Editorial
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The Future of Leadership Development: AI-Driven Manager Enablement
Standard Chartered CEO Bill Winters stood before investors in Hong Kong and described the elimination of 7,800 back-office roles this way: "It's not cost cutting: it's replacing, in some cases, lower-value human capital with the financial capital and investment capital we're putting in."
The global backlash was swift. Winters issued a staff memo within 24 hours, stating he was taken out of context. But the reaction was less about the specific words and more about the fact that he said the quiet part out loud.
Table of Contents
- The Language Is the Strategy
- When the Evidence Doesn't Matter
- The Misread at the Heart of the AI Playbook
- What CHROs Are Actually Navigating
- The Case That Keeps Getting Ignored
- What Culture-First Leadership Looks Like When Things Get Hard
- The Sentence Worth Bringing Into Your Next Executive Meeting
The Language Is the Strategy
The impact of phrases like “low value human capital” replacing the word “employee” reveals how leaders see the people in their organization. The dehumanization allows for inputs to a cost equation, ranked by value, sortable and replaceable (not by other humans, though!).
That framing has real consequences, and not just for the people being cut. The research on large-scale layoff survivors is sobering: job performance drops an average of 20%. Job satisfaction falls 41%. And voluntary turnover, meaning your best people choosing to leave, increases by 31%.
When the Evidence Doesn't Matter
To understand why this is happening despite everything we know about culture and performance, it helps to step back from the headlines and look at the underlying pattern.
Matt Watkinson, author of "Mastering Uncertainty and The Grid," wrote in a recent LinkedIn post that one hallmark of a business fad is that adoption spreads way faster than the evidence of its validity. And once an idea reaches critical mass in the managerial class, something predictable happens through what network scientists call preferential attachment. The more people who believe something, the harder it becomes to challenge, regardless of whether the belief is grounded in fact.
The oft-cited Klarna example is worth dwelling on. The company famously cut 700 people, confident that AI would absorb the work. Then reality imposed itself, and they began hiring again. They called it a “learning.” The people who lost their jobs during the gap between the belief and the correction are collateral damage in someone else's fad cycle.
This dynamic is playing out in our current AI workforce moment. The belief that AI can replace most knowledge work has spread through executive ranks far faster than any evidence supports. And the people caught in the gap between belief and reality are finding out that being right doesn't protect you when the decision-maker isn't asking for evidence.
The Misread at the Heart of the AI Playbook
The logic goes: AI is coming. Productivity will increase. We need fewer people. Restructure now, before the market forces us to.
But Gartner's January 2026 research argues otherwise: only 1% of layoffs in the first half of 2025 were due to productivity and efficiency by AI. Business leaders are justifying workforce reductions based on AI future investment.
What CHROs Are Actually Navigating
I work with CHROs and people leaders every day, and we are in more than just a burnout state. It’s philosophically destabilizing.
Gartner surveyed 426 CHROs across 23 industries to identify priorities for 2026. What they found was a field under enormous pressure from multiple directions at once: 91% of CHROs rank AI and digitization as their top concern. Eighty-two percent of boards and CEOs say they plan to reduce up to 20% of their workforces over the next three years. And yet U.S. employee engagement has hit a 31-year low, with disengaged workers costing the economy an estimated $10 trillion in lost productivity.
The CHROs I talk to are caught between two things they know to be true: the business pressure to cut and automate, and the human cost of getting this wrong. Too often, they're being brought in after the architectural decisions are already made, handed a change management brief, and told to make the announcement land softly.
In a fad environment, where the belief has already spread and the dissenters have already been quieted, the CHRO's job becomes exponentially harder. You can show your CEO the data on post-layoff performance decline. You can cite the 28-year Fortune research. You can walk through the engagement numbers. And if the herd has already decided, none of it will move the needle until reality shows up, the way it did at Klarna.
The Case That Keeps Getting Ignored
The 2026 Fortune 100 Best Companies to Work For list, drawn from 1.3 million confidential survey responses across 7.3 million U.S. employees, shows that companies prioritizing people generate a 13.4% annualized stock return over 28 years. Compounded over time, that's a 3x return multiplier for investors versus the broader U.S. equity market.
McKinsey's research adds: companies that invest in human capital alongside financial performance are four times more likely to outperform competitors. High-engagement business units produce 23% higher profitability than low-engagement ones, per Gallup's 2026 data.
The math is not mathing, but right now the fad noise is drowning it out.
What Culture-First Leadership Looks Like When Things Get Hard
Culture-first leadership is primarily about structural decisions that determine whether your people believe they are respected, that their work matters and that leadership is making decisions with their interests somewhere in the equation.
The organizations that consistently outperform share several key traits:
- They define the work, the outcome and change impact before they restructure the workforce. Before any reduction, they ask: what are the outcomes we need to achieve, and how does the work need to be designed to get there? They start with clarity, not with headcount.
- They treat the workforce as a system, not a series of individual cost lines. Phil Kirschner, whose thinking on organizational systems I find consistently clarifying, makes this point well: most companies are running a work transformation agenda with HR, Real Estate and IT each pulling in a different direction, and no one owns the whole system. When that's true, the decisions about space, technology, leadership behavior and operating model get made in silos, and everyone wonders why the culture doesn't hold.
- They understand that trust is a lagging indicator. You cannot rebuild it quickly after it's been damaged. The leaders treating the 2026 AI moment as a cost-reduction opportunity are spending trust capital they will need desperately when the actual AI transformation requires people to change how they work, embrace new tools and tolerate real uncertainty.
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The Sentence Worth Bringing Into Your Next Executive Meeting
The way leadership talks about people creates culture. The current wave of layoffs and dehumanizing language will look, in hindsight, like every other fad that ran ahead of the evidence. The question is how much damage gets done to real people before it runs its course.
The leaders who will look smart at the end of this cycle are not the ones who sounded toughest in 2025 and 2026. They're the ones quietly building organizations where people can do their best work, even amid genuine uncertainty. Per Brian Elliott: Culture is not the soft stuff. It is, and has always been, the strategy.
Editor's Note: Culture and trust is the name of the game. Catch up on more thoughts on this topic:
- Employee-Focused Companies Will Make a Comeback. Here's What It Will Look Like — It may not feel like it at the moment, but employee-centric companies will return — it's only a question of when.
- The 3 Perception Gaps Causing Most Workplace People Problems — Trust rarely breaks through bad intent. It happens in the hidden gaps between leadership perception and employee experience.
- Microsoft's Voluntary Buyout Is a Layoff With Better Manners — Microsoft made $31.8B in profit last quarter — a record for the company. Six days earlier, it asked 8,750 employees to leave.
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