HR Leaders Grapple With Rising AI Costs and Unclear Returns
Chief people officers gathered in Toronto this week raised a consistent complaint: AI is expensive, and companies haven't figured out if it's worth the money.
The roundtable, which included executives from 1Password, BMO Financial Group, and other major firms, revealed a widening gap between AI experimentation and financial accountability. As employees test more tools, costs mount quickly.
"Tokens, seats, we have all these enterprise tools we haven't basically budgeted for, and it's expensive," said Katya Laviolette, Chief People Officer at 1Password.
Experimentation matters. Companies need it to find productivity gains. But investors eventually demand proof that spending translates to profit. The tension between exploration and results is forcing HR leaders to make hard choices about where AI dollars go.
Productivity Gains Don't Always Show Up on Financial Reports
Entry-level employees using AI tools report less tedious work and better experience. Senior finance leaders see different numbers.
Kyle Trahair, Managing Director at BCG, said his firm hears the same pattern repeatedly: "Yes, I'm hearing all those hours saved. I'm not seeing any change in the results."
The problem isn't AI literacy at lower ranks. It's that senior leaders haven't identified which business problems AI should actually solve. Without that clarity, time savings don't translate to revenue or cost reduction.
"You need the senior levels of the organization to find the right problem for AI to solve that is sufficiently ambitious, that it'll make a meaningful P&L impact," Trahair said. "But they can't do that without the AI literacy needed to understand what the art of the possible is."
Layoffs Aren't the Only Cost-Cutting Option
Some companies are cutting headcount as AI takes on more work. Others are taking a different approach: multiply what each person can do.
Jay Ferguson, Chief Human Resources Officer of Technology & Operations at BMO Financial Group, said the choice is strategic. "You can take cost out, or you can give augmentation and multipliers to every person you have," he said.
If a company can boost productivity 30% across the board, it wins on revenue and costs simultaneously. That requires different thinking than simply removing positions to offset AI spending.
Middle Management Faces New Vulnerability
The jobs most at risk may not be the ones everyone assumes.
Angella Alexander, Chief Human Resources Officer at ATS Corporation, said the traditional experience that middle managers rely on is becoming obsolete. "At some point the level of experience that our middle management has will quickly become irrelevant experience," she said.
The way these managers think about processes and problems won't adapt fast enough. Companies will need people who can reinvent workflows entirely, not just improve existing ones. That shift could eliminate the middle layer faster than it eliminates entry-level roles.
Getting Employees to Actually Use AI Tools Requires Structure
Adoption doesn't happen by accident. Wealthsimple's approach shows how deliberate change management works.
Olivia Chiu, Head of Talent Management at Wealthsimple, described an afternoon the company cleared everyone's calendar for a "Claude installation party." Employees installed the AI tool and immediately applied it to a real client problem they'd seen on the job.
The result: work that typically takes a week got done in an afternoon. That collective experience, all happening at once, became the change management itself.
Smaller Teams Are Becoming the Norm
Venture capital is funding companies with dramatically fewer people than five years ago.
Sanjana Basu, Partner at Radical Ventures, said her firm now sees 16- and 20-year-olds pitching companies built with minimal staff, all using AI tools heavily. "They are building companies with much less workforce," she said.
Those high-autonomy workers will either start their own companies or get hired into larger firms because they can move quickly and independently. Either way, the expectation for what one person can accomplish is shifting upward.
For HR departments, that means the talent they need to hire looks different. So does the structure of the teams they're building.
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