Key Takeaways
- Amazon CEO Andy Jassy said that the company laid off 14,000 employees earlier this week because they didn’t fit with the company’s culture.
- Jassy said that Amazon’s recent years of rapid growth had created “a lot more layers” that had slowed down decision-making.
- He pushed for a more agile and accountable culture with fewer layers of management.
Amazon laid off 14,000 corporate employees earlier this week, marking one of the largest job cuts in the company’s history. Now CEO Andy Jassy is clarifying why the job cuts occurred for the first time, saying that AI and finances had nothing to do with the decision — it was all about culture fit.
Amazon is the world’s second-largest private employer with about 1.5 million employees, including those who work in its warehouses. The company nearly doubled its workforce in six years, going from 798,000 global employees in 2019 to 1.5 million in June of this year, according to Stock Analysis. About 350,000 employees work for its corporate operations, which means the recent plan to cut 14,000 corporate jobs affects about 4% of Amazon’s corporate staff.
Jassy said during Amazon’s quarterly earnings call on Thursday that the layoffs were driven primarily by a desire to reshape Amazon’s internal culture. Amazon aims to operate like “the world’s largest startup,” according to Jassy.
“The announcement that we made a few days ago was not really financially driven, and it’s not even really AI-driven, not right now at least,” Jassy said on the call. “It really — it’s culture.”
Jassy said on the call that Amazon’s recent years of rapid growth had created “a lot more layers” that had inhibited or slowed down decision-making.
On the call, Jassy pushed for a more agile and accountable culture with fewer layers of management. He explained some of the pitfalls of a sprawling corporate culture, pointing out that when a company gets too large and complicated, it can make matters more difficult for the people “who are doing the actual work.” Extra layers can end up dragging down the whole operation instead of helping it move faster, according to the CEO.
“Sometimes, without realizing it, you can weaken the ownership of the people that you have who are doing the actual work,” Jassy said on the earnings call. “And it can lead to slowing you down. As a leadership team, we are committed to operating like the world’s largest startup, and that means removing layers.”
The layoffs, which Amazon reported resulted in an estimated $1.8 billion in severance expenses for the most recent quarter, represent the company’s largest job reduction since it eliminated 27,000 positions in late 2022 and early 2023. Amazon has made dozens of cuts this year to its communications and sustainability departments, devices and services unit, and books division.
Jassy’s approach echoes a broader trend among other major tech firms like Google and Microsoft, which have also conducted layoffs this year by reducing layers of management. In April, Google laid off hundreds of workers in the division that works on the Chrome browser and Pixel phones. In May and July, Microsoft announced layoffs collectively affecting 15,000 workers.
While AI may not be the reason for this month’s job cuts, Jassy warned staff in a memo earlier this year that he expects Amazon’s corporate workforce to eventually shrink as AI takes over tasks. Amazon has already given its customer service chatbot AI capabilities, Jassy wrote. He also noted that AI has enabled the company to put together more detailed product pages on its site.
Amazon posted earnings for the third quarter of the year on Thursday, reporting that sales topped $180 billion last quarter as profit grew by 38% to $21.2 billion.
Amazon shares are up more than 11% today at the time of writing.
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Key Takeaways
- Amazon CEO Andy Jassy said that the company laid off 14,000 employees earlier this week because they didn’t fit with the company’s culture.
- Jassy said that Amazon’s recent years of rapid growth had created “a lot more layers” that had slowed down decision-making.
- He pushed for a more agile and accountable culture with fewer layers of management.
Amazon laid off 14,000 corporate employees earlier this week, marking one of the largest job cuts in the company’s history. Now CEO Andy Jassy is clarifying why the job cuts occurred for the first time, saying that AI and finances had nothing to do with the decision — it was all about culture fit.
Amazon is the world’s second-largest private employer with about 1.5 million employees, including those who work in its warehouses. The company nearly doubled its workforce in six years, going from 798,000 global employees in 2019 to 1.5 million in June of this year, according to Stock Analysis. About 350,000 employees work for its corporate operations, which means the recent plan to cut 14,000 corporate jobs affects about 4% of Amazon’s corporate staff.
