Jack Dorsey didn’t ease into it. In a post on X, the Block co-founder and CEO told staff that “over 4,000 of you are being asked to leave or entering into consultation,” reducing the company from over 10,000 people to just under 6,000 and confirming severance details publicly, and off the bat.

The decision was deliberate, and Dorsey said so plainly on the earnings call. Rather than let AI-driven efficiency gains slowly erode headcount over months or years, he chose a single, deep cut. The announcement came after rolling job eliminations that had often been tied to annual performance reviews. Dorsey’s reasoning: Repeated rounds of cuts, he argued, destroy morale, focus and the trust of customers and shareholders alike.

The market rewarded the clarity. Block—home of Square, Cash App, Afterpay and more— jumped as much as 21% after trading opened on Friday following the layoff announcement.

‘Application gap’

On the earnings call, Dorsey pointed to a specific inflection point in AI capability. “Something happened in December of last year where the models just got an order of magnitude more capable and more intelligent,” he told analysts. “If there are any gaps in our usage of AI right now, it’s an application gap.” He added that Block had invested heavily in AI tools to run more efficiently, including building its own internal tool called Goose.

CFO Amrita Ahuja echoed the operational rationale on the call, noting that Block had already seen a greater than 40% increase in production code shipped per engineer since September, and that “engineering work that would have taken weeks to complete” was now being done by small teams in a fraction of the time with agentic coding tools.

In Q4, Block reported adjusted earnings per share of $0.65, in line with Wall Street estimates, and revenue of $6.25 billion, slightly ahead of expectations. The company also raised its full-year guidance, projecting gross profit growth of 18% year over year in 2026 and adjusted operating income of $3.20 billion, according to Yahoo Finance.

A new breed of severance

Dorsey led with the severance terms before anything else in his note to staff, and multiple observers have described the package as relatively generous compared with recent tech-sector layoffs.

Employees being let go will receive their salary for 20 weeks plus one additional week for every year of tenure at the company, equity vested through the end of May, six months of healthcare coverage, their corporate devices and $5,000 to use however they need during the transition. Employees outside the U.S. will receive comparable support, with exact details varying based on local legal requirements. Dorsey told staff that everyone would be notified the same day, whether they were being asked to leave, entering consultation or staying on.

In comparison, Amazon’s January 2026 announcement of cuts delivered severance of full pay for 90 days plus an “additional severance package,” according to reporting in Business Insider. Google packages, after 2023 layoffs, started with 16 weeks of salary, plus other benefits, as reported by ABC News. In 2022. Meta offered severed employees a similar package, starting with 16 weeks of paid salary, according to Reuters.

Read more: Poorly executed layoffs hurt your company

3 insights for HR leaders

Ahuja framed the decision as one made from a position of strength, not distress. “We are choosing to shift how we operate at a time when our business is accelerating,” she said on the call, noting the company expects adjusted operating income to grow 54% year over year in 2026.

Dorsey also issued a broader warning to the business community. On the call with analysts, he said he believes many companies will ultimately have to make similar moves, telling investors: “I don’t think we’re early to this realization.”

Here are three things to take away from Dorsey’s approach.

The all-at-once approach has a real case

Dorsey’s argument for a single large reduction over a prolonged series of smaller ones deserves serious consideration. Sustained uncertainty, rolling eliminations and protracted reorganizations carry real costs to engagement, productivity and the employees who remain. For HR leaders advising the C-suite on AI-driven restructuring, modeling the full organizational cost of a multi-phase approach against a faster, more definitive one should be part of the conversation before decisions are made.

Severance design is now a brand signal

Block’s package, which includes weeks of pay, extended healthcare and a transition stipend, is already being cited as a benchmark. In an environment where layoff announcements travel instantly, the terms offered to departing employees are as visible to future candidates and current staff as the reduction itself. HR leaders should consider treating severance design as a talent strategy and communications decision, not just a legal and finance exercise.

‘AI made us do it’ requires documentation

As more companies attribute workforce reductions to AI efficiency gains, scrutiny from employees, regulators and the press is intensifying. On the call, Ahuja pointed to specific internal metrics, including that 40% increase in production code per engineer, as evidence tying the decision to measurable operational change. HR and legal teams should be building that same paper trail: concrete, contemporaneous documentation linking structural changes to specific operational decisions, not just a broad AI transformation narrative.

The post Jack Dorsey’s big AI layoff move sets new severance benchmark appeared first on HR Executive.

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Jack Dorsey’s big AI layoff move sets new severance benchmark

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