Points
- Amazon CEO Andy Jassy’s decision to bring workers back to the office full time was one of the biggest post-pandemic work headlines of 2024.
- But there was another major organizational shakeup in the Amazon plan: a greater focus on individual contributors, which Morgan Stanley recently estimated could lead to Amazon cutting as many as 14,000 manager positions.
- Organizational experts say Amazon is a leading indicator of a new era of flattening in corporate structure, and its slashing of manager roles isn’t just about cost-cutting, but a glimpse into the future of work.
Amazon CEO Andy Jassy’s note sent this fall to employees about corporate culture drew headlines for his five-day-in-the-office mandate. But Jassy’s messaging on an increased ratio of individual contributors to managers raises a much bigger question about organizational structure: What is the right balance between individual workers and managers in overall headcount? It’s a question that corporations have long struggled to define with anything but anecdotal findings.
With companies now firmly in a post-Covid world, organizational experts say Amazon may be leading the way in a new look at efficiency gains related to corporate bloat, and especially middle management bloat.
“We have grown our teams quickly and substantially,” said an Amazon spokesperson, echoing the message in Jassy’s note: “When I think about my time at Amazon, I never imagined I’d be at the company for 27 years … Part of why I’ve stayed has been the unprecedented growth (we had $15M of annual revenue the year before I joined—this year should be well north of $600B).”
That growth, the spokesperson said, inevitably led to adding a lot of managers. Comparing Amazon’s plan to Meta’s recent year of efficiency, the spokesperson said the company ended up adding more layers than it had before due to its growth and now is the right time to bring the structure “closer to our customers” and reinforce Amazon’s “culture of ownership.”
Over the past few years, layoffs have been as prominent as hiring in the tech sector. In 2022-2023, the sector was in what could be called the years of the layoff. While that headcount trimming continues, the Amazon thinking involves a broader rethink of how to rightsize the largest corporations.
Morgan Stanley analysts suggested that Amazon could cut as many as 14,000 management positions, with the corporate efficiencies accounting for $2 billion-$4 billion in savings. Morgan Stanley’s forecast was based on an assumption that Jassy made in the note that Amazon is targeting an increase in the ratio of individual contributors to managers “by at least 15% by the end of 1Q25, across all divisions.”
Source: https://www.cnbc.com/2024/12/15/amazon-and-the-endangered-future-of-the-middle-manager.html