Josh Bersin’s Post

In my experience, a reduction in force is never about growth. Its more about adjusting to changing market conditions that require greater financial discipline (often at the short-term expense of growth). Additionally, "rule of 40" is defined that a company's COMBINED revenue growth and profitability (best measured by free cash flow margin) should be 40% or higher. Many PE-backed companies of the size and scale of UKG have slowing growth in the single digits or high teens ("the law of large numbers") and, as a result, investors will demand increased free cash flow margin. Lastly, it should be noted that UKG is a well-run business with a strong culture. I wouldn't read anything more than management running a very disciplined company.

This supports the thesis around 90 million expected job losses as a direct consequence of embracing AI as a means to eliminate jobs and drive margins. Spin it any way you want. Job elimination is the goal. Just be honest about it.

Sorry -- "Subtract and then multiply" sounds like the worse sort of consultant speak I've ever heard. And I'm a consultant...

While there’s merit to the discussion of realigning and reallocating investment and resources to these growth vectors, I struggle to believe that the Board level conversation unperpining this RIF was principally predicated on that vs a measured approach to preserve margins. Generally speaking, Private Equity owners of scaled, mature Software/SaaS businesses tend not to lean in on underwriting opaque, asymmetric outcomes on revenue (i.e. reacceleration of growth from some “one the come” net new opportunity) - that’s what Venture Capital and Growth Equity investors do. They also equally tend to shy away from underwriting anything that can pose operational risk (i.e. not having a cost structure to support realistic growth expectations). In other words, I struggle to see a scenario where if in the event a company is meeting or exceeding its Plan (whether on growth and/or EBITDA/FCF) that it would come to the decision to take out $250-$300M of run-rate cost (~5% impact to EBITDA margins) to try to crystallize freeing up resources to make these “bets” on something that’s fundamentally hard to measure today.

I disagree with this article. Part of the rule of 40 and the fundamental business of UKG is retention. The downstream impacts of these layoffs will be catastrophic and will not be able provide quality or fast enough service. There was some fat at UKG but not 14%. This is a dramatic layoff where the company didn’t understand what half of these people did. They can try to spin this to the public and internal employees but retention of of employees and customers will be massive.

Usually I stay in my lane & I probably should. With the amount of VP’s and CEO’s commenting on this , I’m astounded that this article is being taken at face value. They know how business operates. Did we forget the ability to think critically? I came from this organization two months ago, I can tell you that this article covers the smallest fraction of variables that informed the ‘strategic growth’ decision. Admittedly, I don’t know all the details but it surely cannot be explained away by a simple theory of positive growth and reallocation to AI. When business is booming you don’t see a 14% haircut on the most liquid overhead cost - people. Restructuring is normal, even when business is good, but an organization owned by private equity will always be a transparent indicator on how business is doing. The private equity company will always ensure they get their return on investment - even when they have to liquidate for margin. PR articles are an art form. This was almost as good as SVB going under and the vendor that struggled to move money for employee payday being painted as a hero because they managed to take last minute loans.

The sooner the world moves to an employee ownership model that values more than just shareholder profits and CEO pay the faster I can stop reading drivel like this that justifies disrupting 1000s of lives and communities just to make the lines on a spreadsheet go up. Here is a quick summary for your article: a profitable company wants to look even more profitable in the short term by sacrificing one of the secret sauces that got them this far, exceptional employee retention. They literally acquired the Best Places to Work company to hide the the stench of the rotting company culture under the guise that they can't rate themselves or be impartial.

As a customer of UKG (from Ultimate days to current), the company has lost sight of what made them successful in the first place - their people. Each time they do a RIF, the company is losing its most valuable asset, employees are losing their livelihoods and customers are losing more of the vital support teams they are paying $$$$ for. UKG needs to do better - and if it doesn't, I think you are going to see those 'margins' and 'profits' start to decline as customers evaluate other competitors out there who are keeping their people employed. End rant.

I was disappointed to see how poorly my former company handled this layoff. I heard some folks were informed via receipt of a fedex label for the equipment return. Also to do it the day before the 4th of July holiday is just disgusting. Ruined over 2000 family celebrations. Layoffs may be necessary, but there are ways to do it that respects the workers who are impacted and does it with empathy. UKG continues to disrespect its current and former workers with moves like this and will pay the consequence down the line when the "Do more" part of "Do more with less" doesn't come to fruition.

Josh Bersin While it is true that AI will impact the job landscape, the current hypothesizing and sense of inevitability is more speculative and self-fulfilling than based on solid evidence. The messaging spewed-forth by AI-addled tech and tech-enabled firms is meaningless hyperbolic fluff. While AI generates "Wows!", there is little replicated research indicating exactly how AI is transforming work. Research in call centers shows AI applications improve time-to-productivity for new joiners and quality-of-work for average employees, but the impact on highly-skilled workers is minimal. No replicated research confirms which jobs are being eliminated by AI to deliver efficiencies. Most published claims, on this platform and in mainstream media, are pure speculation. No major tech firm that announced layoffs citing AI has credibly detailed which jobs have been fully automated and replaced by AI. The UKG statement reeks of a shareholder-value play. By jumping on the viral AI-induced layoff bandwagon, Hellman & Friedman will likely see a spike in UKG's market value. It wouldn't be surprising if they aim to float or flip it at an AI-inflated price in the coming months.