The pervasive influence of artificial intelligence on the global workforce is no longer a hypothetical scenario but a rapidly unfolding reality, prompting widespread discussion about job displacement and the emergence of new roles. While the focus has largely been on the impact of AI on specific positions—which will endure, which will fade, and what new AI specialists companies should recruit—a critical, yet less explored, dimension is how organizations’ talent and people leaders are strategically managing these transformations from within. Addressing this gap, two recent in-person workshops convened by Battery Ventures brought together a cohort of people and talent leaders from across their portfolio companies and broader professional networks. These sessions revealed a profound sense of disorientation as AI reshapes fundamental aspects of human resources, from hiring and compensation to performance management and career development. The consensus emerging from these discussions is that HR can no longer operate as a purely reactive function. Companies navigating this period with the greatest efficacy are not treating their people leaders as mere enforcers of policy or managers of process, but rather as integral architects of business operations. The most forward-thinking leaders, in turn, are proactively embracing this elevated role.
Hiring Becomes a Deliberate, Competitive Endeavor
The integration of AI agents capable of performing tasks previously handled by humans has significantly altered the landscape of recruitment. The expectation that open positions will be automatically backfilled is rapidly becoming obsolete. Instead, organizations are adopting a more deliberate and strategic approach to filling vacancies. This involves proactive market mapping—a comprehensive analysis of the external talent pool within specific industries, skill sets, or geographic regions—and active engagement with internal stakeholders, including functional leaders and individual contributors, to gather crucial input before initiating the hiring process.
A concept that repeatedly surfaced during the workshops was "Know Your Candidate" (KYC), a principle adapted from the financial services industry’s "know your customer" mantra. In an increasingly competitive market for top AI talent, recruiting teams are deepening their understanding of candidate motivations to enhance their ability to secure sought-after individuals. This involves asking pointed questions designed to gauge AI fluency and its practical application in driving business outcomes. For instance, inquiries such as, "What tools are you using, and how are you leveraging them to accelerate business outcomes?" are becoming standard. Furthermore, discussions around AI usage often extend to probing candidates’ understanding and implementation of Key Performance Indicators (KPIs) for their teams’ utilization of increasingly valuable computational resources and "tokens." Questions like, "What are your thoughts on ‘tokenomics,’ and how are you assessing that as your organization grows?" are being posed to assess a candidate’s strategic thinking in this nascent domain. The underlying expectation is that all candidates possess at least a foundational level of AI fluency.
The recruitment process itself is also undergoing a significant AI-driven transformation. Virtual career fairs, conversational hiring events, and AI-powered resume-matching tools are becoming standard components of the talent acquisition pipeline, not only to optimize efficiency but also to identify candidates who might otherwise be overlooked. To compete for a diminishing pool of high-impact individuals, many companies are increasing referral bonuses, with some offering incentives that fall within the 70th to 80th percentile of salary bands for critical hires. This intensified competition underscores the strategic importance of talent acquisition in the current economic climate.
Rethinking Growth: Automation vs. Headcount Expansion
Perhaps the most debated topic among the assembled leaders was the question of whether growth can be achieved without a corresponding increase in headcount. This inquiry itself serves as a critical indicator of the evolving business environment. Companies that frame the decision between hiring and automation as a binary choice often find themselves reacting too late—after a role has become vacant or a team is already overburdened. A more effective approach involves proactively mapping the flow of work across the organization before determining the optimal resource allocation.
This necessitates treating workflow design as a strategic imperative. Leading organizations are engaging functional leaders in end-to-end reviews of their core processes. These deep dives aim to identify where time is being expended, where handoffs between teams or individuals are breaking down, the loci of decision-making, and the sources of productivity drag. The most impactful takeaway from these discussions was the imperative to map workflows before initiating a hiring requisition. This process involves a granular understanding of the tasks inherent to a role, identifying which of those tasks could be augmented or automated by AI, and then defining the essential responsibilities for a human hire after such automation. This exercise often leads to a complete reimagining of job descriptions and, in some cases, eliminates the need for a new hire altogether, allowing for the redirection of budget towards technology investments.
Consequently, employee expectations are visibly shifting. Individuals are increasingly expected to possess a multifaceted skill set, acting as functional experts, systems thinkers, and AI operators. At all organizational levels, employees are tasked with performing their core duties while simultaneously contributing to the redesign of work processes through the lens of AI. This represents a significant departure from the profiles companies sought just a few years ago, rendering traditional job description language increasingly insufficient. Roles such as "AI enablement lead" or "GTM engineer" have emerged as critical in many organizations, having not existed in their current form a short time ago. More broadly, companies are grappling with the challenge of translating nascent AI advancements within specific functions into cohesive, company-wide AI strategies. This strategic integration is crucial for realizing the full potential of AI across the enterprise.
Compensation and Career Progression: A Shift Towards Targeted Rewards and Dynamic Paths
The traditional "peanut butter" approach to compensation—spreading raises evenly across the organization—is losing favor, according to the people leaders present. Companies are increasingly concentrating resources on roles and individuals that generate the greatest leverage, structuring compensation packages accordingly. The prevailing sentiment was clear: reward impact, not merely tenure.
Retention, however, presents a more nuanced picture. While financial compensation remains important, a growing segment of the workforce prioritizes opportunity over salary alone. A compelling metaphor emerged from the workshops, courtesy of experts at Sequoia: winning companies are offering employees a "rock-climbing wall" rather than a traditional "corporate ladder." A corporate ladder delineates a linear, predictable, and often slow path to advancement. In contrast, a rock-climbing wall offers numerous routes to success, some unexpected, encouraging individuals to forge their own paths. This model rewards curiosity, adaptability, and initiative over mere patience.
A new generation of employees is less interested in guaranteed career trajectories and more focused on accumulating a diverse portfolio of experiences that compound over time. Startups have historically operated on this principle, but the shift is in how this breadth and speed of experience are now being explicitly framed as a key benefit, rather than a compromise for potentially lower compensation. For companies unable to compete solely on salary, this strategic framing offers a legitimate competitive advantage in attracting and retaining talent.
Equity structures are also evolving. As more late-stage companies remain private for extended periods, the traditional stock option model appears increasingly outdated. Restricted Stock Units (RSUs) are gaining prominence, particularly in companies where rising strike prices have diminished the perceived value of stock options for new hires. Unlike options, RSUs do not require employees to make an upfront payment to receive them; upon vesting, they are granted as actual shares. This predictability is attractive to employees seeking clarity on their compensation and to companies looking for more straightforward retention tools that are less dependent on specific liquidity events. A comprehensive analysis of RSUs highlights when and why this switch makes sense, including the critical trade-offs leaders must consider.
"Refresh equity" grants are becoming more selective in the current environment, with a notable exception: AI companies continue to extend these grants broadly due to the persistent competition for specialized talent. For other organizations, the retention playbook is increasingly emphasizing elements that money cannot easily replicate—a sense of continuous growth, the visibility of one’s contributions, and the assurance that the next two years will provide invaluable learning experiences that cannot be easily replicated elsewhere.
The Evolving Mandate of People Leaders: A Critical Window for Strategic Action
The decisions being made today regarding AI integration, headcount, organizational design, and compensation transcend mere operational choices; they are strategic imperatives that will shape how companies compete over the next decade. The expertise of people leaders in areas such as compliance, process optimization, and risk management is more crucial than ever in the AI-driven landscape. These skills empower forward-thinking individuals to assume more significant, strategic roles within their organizations. Their influence is shifting from a mere presence at the table to a direct hand on the wheel, guiding companies through this transformative era. The current moment represents a critical window for these leaders to exert their influence and drive substantial strategic impact, positioning their organizations for sustained success in the age of artificial intelligence.
Disclaimer: The information presented herein reflects the opinions of Jenny Kang, Carl Narcisse, and Susanne Richman and should not be construed as investment advice. This material is provided for informational purposes only and is not intended as, nor should it be relied upon as, legal, tax, or investment advice, nor does it constitute an offer to sell or a solicitation of an offer to buy any interest in any fund or investment vehicle managed by Battery Ventures or any other Battery entity. This content covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and is intended for educational purposes. The anecdotal examples are provided for an audience of entrepreneurs building their businesses and do not constitute recommendations or endorsements of any particular business.
