San Francisco: Jack Dorsey, the co-founder and CEO of Block Inc., has announced a sweeping reduction in the company’s workforce. Approximately 4,000 employees — nearly half of the firm’s global headcount — are to be made redundant as the company pivots towards a future defined by artificial intelligence and leaner operational structures.

The announcement, delivered via an internal memorandum and subsequently shared on social media, marks one of the most significant contractions in the company’s history. Block, formerly known as Square, is the parent company of major services including Cash App, Afterpay, and Tidal.

A Fundamental Shift in Labour

Dorsey’s justification for the cuts was notably distinct from the “cost-cutting” rhetoric typically seen in Silicon Valley during economic downturns. Rather than citing financial instability, the CEO pointed to a fundamental evolution in how technology companies operate.

“We’re not making this decision because we’re in trouble,” Dorsey stated. “Our business is strong. Gross profit continues to grow… but something has changed.”

That “something” is the rapid integration of Intelligence Tools. Dorsey suggests that the synergy between advanced AI and smaller, “flatter” corporate hierarchies has rendered the traditional 10,000-strong workforce obsolete for Block’s future ambitions. He argued that these tools are “enabling a new way of working which fundamentally changes what it means to build and run a company.”

By reducing the workforce from over 10,000 to just under 6,000, Dorsey is betting that a more agile, AI-centric organisation will outperform the legacy structures of the past decade.

The Severance Package: A “Human” Departure

Acknowledging the severity of the decision, Dorsey outlined a comprehensive redundancy package for those affected. In a bid to maintain what he described as a “human” approach to a cold corporate reality, the company is offering:

* 20 weeks of basic salary, plus an additional week for every year of service.
* Equity vesting through to the end of May.
* Six months of healthcare coverage and the retention of corporate devices.
* A $5,000 transition payment to assist with immediate needs.

While these terms apply primarily to U.S. staff, Dorsey noted that employees in international markets, including the United Kingdom and Australia, would receive “similar support” tailored to local labour laws and consultation requirements.

In a departure from the “locked-out-by-lunch” approach favoured by many tech giants, Block will keep internal communication channels, such as Slack and email, open until Thursday evening. This is intended to allow departing staff to “say goodbye properly” and preserve the dignity of the workforce.

Strategic Risk and Market Pressure

The decision to “rip the plaster off” rather than implement gradual cuts over several years was deliberate. Dorsey expressed a disdain for “repeated rounds of cuts,” which he believes are destructive to morale and erode the trust of both customers and shareholders.

“I’d rather take a hard, clear action now and build from a position we believe in than manage a slow reduction of people toward the same outcome,” he said.

However, industry analysts suggest the move carries substantial risk. Reducing a workforce by 40% in a single day could lead to significant “brain drain” and operational disruptions. Dorsey admitted as much, noting that the company has “pressure-tested” the new structure but accepts that they may have “gotten some of them wrong.”

The shift reflects a broader trend in the “Post-ZIRP” (Zero Interest Rate Policy) era, where tech companies are no longer being rewarded by the markets for aggressive hiring, but rather for efficiency and profitability per employee.