First, they were told to use AI. Experiment! Add it to your workflows! Go wild! Then the bills started piling up, and companies realized the cost was not tenable. Now the walk-backs are happening. Usage caps! Caution! Slow down! Among the issues communicators need to address is employees questioning leadership’s judgment. In this short midweek episode, Shel and Neville explore approaches communicators can take to help employees understand the pivot while maintaining the perception of leader competence.

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The next monthly, long-form episode of FIR will drop on Monday, June 22.

We host a Communicators Zoom Chat most Thursdays at 1 p.m. ET. To obtain the credentials needed to participate, contact Shel or Neville directly, request them in our Facebook group, or email fircomments@gmail.com.

Special thanks to Jay Moonah for the opening and closing music.

You can find the stories from which Shel’s FIR content is selected at Shel’s Link Blog. You can catch up with both co-hosts on Neville’s blog and Shel’s blog.

Disclaimer: The opinions expressed in this podcast are Shel’s and Neville’s and do not reflect the views of their employers and/or clients.

Raw Transcript

Neville Hobson: Hi everyone and welcome to For Immediate Release. This is episode 517. I’m Neville Hobson.

Shel Holtz: I’m Shel Holtz. In some companies right now, that AI that was supposed to replace expensive humans is costing more than the humans it replaced. The numbers are kind of breathtaking. Uber burned through its entire 2026 AI budget in four months. In fact, I just heard today that they’re introducing a monthly AI spending cap of $1,500 per employee. One unnamed company, a real one though, spent half a billion dollars on AI in a single month because nobody had bothered to set a spending limit. An NVIDIA executive flat out admitted that for his team, compute now costs more than the engineers using it. A lot of these companies didn’t just overspend, they made decisions on the strength of what they thought AI could do. And in plenty of cases, those decisions cost people their jobs. The pitch was that AI can do this work for a fraction of the cost.

Then Bain and Company studied a thousand companies and finds that most aren’t getting those savings. Gartner found the layoffs delivered no better returns than not laying anyone off at all. In its study, Bain looked at the books and saw money leaking out of the top, companies spending the budget without the savings showing up. And Boston Consulting Group went and asked employees and found that the leak runs from the bottom too. Over 40% of regular AI users say they’re saving a full workday every week. But Boston Consulting Group’s point is that saved time doesn’t automatically become value. If nobody tells an employee where to redirect those reclaimed hours, that value just evaporates. So two consultancies looking at two completely different ends of the organization landed on the same diagnosis. This is a management failure. It’s not a technology failure. So put yourself in the shoes of employees who are still there.

They watched colleagues walked out the door because they were told the machine could do it cheaper. And now they’re watching leadership start to walk it back. In most cases, walk it back really quietly. What does that do to employees who see their leaders’ judgment, their competence? Because that is where this becomes a communication story. It’s about trust, credibility, and what we as communicators are supposed to do when leaders make a big public painful bet that doesn’t pay off. We’ll share our thoughts about that right after this.

Now there’s a lot we can talk about with this story, like communicating a suddenly altered governance model. But let’s start here. The bet companies made was about people, that AI could replace human labor at a fraction of the cost. When that turns out to be wrong, employees don’t just see a line item on a P&L. They see leaders who either didn’t understand the technology they bet the company on, or who used the AI story as cover for cuts they were going to make anyway, what we’ve come to call AI washing. Both of these readings are poison. The second one travels fastest. A communicator’s first job is to make sure that the accurate story is the one that gets out there. And to add a little context to that idea, Sam Altman, the CEO of OpenAI, just recently said that this cost discussion is new. It started early this year. Before that, nobody was talking about it. And that’s probably because before early this year, most employees were prompting AI chatbots, and that didn’t blow up budgets. What changed early this year? Agents. Now employees have agents running complex tasks in an endless loop, and that burns tokens like nobody’s business. I heard about one employee who burned through a billion tokens in a month. That means costs are exploding. It’s not something anybody really anticipated, and a lot of CEOs were caught unaware. You know, they paid for the subscription cost to say Anthropic, now they’re paying the subscription, but they’re also paying for tokens. So Neville, if you were leading a comms department in a company that laid off a bunch of people because AI could do their jobs, and now it’s either costing more for the AI to do those jobs, or the AI isn’t doing it as well as the people did, how do you communicate that without making leadership look like fools?

Neville Hobson: Yeah, it’s a good question, isn’t it, Shel? I mean, you’ve painted a picture that’s pretty dire, it seems to me. And I like to think that this is a kind of outlier territory we’re in. This is not the mainstream. But I’m willing to be proven wrong. You know, I don’t recognize this in the UK, so it could not yet be a big deal over here. But I’m thinking you mentioned that the original AI narrative, if I can describe it that way, was sold to people as we’re replacing you with robots or we’re replacing you with tech. I wonder, is that the case everywhere? Because I would have thought it was, many would have sold it as additive. It’s AI plus you, not AI instead of you. And that’s a wholly different kind of message if that were the case. Either way, they’re walking it back. And I think there’s a handful of things the communication leader should do. And that person would also be the counselor and the advisor to the leadership of the organization. So I think one of the first things, if not the first thing, is that you mustn’t let the leadership hide behind eup...