Amazon plans to slash 14,000 managerial roles to save $3 billion
Cost-cutting measures include a 15% increase in ratio of individual contributors to managers by 2025.
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Amazon is reportedly preparing to eliminate approximately 14,000 managerial positions by early next year in a bid to save between $2.1 billion and $3.6 billion annually, according to a Morgan Stanley note cited in media reports.
The cuts, aimed at streamlining the company's operations and improving decision-making efficiency, are part of broader restructuring efforts that CEO Andy Jassy outlined earlier this year.
The planned reduction in managerial roles would represent a 13% drop in Amazon's global management workforce, bringing the total number of managers down from 1,05,770 to 91,936 by the first quarter of 2025. Jassy has pushed for a 15% increase in the ratio of individual contributors to managers by March 2025, signalling a shift toward a flatter organizational structure, which he says will enable quicker, more efficient decisions without unnecessary bureaucratic delays, according to a Bloomberg report.
To further support these changes, Jassy has also introduced a "bureaucracy tipline," encouraging employees to report inefficient procedures that hinder workflow.
Significant Cost Savings Projected
Morgan Stanley's analysis estimates that the cost per manager at Amazon ranges from $200,000 to $350,000 annually, leading to projected savings of 3% to 5% of the company's operating profit next year. These cuts are seen as a crucial part of Amazon's broader goral to operate with fewer management layers and increase agility within the organization.
Amazon, which employs over 1.5 million people globally, including a significant portion in logistics and warehouse operations, has not provided a detailed a breakdown of the specific jobs that will be affected by this restructuring. However, the company has reiterated that these changes are intended to boost operational efficiency across its global operations.
Return to Office Policy
In a related development, Amazon will require employees to return to the office full-time starting in January 2024, marking a shift from its previous flexible work arrangements. This decision aligns with Jassy's focus on streamlining operations and fostering collaboration as the company navigates this significant restructuring phase.
