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Why Workday’s CEO made a tough layoff decision to invest in AI
Hello and welcome to Modern CEO! I’m Stephanie Mehta, CEO and chief content officer of Mansueto Ventures. Each week this newsletter explores inclusive approaches to leadership drawn from conversations with executives and entrepreneurs, and from the pages of Inc. and Fast Company. If you received this newsletter from a friend, you can sign up to get it yourself every Monday morning. During December 2024, Workday CEO Carl Eschenbach and his leadership team, including cofounder and executive chairman Aneel Bhusri, arrived at a big decision: the software company would restructure itself to free up operating dollars for investment opportunities tied to artificial intelligence (AI). The move would involve shedding hundreds of jobs, marking the biggest layoff in the company’s history. Even though the plan was finalized, Eschenbach says he was “not at peace” because he had not had a chance to share his thinking in person with Dave Duffield, Workday’s other founder and its largest individual shareholder. So, Eschenbach met Duffield at the Jax Truckee Diner near California’s Lake Tahoe—the very diner where Duffield and Bhusri decided to start Workday, and offer cloud-based software to human resources and finance departments—to lay out his rationale. “Dave said, ‘Carl, I support you. We brought you in to scale the company and we’re supporting you 100% in this very difficult decision,'” Eschenbach recalls. “The only thing he asked, which was obviously a ‘yes’ on my part, was that we take care of our employees who were moving on.” Humans vs. AI: Finding the balance In early February, Workday announced it was cutting 1,750 employees, or 8.5% of its workforce, with U.S.-based employees receiving a minimum of 12 weeks of pay with additional severance based on tenure. Workday is just one of many tech companies, including Salesforce, Microsoft, and Meta, announcing layoffs this year. Workday CEO Carl Eschenbach [Photo: Workday] But even as Eschenbach restructures his company to make room for more AI investments, he insists AI will not result in mass unemployment. In fact, he says of Workday’s layoffs: “If you fast-forward one year later, we’ll have the same, if not more people in the company because we’re going to rehire as we invest in [the AI] opportunity.” The workforce more broadly will “peacefully coexist with the technology, we’ll leverage it, and we’ll become more productive as humans and as employees because of the technology,” he says. “It’s not just a replacement.” AI for CEOs I asked Eschenbach what kinds of AI agents or automation tools CEOs should embrace. He says all executives would benefit from agents that help with day-to-day “mundane” tasks (this is a common AI talking point) such as managing calendars or summarizing email messages. But he also noted that Workday is starting to roll out agents that can summarize financial data ahead of earnings calls and monitor transactions to help with audits. Aneel Bhusri [Photo: Workday] It’s a perspective echoed by Bhusri, who has served as CEO of Workday at various times over the company’s 20-year history. “Every CEO should be thinking about how to integrate agents that enhance their ability to think strategically and make informed decisions faster,” he says. “There are two primary types of agents: task-based and role-based. Task-based agents can create some efficiencies but can become easily siloed. Instead, I’d encourage executives to adopt role-based agents that can transform entire workstreams to free them up to focus on more strategic, impactful work.” But AI also has the potential to free up leaders to do more of the meaningful, person-to-person work that’s become an increasingly important part of the job. In 2018, Michael Porter and Nitin Nohria published research in Harvard Business Review that showed CEOs spend 61% of their time in in-person meetings. And while the study predated the pandemic and the rise of remote and hybrid work, there’s no question that face-to-face interactions—like Eschenbach’s meeting with Duffield at the Jax Truckee Diner—will continue to be part of the CEO playbook in the age of AI. How is AI helping you? Are you a CEO using AI to help you manage your time or run your business? Send your best examples to stephaniemehta@mansueto.com. Your responses may form the basis of a future newsletter. Read more: overcoming CEO challenges 4 ways top CEOs are making AI work for them The 4 most common problems for founder-led startups From founder-led to founder-inspired
Hello and welcome to Modern CEO! I’m Stephanie Mehta, CEO and chief content officer of Mansueto Ventures. Each week this newsletter explores inclusive approaches to leadership drawn from conversations with executives and entrepreneurs, and from the pages of Inc. and Fast Company. If you received this newsletter from a friend, you can sign up to get it yourself every Monday morning.
During December 2024, Workday CEO Carl Eschenbach and his leadership team, including cofounder and executive chairman Aneel Bhusri, arrived at a big decision: the software company would restructure itself to free up operating dollars for investment opportunities tied to artificial intelligence (AI). The move would involve shedding hundreds of jobs, marking the biggest layoff in the company’s history.
Even though the plan was finalized, Eschenbach says he was “not at peace” because he had not had a chance to share his thinking in person with Dave Duffield, Workday’s other founder and its largest individual shareholder. So, Eschenbach met Duffield at the Jax Truckee Diner near California’s Lake Tahoe—the very diner where Duffield and Bhusri decided to start Workday, and offer cloud-based software to human resources and finance departments—to lay out his rationale.
“Dave said, ‘Carl, I support you. We brought you in to scale the company and we’re supporting you 100% in this very difficult decision,'” Eschenbach recalls. “The only thing he asked, which was obviously a ‘yes’ on my part, was that we take care of our employees who were moving on.”
Humans vs. AI: Finding the balance
In early February, Workday announced it was cutting 1,750 employees, or 8.5% of its workforce, with U.S.-based employees receiving a minimum of 12 weeks of pay with additional severance based on tenure. Workday is just one of many tech companies, including Salesforce, Microsoft, and Meta, announcing layoffs this year.
But even as Eschenbach restructures his company to make room for more AI investments, he insists AI will not result in mass unemployment. In fact, he says of Workday’s layoffs: “If you fast-forward one year later, we’ll have the same, if not more people in the company because we’re going to rehire as we invest in [the AI] opportunity.”
The workforce more broadly will “peacefully coexist with the technology, we’ll leverage it, and we’ll become more productive as humans and as employees because of the technology,” he says. “It’s not just a replacement.”
AI for CEOs
I asked Eschenbach what kinds of AI agents or automation tools CEOs should embrace. He says all executives would benefit from agents that help with day-to-day “mundane” tasks (this is a common AI talking point) such as managing calendars or summarizing email messages. But he also noted that Workday is starting to roll out agents that can summarize financial data ahead of earnings calls and monitor transactions to help with audits.
It’s a perspective echoed by Bhusri, who has served as CEO of Workday at various times over the company’s 20-year history. “Every CEO should be thinking about how to integrate agents that enhance their ability to think strategically and make informed decisions faster,” he says. “There are two primary types of agents: task-based and role-based. Task-based agents can create some efficiencies but can become easily siloed. Instead, I’d encourage executives to adopt role-based agents that can transform entire workstreams to free them up to focus on more strategic, impactful work.”
But AI also has the potential to free up leaders to do more of the meaningful, person-to-person work that’s become an increasingly important part of the job. In 2018, Michael Porter and Nitin Nohria published research in Harvard Business Review that showed CEOs spend 61% of their time in in-person meetings. And while the study predated the pandemic and the rise of remote and hybrid work, there’s no question that face-to-face interactions—like Eschenbach’s meeting with Duffield at the Jax Truckee Diner—will continue to be part of the CEO playbook in the age of AI.
How is AI helping you?
Are you a CEO using AI to help you manage your time or run your business? Send your best examples to stephaniemehta@mansueto.com. Your responses may form the basis of a future newsletter.
Read more: overcoming CEO challenges
- 4 ways top CEOs are making AI work for them
- The 4 most common problems for founder-led startups
- From founder-led to founder-inspired
