Wellness
Rewards
Recognitions
Learn more about Wellable's all-in-one
employee engagement platform
Workplace in Transition: The AI Investment
Estimated reading time: 6 minutes
In this week’s episode, Nick and Geoff explore how companies are reallocating resources to fund AI projects and what that means for employees. From layoffs and voluntary buyouts to reductions in parental leave and other core benefits, they unpack the different strategies organizations are using to cut costs to fund token use, data centers, and other AI investments. The conversation also dives into how these shifts are influencing employee experience, talent retention, and even the growing popularity of health fairs as a way to communicate difficult benefits changes.
Short on time? Here are the key takeaways:
- Companies are shifting significant dollars toward AI investments, including infrastructure, compute, and tokens, which are affecting the balance between human and technological capital while forcing difficult trade-offs in workforce spending
- Layoffs remain the most visible cost-cutting strategy, but organizations are also using quieter approaches like benefit reductions, return-to-office mandates, and voluntary buyouts to manage headcount
- Zoom and Deloitte have made notable cuts to parental leave and other core benefits, signaling a broader trend of scaling back high-value employee perks introduced during the pandemic
- Voluntary buyouts, like Microsoft’s program, may unintentionally push out top talent, since employees with the strongest external opportunities are often the most likely to opt in
- The labor market has shifted in favor of employers, giving companies more leverage to make unpopular changes while expecting many employees to stay
- Health fairs and similar engagement initiatives may be rising in popularity as organizations look for more positive, engaging ways to communicate benefit reductions
Episode Summary
Benefits Cuts as a Capital Reallocation Strategy
The throughline connecting dozens of recent corporate announcements — from large-scale layoffs at Meta and Block to the quieter benefit reductions at Zoom and Deloitte — is not simply cost discipline. It is a deliberate transfer of capital from human labor costs to AI investment. That AI spend takes multiple forms: physical infrastructure like data centers and servers, rented compute capacity, and the token costs of running AI models at scale.
Some companies are now budgeting for software engineers at a cost that doubles the traditional salary figure — paying $300,000 for the person and expecting an equivalent amount in annual AI token usage to enable a dramatically higher level of output. For organizations with thousands of employees, this arithmetic creates intense pressure to find savings elsewhere.
Companies have several levers available. The highest-profile option is outright layoffs, which generate headlines and require severance planning. A less visible but increasingly common approach is strategic benefit reduction. And a third path — visible in Microsoft’s case — is the voluntary buyout, which attempts to reduce headcount without the reputational cost of a traditional layoff.
Zoom and Deloitte: Parental Leave in the Crosshairs
Zoom and Deloitte drew particular attention for rolling back some of the most emotionally significant benefits companies offer: parental leave and family-building support. Zoom, which expanded aggressively during the pandemic and built a benefits package designed to attract talent in a hot labor market, is now trimming those offerings significantly. Birthing parents will see paid leave drop from 22–24 weeks to 18 weeks. Non-birthing parents face a reduction from 16 weeks to 10.
Deloitte’s changes are more structurally complex. The firm is differentiating benefits by role type — administrative services, IT, and finance employees are seeing adjustments distinct from those affecting consultants. Beyond parental leave, Deloitte is also modifying annual PTO, pension plan terms, and IVF coverage. The framing from Deloitte’s leadership is that this reflects a modernization of talent architecture — a complete rethinking of how the organization combines human capital with technology.
Geoff draws on his own consulting background to note how much of a junior associate’s work has already become automatable: building pitch decks, modeling in Excel, synthesizing research. If AI can perform 80% of a junior role, the staffing model built around that role needs to change, and the benefits designed to attract people into it will change too. Nick raises the question of intent: are these cuts purely about cost reduction, or are they partly a mechanism for voluntary workforce contraction? For a working parent weighing a role that now offers 10 weeks of non-birthing leave instead of 16, the calculus about whether to stay or look elsewhere has materially changed. That may not be accidental.
The Health Fair Paradox
At Wellable’s annual broker health plan summit last October, a senior wellness leader from a major national health plan offered what Nick calls the best explanation for the surprising popularity of health fairs: they are cover. As companies reduce health plan benefits — increasing deductibles, narrowing coverage, scaling back perks — a health fair provides a festive, engaging event through which those changes can be communicated. The fun atmosphere and giveaways cloud the fact that employees are receiving less.
This observation extends the broader theme of the episode. The benefit reductions happening across the industry are not new. They have been building for months. The visible events — the health fairs, the “talent architecture” announcements, the buyout programs — are the packaging around a sustained shift in how companies are allocating their cost structures. And based on the trajectory Nick describes, there is no indication that pace is slowing.
Microsoft’s Voluntary Buyout: Who Actually Leaves?
Microsoft, a company in its fourth or fifth decade of operation, is offering its first-ever voluntary employee buyout. It targets roughly 7% of the US workforce and is structured around an eligibility threshold where an employee’s age and years of service must combine to reach 70. A 50-year-old senior director with 20 years at the company would qualify.
The appeal is that it reduces headcount without forced layoffs, preserving brand reputation and avoiding some of the legal and severance complexity of a reduction in force. But the problem with voluntary programs is well-documented: the employees most likely to take a buyout and a one-time payment are the ones with the most options elsewhere. The highly tenured senior director with deep domain knowledge and strong market demand is precisely the person who can afford to take the package and immediately land somewhere else. The people least likely to leave are those with fewer external options — which may not reflect the employees Microsoft most wants to retain.
Microsoft appears to recognize this risk. Alongside the buyout announcement, the company is adjusting its bonus and stock compensation structure to give managers more flexibility to recognize high performers with larger equity allocations — an attempt to create a financial incentive for valuable employees to stay even as the buyout creates an off-ramp. Whether that counter-incentive is strong enough to offset the pull of a guaranteed payout for someone already considering their next move remains to be seen.
Frequently Asked Questions
The primary driver is capital reallocation. Companies are investing heavily in AI infrastructure — data centers, compute, and the ongoing cost of running large language models at scale — and need to fund that spending somewhere. Benefits are a significant cost line, and in a labor market that has shifted toward employer leverage, the consequence of benefit cuts in terms of employee attrition is lower than it was two to three years ago. Parental leave reductions at Zoom and Deloitte reflect both genuine cost management and, potentially, a way to encourage voluntary attrition from employees who place high value on family-oriented benefits.
AI infrastructure is expensive. Building or leasing data center capacity, purchasing compute, and paying token-based usage costs for foundation models represents a new and significant line item in corporate budgets. For large employers, funding that investment while maintaining profitability requires finding offsetting savings. Labor costs — salaries, benefits, headcount — are the largest operating expense for most companies, making them the natural target. Layoffs generate the biggest immediate savings but carry reputational and operational costs. Benefit reductions and voluntary buyouts offer a softer path to a similar financial outcome.
According to a senior wellness leader at a national health plan, health fairs have become a tool for communicating benefit reductions in a positive, engaging context. As companies adjust health plans — raising deductibles, trimming coverage, removing perks — a health fair creates a fun environment that makes those announcements easier to deliver and harder for employees to focus on negatively. Whether intentional or not, the festive format functions as a distraction from what are often materially worse benefit packages.
The core risk is adverse selection: the employees most likely to take a buyout are those with the most external options, which often means the most talented and experienced people in the organization. A guaranteed payout combined with strong market demand makes the decision easy for a high performer who was already considering a move. The employees least likely to leave are those with fewer alternatives — which may be the inverse of what the company wants. Microsoft is attempting to mitigate this by simultaneously giving managers more discretion to recognize high performers with larger stock awards, but it is a difficult dynamic to fully control.
Two to three years ago, the talent market was heavily tilted toward employees. Companies competed aggressively on compensation, remote flexibility, and benefits — including generous parental leave — to attract and retain workers. That pendulum has swung significantly in the employer’s direction. Job openings have normalized, hiring has slowed in many sectors, and the leverage employees held during the pandemic era has largely dissipated. That shift gives employers more room to reduce benefits without triggering the level of attrition that the same cuts would have caused in 2021 or 2022.
Yes, in some cases deliberately so. Return-to-office mandates and benefit reductions both function as indirect tools for reducing workforce size without going through a formal layoff process. When a company moves to five days per week in-office, some percentage of employees who cannot or will not comply will leave voluntarily. Similarly, when a benefit that was central to an employee’s life planning — parental leave, IVF coverage — is cut, some employees will choose to find a different employer. The company achieves headcount reduction without severance costs, but loses control over which employees leave.
The key takeaway is that the shift happening now is structural, not temporary. Capital is moving from people costs to technology costs across the industry, and that reallocation is reshaping everything from staffing levels to benefits design to how workforce reductions are executed. HR leaders who understand this dynamic — and can translate it for their organizations — will be better positioned to make the case for which people investments are worth protecting and which levers carry the most risk when pulled.
Full Episode Transcript
Nick: Welcome to the Wellable Weekly Podcast, where we talk about key topics and trends at the intersection of wellbeing, technology, and HR. I’m Nick, here with my good friend, Jeff. A lot of stuff happening, Jeff, across a lot of big companies and a lot of dollars being moved. And why it’s important to us in our conversation is often those dollars being moved and those budgets being balanced impact people and employees that work for these companies. And so I think if I was trying to summarize the overall theme of what we’re going to talk about, because it’s a bunch of different articles across two Wellable Weeklys — because we had a guest podcast last week — is really a function of employers trying to save costs so they can transfer some of those funds, presumably to AI spend. And that AI spend can be infrastructure spend, like buying servers and data centers and all that type of stuff. It can be buying or renting compute if you don’t operate your own. Or could just be paying for tokens, right? And so there’s tons of articles and stories about companies paying someone $300,000, like a software engineer, and expecting them to use another $300,000 in tokens to kind of execute at a higher level with AI. So effectively, now hiring one engineer could be the cost of hiring two. And how do you balance that in the context of a huge number of employees in the case of the companies we’re about to talk about?
So how are companies doing this? I think there’s a couple of options. One is like the one I think that gets the biggest headlines — the layoffs. We’ve talked about a ton of these — Block is laying off people, Meta is laying off people, Amazon’s doing cuts, Oracle is doing cuts, Dell is doing cuts. Across the spectrum, people are cutting folks. The biggest ones are the ones that have the biggest spend, no surprise. And these are the ones that are trying to operate their own data centers like the Metas and the Amazons of the world.
Geoff: Yeah, it’s interesting. The two companies that were recognized for making these big changes to benefits — Zoom being one and Deloitte being another — rolling back benefits across key areas like parental leave, PTO, things that are really critical to a lot of employees. When I saw those two company names, the thing that came to mind for me was the nature of those two organizations. In the case of Zoom, obviously a pandemic darling that really invested a lot over the early 2020s to ramp up hiring and infrastructure to account for the fact that we’re all thrust into this hybrid or remote world. And then Deloitte, in a different industry, but really a good example of how this AI transformation is radically changing how people work. As a former consultant — I was at EY for a number of years — I remember my first job as a junior associate: a lot of creating pitch decks and working in Excel, largely things that I would expect Claude or ChatGPT could automate at maybe 80% of the role. I just think, even if you looked at the press release from Deloitte, they’re modernizing talent architecture to provide a more tailored experience reflective of their professionals. It’s not just one tweak of the benefits suite. It is completely rethinking how they structure organizations to combine human capital and, as you point out, more technology capital with the use of tokens and AI power.
Nick: Exactly. And to give some perspective on this: these benefits are getting cut across the board, but Zoom and Deloitte are famously in the news because both of them are focusing on maternity and paternity benefits, parental leave, things like that. For some context, Zoom — if you are the birthing parent, they’re reducing the paid leave from 22 to 24 weeks — so maybe depending on where you are you get one of the two — down to 18 weeks. That’s a material drop in terms of the number of weeks you get. And if you’re a non-birthing parent, you’re getting reduced from 16 down to 10. Again, a very, very material drop. And if you think about it, as you noted, Zoom was like the tech darling during COVID. During that time they couldn’t hire people quick enough. They were giving, in addition to really nice compensation packages, really robust benefits — one of those being parental leave. So the fact that they’re dropping it is indicative of a lot of things. I think one of it is just the job market in general. Employers now have all the power it seems, where two to three years ago, it was so lopsided on the employee. Now it seems to be lopsided on the employer. Ideally, you kind of get to an equilibrium where the right candidates have some leverage, but the employer has choices and options as well. But that doesn’t seem to be the case right now.
Deloitte, a little bit different. They’re actually cutting their parental leave based on roles. So apparently they deliver benefits that are role specific — administrative services, information technology, finance. They have a set of benefits where the consultants may be a little bit different, but they’re cutting that down. They’re also changing some annual PTO benefits. They’re making changes to their pension plan. They also cut IVF benefits — a really popular benefit that emerged with pretty significant growth during COVID — for parents who are struggling to get pregnant and have a baby. So pretty substantial changes. And I’m just trying to put myself in their shoes. What are they doing? Are they just trying to flex their muscle because they can? Or is this a way to potentially have some people opt out? And if you’re an expecting mother and you’re thinking, I really need 20-some plus weeks to operate the way I want in terms of serving in a capacity as a parent, you may just choose to leave that job. When I was in banking, I think about what I did as an analyst. I was like, man, a lot of this could at least be done sufficiently well with AI. And at the very least, just a little bit quicker with AI. So if that’s all AI did was improve your speed, in theory, unless that business grows, you just need less analysts to deliver the same amount.
Geoff: Right. The benefits you pointed out that are being adjusted or cut by Zoom and Deloitte — they’re not coming for the ping pong tables or the free snacks, right? They are coming for family-oriented benefits that, as you would expect when cut or adjusted, sparks this outcry or outrage from employees who maybe have been there for a while, were counting on these as part of their family planning process. Companies would have to expect some sort of response to that. Certainly publicly, I know there’s a lot of commentary out there. But it could just be that because of the way the labor market is right now — more pendulum swinging towards the employer — they feel these type of adjustments can be made. And sure, there’s going to be some outcry against it. But with a tight market and maybe not too many favorable destinations for folks to go to, they’re able to do that. Employees who are committed to the company and their careers there will stay and manage it. And those who are at a deal breaker point, there may be some natural attrition that those companies are prepared for and expecting.
Nick: This reminds me — for those who don’t know, at Wellable we run this annual broker health plan summit. We fly a small group of industry leaders to Mexico for a multi-day thought leadership, focus group type session. Last year, someone who is the head of wellbeing for a very, very large national health plan made a comment about why health fairs were becoming so popular at that given moment. And this person made what I think was the best rationale I could think of, which was that companies were reducing their benefits — adjusting their health plan, increasing their deductible, reducing some of the benefits you may get in the health plan, et cetera. And that’s a hard pill to swallow. So they launch a health fair. It’s fun, it’s exciting, people are getting tchotchkes, et cetera. The goal of a health fair is to communicate benefits and benefit changes. So it’s a way for you to do that in a very fun and engaging atmosphere, in a way to cloud the fact that people are getting a reduction in benefits. And so when I heard that from her, it instantly clicked. I thought: that’s it. That’s why health fairs are booming. And the reality is these reductions in benefits, not just big ones like parental leave, have been happening for months and seem to be picking up pace.
Part of it is cost management — reallocating capital from humans into AI. But part of it is also that benefit reductions can be a mechanism to remove people. Meta and Block want to do pretty significant layoffs in terms of just the number or percentage of people — you have to do that through layoffs. But if you’re just trying to reduce your workforce a little bit, one way to do this is a return-to-office mandate. And if all of a sudden you bump your return to office to five days a week, you’re going to lose some folks. That may be a path to getting that headcount reduction without having to go through a layoff or severance. It reminds me a little bit of what Microsoft’s doing. So Microsoft announces — for this 40-to-50-year-old company — its first ever voluntary employee buyout. The goal is for 7% of the US workforce. It’s for senior director titles or below whose years of employment and age add up to 70. So if you’re 50 years old, you’re a senior director, and you’ve worked at Microsoft for 20 years, you’re eligible. They’re also making some changes to stock and cash compensation.
But I find this really interesting because I remember when early retirement was used as a way to reduce the workforce during the DOGE crisis early last year. And a lot of people were saying that using early retirement as a way to reduce the workforce isn’t a good idea. Because if you are that senior director and you’re 50 years old and you’ve been at Microsoft for 20 years — maybe you have enough money to retire, but even if you do, maybe you just don’t want to retire. There’s a huge portion of that profile who are not going to retire. So the people who take this buyout are often the individuals who are the most talented, often the people who have the most job prospects. They take the one-time payment and go out and get another job. Yes, you reduce your workforce — which is the stated goal — but you want to do it in a way that you get to keep the people you want rather than having them choose. In layoffs, you get to choose who you keep and who you don’t. In a voluntary buyout, you lose control. And a lot of studies and data points suggest the best people will leave in that scenario, which can’t be what Microsoft wants.
Geoff: 100%. And it’s probably why at the same time when they made this announcement, they also indicated they’re going to change how they approach performance-related bonuses and stock — effectively moving away from it being directly tied to a bonus, shifting instead to giving managers more flexibility to recognize high performers with higher stock allotments. And so hopefully that helps partially address the situation you described, where maybe a high performer who was kind of on the fence on whether to take that buyout or stay a bit longer would be more monetarily incentivized to stay with the company.
With that, I think it’s probably a good time to wrap up today’s pod. Really appreciate the conversation, Nick. And as always, for those who are listening, you can tune in to Apple Podcasts, Spotify, wherever you get your podcasts for our weekly episode. And be sure to subscribe to Wellable Weekly to get all of our other insights there. Thank you.
-
Share
-
-
-
-
