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In an attempt to minimize costs by $2.1-3.6 billion a year, Amazon intends to remove 14,000 managerial positions by 2025. This will decrease the global workforce by 13%, cutting the total number of managers from 105,770 to 91,936.
These cuts were done after displacements to the communications and sustainability departments as Amazon attempts to consolidate the business and revise teams.
Restructuring for Cost Efficiency
Business Insider states that these changes are in line with the plans of CEO Andy Jassy to reduce the complexity of structures and enhance operational efficiencies. As a result, he has stated that the ratio of individual contributors to managers will be increased by a minimum of 15% by quarter one of 2025, working to reduce the amount of red tape and enhance processing speed.
A report from Morgan Stanley expects that around 13,834 managerial positions will be absent by the start of next year due to the reshuffle, in turn leading to significant cost sinks for the organization.
Revised Efficiency Plan
As part of a broader cost-cutting strategy, Amazon has now added a so-called “bureaucracy tipline” which allows employees to identify areas of perceived inefficiency. Managers have also been tasked with:
Increasing the number of direct reports
Capping the number of senior level hires
Examining the compensation frameworks
These modifications are consistent with Amazon’s more encompassing attempts to rationalize activity and concentrate on income. The firm has already eliminated certain programs, including the “Try Before You Buy” clothing initiative, and a hyperlocal delivery scheme for retail stores.
Evolution of Amazon’s Workforce
By the end of 2021, the firm employed over 1.6 million people, up from approximately 798,000 in 2019. This increase corresponds to the employment surge Amazon experienced during the pandemic. However, after previously announcing layoffs of 27,000 in 2022 and 2023, the company has begun to strategically trim its headcount.
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