unchanged at 228,000

-      Over the last 12 months they have laid off (at least) 25,000, or 11% of the workforce

Which means, that they are letting go and hiring at the same time. Rebalancing with new skillsets while freeing up capacity from areas that are aggressively adopting AI and automation.

For shareholders, this is great news.

If your management team can deftly navigate grow + shrink every quarter, revenue per employee will become the prime driver of shareholder value.

PeakConfusion

For employees, managers, and team leaders, on the other hand, this is peak confusion season.

-      SHRINK PLAY: Dowe centralize our decision making and manage strict cost discipline to eliminate unnecessary capacity in light of new AI tools and resources?

-      GROW PLAY: Dowe empower our people to experiment, innovate and find new propositions for clients to accelerate revenue growth?

I know what Satya Nadella will say – we must do both. At the same time.

Not through periodic initiatives but by embracing this duality as the new ‘business as usual’.

Every team leader must think PLUS and MINUS.

How can we grow revenue while reducing the team size to deliver that growth?

One Problem – Anxiety

The one problem that will eventually get in the way is human anxiety.

Unfortunately, the human brain does not allow anxiety and innovation to function simultaneously.

When a manager is anxious about her own career and the job security of her team members, it is incredibly difficult for her to whole heartedly drive innovation and growth in her team.

This leads to a managerial dilemma, and the duality of commitment and apprehension of the same time.

I suspect this is playing out at all the organizations that are simultaneously driving massive AI adoption, while rebalancing the workforce by replacing thousands of existing staff with new skills. All of this is happening while the executors of the game plan – the managers, are themselves struggling to work out what future they will enjoy in the organization.

The only way to square this circle is human agency. Not empowering (giving the promise of agency to others) but developing (personal ability to develop one’s own agency).

HumanAgency – the answer is simple, yet complicated.

In my research over the last 5 years, I have uncovered a reassuring fact.

Human agency at work is a skill, not a trait. It can be built by anyone with a little bit of discipline and commitment to personal growth and success.

Once built, human agency creates the conditions for the individual and the team to thrive at work, not be anxious of constant uncertainty.

ANXIETY =UNCERTAINTY / AGENCY (so, high agency teams can thrive in uncertainty)

This means that a high agency workforce will be embracing the idea of SHRINK and GROW, with the confidence needed for innovation and adoption of new ideas.

In fact, in today’s context, if you want your business to be able to constantly grow topline while shrinking headcount, human agency is the only way to get there in a sustainable way.

Why is this complicated?

Only because agency at work does not come naturally to us. It has to be learnt, practiced and reinforced constantly. It can’t exist in just a handful of individuals and teams,  it has to permeate at least a third of the workforce.

Here’s to hoping that CEOs understand this and act on building agency in their organization so that the shareholder benefit of shrink and grow does not come at the risk of workforce anxiety and burn out.  

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