Amazon CEO Andy Jassy: 14,000 Layoffs Driven by Company Culture, Not AI or Costs
Amazon CEO Andy Jassy addressed the recent layoffs impacting 14,000 employees during the company’s quarterly earnings call. He clarified that these cuts were not primarily based on financial considerations or driven by artificial intelligence. Instead, he attributed the layoffs to a misalignment in company culture.
Insights on the Layoffs
According to Jassy, the decision to reduce staffing was influenced by cultural factors rather than financial constraints. He stated, “The announcement that we made a few days ago was not really financially driven, and it’s not even really AI-driven, not right now at least. It’s culture.”
Background on Job Cuts
The layoffs predominantly affected middle management positions. This action followed a previous memo Jassy released in June, which indicated that Amazon would require fewer employees due to efficiency gains from AI technologies. In a recent memo, Amazon’s senior vice president of people referenced the need to adapt to “transformative technology.”
Company Growth and Future Adaptations
Jassy highlighted that Amazon has seen significant growth over the past few years. The company currently employs approximately 1.55 million individuals, including around 350,000 in corporate roles. A filing with the Securities and Exchange Commission revealed that in December 2019, prior to the pandemic, Amazon had about 798,000 employees.
Challenges of Rapid Expansion
Jassy explained that when a company grows quickly, it can lead to added complexities. He noted, “If you grow as fast as we did for several years, you end up with a lot more people than what you had before, and you end up with a lot more layers.” This rapid growth can unintentionally dilute the ownership and decision-making abilities of team members.
Industry Context
Amazon’s layoffs come amid a trend affecting several large companies, such as Salesforce, Target, and Paramount, which have also reduced their workforces in recent months. Fed Chairman Jerome Powell recently stated that many organizations are citing AI as a reason for hiring freezes or layoffs.
However, a recent Goldman Sachs study found that only 11% of surveyed clients were laying off workers specifically due to AI. In the technology, media, and telecommunications sectors, about one-third of companies are reducing their headcounts due to AI advancements.
Looking Ahead
During the earnings call, Jassy emphasized the importance of adaptability in the face of ongoing technological transformation. He asserted, “It’s important to be lean, it’s important to be flat, and it’s important to move fast.” He concluded by reinforcing the need for the company to remain agile amid changing industry dynamics.
