The return of the Company Man

How AI will increase the returns of employee retention

A few generations ago, times were different. You dreamed to work for a big company. You stayed there for 40 years. And at the end, they gave you a gold Rolex.

Rolexes cost a few hundred dollars back then, now a gold day date will run you $50k. Goods have gotten more expensive, the economy has gotten more competitive, and people more than ever frequently switch between employers to maximize their pay.

As AI reshapes the economy, we’re undergoing another major shift to workplace culture and individual career incentives. People are already starting to be concerned about job security in the face of AI. Many companies have implemented hiring freezes or layoffs from the productivity gains of AI. And this will only accelerate.

Meanwhile, the concept of a “firm” is changing. What does a talent moat look like when many white collar jobs can be automated? Google used to excel from having the best software engineers. But now robots will be software engineers and every company will have virtually the same ones.

White collar’s workers’ roles will shift then too. The individual contributor will become a manager of agents. The manager will become a super-manager with the help of AI. When the execution of work is automated, firms will compete not on the skills of their workers, but on the things that remain bespoke: brand & internal processes.

Coca Cola doesn’t necessarily have the best product. There are better tasting sodas out there. Coca Cola succeeds by their brand. AI won’t change that. Similarly, Palantir may have better products than a lot of their competition, but that’s not why they win. They win 1) because their brand is trusted 2) they have very strong internal workflows from doing big AI government projects countless times over the last 15 years.

AI may be able to automate estimating production targets for Coca Cola, or on writing low-level code for Palantir, but a new firm won’t be able to instantly be Palantir or Coca Cola (brand or process wise). This increases the returns to incumbents. Long standing brands will be the hardest to displace, and companies with smooth processes at the scale of 10,000s of employees will be difficult to compete with. AI will be in many ways a sustaining innovation for these firms.

For the individual worker, their hard skills decline in value as AI can automate them. The worker’s value to the firm is now based on their ability to accelerate brand & internal processes. Both brand & internal workflows are easier to impact for someone who’s been at the company for a long time. For any individual worker, their value to the firm will compound faster with tenure in this future than now.

For the employee, their market value as a new entrant to a firm may then be much lower than the value to their existing firm where they understand the processes & brand, and know how to work with the existing team & tools. I argue that for most employees, they will be more valuable to their existing employer, and thus not incentivized to leave. And for the employers, they are far better off retaining existing employees. So we may once again return to people staying 5, 10, 20 years at the same enterprise.

Furthermore, we can expect government regulation to step in once firms are firing humans en mass. There will likely be more protections for existing employees (e.g. longer notice before firing, more severance, etc). Perhaps we even have a rule that says if a human is capable of doing a job as good as an AI, the firm is forced to hire the human. People who voluntarily quit their jobs forfeit these benefits, again meaning more people will stay.

So if you’re in the talent market today, and not looking to start your own company, I’d pick your next job wisely. You might be there longer than you expect.