Amazon can eliminate up to 14,000 management positions by early 2025, potentially saving between $2.1 billion and $3.6 billion a year, according to a recent Morgan Stanley analysis. This restructuring aligns with CEO Andy Jassy’s goal to increase the ratio of individual contributors to managers by at least 15% by the end of the first quarter of 2025, as part of a broader strategy to improve Amazon’s agility and efficiency. This was first reported by Business Insider.
The move is part of Jassy’s vision for Amazon to “operate like the world’s largest startup,” fostering a culture of urgency, ownership, quick decision-making and frugality. By reducing management roles, Amazon aims to eliminate unnecessary bureaucratic layers, making the company more responsive and collaborative.
Currently, around 7% of Amazon’s global workforce holds management positions. The analysis estimates that the company could reduce this number from 105,770 to 91,936 managers worldwide, which would translate into significant cost savings. Each management position is estimated to cost Amazon between $200,000 and $350,000 a year.
Amazon has acknowledged the need to make organizational adjustments, noting that it has recently “added a lot of managers” and now believes the time is right to restructure. The company plans to have all teams review their structure, although it has not committed to specific job cuts. The planned change in the ratio could be achieved through a variety of measures, including reassigning managers to new roles.
Morgan Stanley sees this potential reduction as a key opportunity for Amazon to improve its operational efficiency, with the cost savings representing between 3% and 5% of Amazon’s projected operating profit by 2025. This move is part of ongoing efforts of the company to optimize operations while maintaining its competitive advantage.
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