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Amazon, the largest e-retailer in the world, is reportedly planning to reduce its managerial staff to save costs as part of an efficiency drive. Morgan Stanley recently conducted an analysis, predicting that managers' routine could be reduced in early 2025, and about 14 thousand individuals could lose their occupations.
This strategic decision could cost between $2.1 billion and $3.6 billion per year, which is almost in line with the company’s efforts to eliminate wasteful expenses and adapt a more entrepreneurial culture within its large corporate entity.
According to the analysis, the expected restructuring will reduce the global number of managerial positions from 105,770 to approximately 91,936. Amazon’s CEO Andy Jassy has set a goal of changing the ratio toward the greater number of individual contributors to managers by 15% by the first quarter of 2025, which caused this transition.
Eliminating tiers of managers in key facilities will increase decision-making speed and efficiency, which suggests a wider attempt to sustain Amazon's competitive advantage.
Based on Morgan Stanley’s analysis, the program may eliminate managerial positions from between 3% and 5% of Amazon’s forecasted operating profit in 2025. These costs are based on the specific responsibilities given to managers and employees, including expenditures ranging between $200,000 and $350,000 annually.
The investment bank considers this rationalization a significant opportunity for Amazon to reduce expenses and enhance its organizational efficiency.
Amazon's recent organizational review indicates that some roles may be removed while the company is focused on improving organizational culture and effectiveness.
However, the company also stated that there will be cases where the managers will be asked to change their work responsibilities to other departments instead of being fired showing that there is no rigidity when it comes to achieving the anticipated human resource reduction.
This is in line with the company’s vision that its operation should be flexible and fast because of the competitive nature of the market.
The planned changes are in line with the current CEO Andy Jassy who aims at turning Amazon into ‘the largest startup in the world’. During the interview, Jassy highlighted the pursuit of the utmost urgency, ownership, and cost consciousness coupled with second-skin integration throughout Amazon.
Regarding the staff, Amazon planned to cut most of its managerial levels to strengthen its performance because excessive hierarchy slows decision-making and brings more harm to a business than good.
Amazon, which has a workforce of more than 150,000 worldwide, many of whom are engaged in countless logistics and storage centers, considers these possible shifts imperative for preserving its dominance.
