Amazon is preparing for a large-scale managerial restructuring as the company faces increased pressure to remain competitive in evolving markets. The move may eliminate approximately 14,000 manager positions by early 2025, potentially saving up to $3 billion per year, according to a recent Morgan Stanley analysis.
With the move, CEO Andy Jassy aims to increase the ratio of individual contributors to managers by at least 15% by the end of Q1 2025 as part of Amazon's broader effort to "operate like the world's largest startup". Jassy said the move will emphasise the need for "strong urgency, high ownership, fast decision-making, scrappiness and frugality, deeply-connected collaboration."
According to Morgan Stanley, Amazon could reduce its management workforce from about 105,770 to 91,936 globally. This reduction would help the company save in annual cost between $2.1 billion and $3.6 billion, representing 3% to 5% of Amazon's projected 2025 operating profit.
Amazon had recently admitted to Business Insider that it has "added a lot of managers" recently. The company now believes "now is the right time" to make this change. The company confirmed that every team will review their structure, and it's "possible" that some roles may be eliminated.
The restructuring is aimed to remove unnecessary organisational layers and improve Amazon's agility by reducing bureaucratic hurdles.
Morgan Stanley's analysis assumes that 7% of Amazon's workforce holds management positions, with an estimated annual cost per manager between $200,000 and $350,000. The restructuring movee, the investment bank believes, could be a significant opportunity for Amazon to enhance its operational efficiency.