Amazon CEO Andy Jassy said yesterday that the company is increasing the numb er of people it is laying off from 10,000 to 18,000. The majority of the role eliminations will be from Amazon's Stores and People, Experience, and Technology (PXT) divisions.
The Wall Street Journal points out that the layoffs "represent roughly 5% of that element of its workforce, and 1.2% of its overall tally of 1.5 million employees as of September."
The New York Times writes that "the company more than doubled its work force during the pandemic as customers flocked to online services. It had about 1.5 million employees at the end of September. Amazon’s growth, however, slowed to its lowest rate in two decades, and Mr. Jassy has been reeling in the company’s overexpansion. Amazon recently cautioned investors that growth could weaken to its slowest pace since 2001."
Again, from the Journal: "Amazon was one of the biggest beneficiaries of the Covid-19 pandemic as customers flocked to online shopping. The rush to Amazon’s various businesses, from e-commerce to groceries and cloud computing, pushed forward years of growth for the company. To keep up with demand, Amazon doubled its logistics network and added hundreds of thousands of employees."
The Seattle Times writes that "in November, Amazon made cuts to its books and devices departments. Devices includes its voice assistant Alexa, its health device Halo and its home robot Astro, as well as Kindle, smart home products and the Echo speaker. It had also offered buyouts to some employees in its human resources division … Amazon, like many tech companies, had been hinting at its intent to cut costs and slim down before the job cuts. It froze hiring for corporate roles and ended some experimental projects, including some robots, a virtual travel experience and a video device for kids."
In a message communicated to employees and posted on Amazon's website, Jassy wrote that the company's executive team is "deeply aware that these role eliminations are difficult for people, and we don’t take these decisions lightly or underestimate how much they might affect the lives of those who are impacted. We are working to support those who are affected and are providing packages that include a separation payment, transitional health insurance benefits, and external job placement support.
"We typically wait to communicate about these outcomes until we can speak with the people who are directly impacted. However, because one of our teammates leaked this information externally, we decided it was better to share this news earlier so you can hear the details directly from me. We intend on communicating with impacted employees (or where applicable in Europe, with employee representative bodies) starting on January 18."
Jassy went on:
"Amazon has weathered uncertain and difficult economies in the past, and we will continue to do so. These changes will help us pursue our long-term opportunities with a stronger cost structure; however, I’m also optimistic that we’ll be inventive, resourceful, and scrappy in this time when we’re not hiring expansively and eliminating some roles.
"Companies that last a long time go through different phases. They’re not in heavy people expansion mode every year. We often talk about our leadership principle Invent and Simplify in the context of creating new products and features. There will continue to be plenty of this across all of the businesses we’re pursuing. But, we sometimes overlook the importance of the critical invention, problem-solving, and simplification that go into figuring out what matters most to customers (and the business), adjusting where we spend our resources and time, and finding a way to do more for customers at a lower cost (passing on savings to customers in the process). Both of these types of Invent and Simplify really matter."
From the Journal, a bit of context:
"Many tech companies have cut jobs as the economy sours. Amazon’s layoffs of more than 18,000 employees would represent the highest number of people let go by a tech company in the past few months, according to tallies released on Layoffs.fyi, a website that tracks the events as they surface in media reports and company releases."
- KC's View:
On virtually every communication that Amazon sends to the outside world, there is a 39-word paragraph designed to communicate the company's core values:
Amazon is guided by four principles: customer obsession rather than competitor focus, passion for invention, commitment to operational excellence, and long-term thinking. Amazon strives to be Earth’s most customer-centric company, Earth’s best employer, and Earth’s safest place to work.
While these cuts are considerable, and probably will be reflected in a slowdown of store openings and other initiatives, ultimately the real test will be whether at a time of economic challenges, Amazon's cultural imperatives remain intact. Is Amazon succumbing to the popular business fiction that companies can cut their way to prosperity? Or is it simply right-sizing, as focused on effectiveness as efficiency?
It seems to me that Amazon is facing the same issues as many maturing companies, and is reacting the same way. In some ways, that alone is troubling … because Amazon often separated itself from the pack by turning left when everybody else was turning right.
These events do nothing to move me off the 2023 prediction I made on The Innovation Conversation with Tom Furphy - that we're going to see Jeff Bezos return to the CEO role at Amazon. While Jassy may be doing the necessary hard work of the moment, he may be losing the loyalty of the remaining workforce, and it could be critical for Bezos to step back in to establish fresh forward momentum and improve morale in a way that may be beyond Jassy's capabilities at this point.