Amazon Attributes Cutting 14,000 Jobs to ‘Cultural’ Changes, Not Financial Reasons
Amazon has announced plans to reduce its workforce by 14,000 employees, linking the decision primarily to “cultural” changes rather than financial reasons. CEO Andy Jassy emphasized that the layoffs were not driven by financial constraints or the immediate impact of artificial intelligence (AI) during a recent earnings call.
CEO’s Insights on Culture and Growth
Jassy explained that as Amazon expanded its workforce, locations, and business sectors over recent years, the organization grew more complex. This expansion resulted in a greater number of employees and layers of management: “Sometimes without realizing it, you can weaken the ownership of the people that you have who are doing the actual work,” he stated.
The company’s headcount reached over 1.6 million employees in 2021. However, by the end of last year, this number had decreased to around 1.5 million, according to Securities and Exchange Commission (SEC) filings. Jassy noted that excess layers in management could hinder operational efficiency, saying, “It can lead to slowing you down as a leadership team.”
Commitment to Agility
Amazon’s commitment to maintaining a nimble corporate structure is evident through this decision. Jassy pointed out that operating with fewer layers aligns with their goal of functioning like “the world’s largest startup.” This approach is intended to ensure that the company can swiftly adapt to future efficiencies brought by technological advancements.
- 14,000 jobs will be cut as part of this strategy.
- Company had a peak workforce of over 1.6 million in 2021.
- Current workforce stands at approximately 1.5 million.
- Amazon’s quarterly sales increased by 13%, reaching $180 billion year-on-year.
- Post-announcement, Amazon’s stock rose by 13% after hours.
Despite the layoffs, there are concerns regarding technology replacing human labor, particularly in light of the company’s discussions about AI efficiencies. However, Jassy insists that these layoffs are intended to strengthen the structural integrity and cultural foundation of Amazon.
