MESSAGE FROM OUR CEO’S DESK

Last week, Inc. ran this piece that should make every board member who approved an "AI efficiency" layoff very nervous - Gartner predicts half of those cuts get reversed by 2027 and 55% of employers who restructured because of AI already regret it. Exhibit A is Klarna, which cut 700 support agents in 2024, bragged about the savings, then rehired humans within a year for anything involving fraud, a billing mess, or a genuinely upset customer. AI can read policies, but it certainly cannot read the room.

The article is about enterprises with thousands of employees, and it makes me think about the venture-backed 20-200-person startups that  told their board the exact same story on a much smaller stage. The story went something like "we can hit our numbers with a fraction of the headcount,” and “AI covers the gap,” and it got the board to sign off on their business plan based on these cuts.

My guess is that at least 50% of those companies don't have the output to show their VCs the bet actually worked. And in the next 12 months, we're going to watch a wave of those same founders walk back into the boardroom asking to add the headcount back, because AI wasn't the fix they promised.

Some lessons and advice to consider:

• Double check the efficiency gains. If you cut a role and called it "AI efficiency," go back and check whether what you automated was retrieval- or judgment-based work, and the impact of those changes. 

• Rehiring isn't admitting you were wrong about AI. It's admitting your first plan didn't leave enough humans in it, and you’re coming back to them with recalculations. Boards can tell the difference if you frame it that way.

• Don’t sell a story you’re not sure you’ll have the data for. If you haven't made the cut yet, don't sell your board a story you can't back up with real output data in six months. That bill always comes due.

• Own up to your mistakes. If you already made the cut and it's not working, get ahead of it. Have a clear message that takes meaningful ownership for your company and for the board. Accountability builds TRUST! 

The founders I respect most right now are the ones willing to say "I got this one wrong" before their employees and their board force them to say it. We’re learning A LOT, all the time. There’s no shame in processing new information, shifting our perspective, and building a new plan.

THE HR BRIEFING 🗞️

THE LATEST NEWS TO KNOW

HR headlines and stories, curated with our perspective. 🤝

A top-trending story in the news this past week was that a group of current and former Meta employees claim the company used automated scoring systems that discriminated against workers on family, pregnancy, or medical leave.

• ↪️ PFunc’s Perspective: This is why you need to enforce a “Human-in-the-Loop Safeguard. Never let a software program generate a final termination, PIP, or low-performer list without rigorous human oversight. Real leaders aren’t using automated HR tools as a hands-off solution.

TalentLMS research found that employees are outrunning their companies' ability to train them, leading many to secretly hide their skills gaps or use AI to look way more competent than they actually are.

• ↪️ PFunc’s Perspective: This is helping NO ONE! It is the company’s job to ensure employees feel safe enough to expose their learning gaps, so that the company can support them in their growth and development.

A couple of other trending stories:

• HR Brew: AI-influenced job titles are now more common outside the tech industry.

• Orgvue: Report debunks AI myth, revealing tech downsizers grow at half the rate of talent investors.

COMPLIANCE CHECK

Watch out for these HR compliances going into effect (or hitting deadlines) this month.

• Maine (eff. 7/29) – Employers with 10+ workers must provide expected pay scales within external and third-party job listings, and share current pay scales with existing staff upon request.

• Federal (eff. 7/31) – ERISA-regulated employers must file annual Form 5500 benefit plan reports, detailing retirement and welfare plans.

• New Jersey (eff. 8/1) – Child vlogger protections will expand, defining a minor as "employed" if they appear in at least 30% of a vlogger's paid monthly content.

THE OPPORTUNITY EXCHANGE 📈

ROLES ON OUR RADAR

The PFunc job board is packed with open roles across our client companies, making it easier than ever to tap into our network.

This week, we’re highlighting the latest job openings in our network.

• Accounting Manager at Allocate (Palo Alto, CA) – Own the monthly close process and scale day-to-day financial operations in a role with high visibility and ownership.

• People Operations Lead at Akina Pharmacy (Remote, East Coast) – As the first People Operations Lead, you’ll fully own and scale the operational engine across compliance, compensation, data, and the employee lifecycle.

• Software Engineer Manager at RADAR (Sunnyvale, San Diego, or Seattle) – Bring a strong technical background to oversee full-stack engineering, core frontend experiences, and team scaling.

See a role you’re interested in? Reply to this email and we’ll try to connect you with the hiring team. Hiring for an open role yourself? Reply to have your job featured in an upcoming PFunc Pulse issue.

CHRONICALLY ONLINE📱

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STAY IN TOUCH 💌

If you’re interested in fractional HR support for your team, reply to this email or contact us to learn more about our offerings, pricing, and how we can support your growing company.

Join the Talent Network here (it’s free!). Whether you’re actively exploring new opportunities or happily employed but open to the right fit, becoming part of our network boosts your profile when roles align with your experience, skills, and career goals.💡

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Every Tuesday, The PFunc Pulse delivers the HR news and compliance shifts you actually need to know about, without all the corporate fluff. Emma brings her unfiltered take on the trends keeping CEOs awake at night, served with the gritty, practical wisdom of a founder who’s seen it all. Real talk for better people decisions, week by week. (P.S. Do your work bestie a favor and forward this— friends don't let friends do old school HR. 🫢)