Amazon, the e-commerce giant, is set to undergo a significant restructuring aimed at streamlining operations and reducing bureaucracy. According to a Morgan Stanley note, the company plans to cut approximately 14,000 managerial roles by early 2025, a move expected to save $3 billion annually.
CEO Andy Jassy’s Vision
Amazon’s CEO, Andy Jassy, has outlined a clear goal: to increase the ratio of individual contributors to managers by 15% by March 2025. This restructuring is designed to facilitate more efficient decision-making processes and reduce red tape within the organization.
Key initiatives include:
- Launching a “bureaucracy tipline” for employees to report unnecessary procedures
- Aiming for a leaner management structure
The Numbers Behind the Restructuring
- Current managerial roles: 7% of Amazon’s workforce (approximately 105,770 managers globally)
- Projected managerial roles by Q1 2025: 91,936
- Estimated job cuts: 13,834 manager positions
Financial Impact
Morgan Stanley’s analysis provides insight into the potential financial benefits of this restructuring:
- Estimated cost per manager: $200,000 to $350,000 per year
- Projected annual savings: $2.1 billion to $3.6 billion in 2025
- Savings as a percentage of estimated 2025 operating profit: 3% to 5%
Workforce Distribution
While Amazon boasts over 1.5 million employees globally, the majority are engaged in logistics and warehouse operations. The company has not provided a detailed breakdown of job roles across its workforce.
Expert Opinion
Morgan Stanley views this move positively for Amazon, stating, “Removing layers, operating with fewer managers and flattening the organization are all in focus to move faster.”
Return to Office
In a related development, CEO Andy Jassy has announced that Amazon employees will be required to return to full-time office work starting January next year, further emphasizing the company’s focus on operational efficiency and workplace dynamics.
