Amazon's efforts to streamline its middle-management ranks are beginning to take shape, with recent directives aimed at reducing the number of managers and increasing the span of control for those who remain. The company has instructed some managers to increase their direct reports, limit senior hires, and potentially reduce pay or demote certain employees, according to internal documents and sources familiar with the matter. This initiative is part of a broader plan announced by Amazon CEO Andy Jassy in September, which aims to increase the ratio of individual contributors to managers by 15% by the end of March.
### The Plan: Fewer Managers, Faster Decisions
Jassy's goal is clear: by cutting down on management layers, Amazon hopes to reduce bureaucracy and accelerate decision-making. In an internal memo, Jassy acknowledged that the rapid hiring during the pandemic had "stretched" the company, leading to slower processes. He emphasized his disdain for bureaucracy, stating, "I hate bureaucracy."
The strategy involves several key components:
1. **Increasing Span of Control**: One of the most notable changes is the requirement for managers to oversee more direct reports. For example, AWS sales teams have been directed to ensure each manager oversees at least eight employees, up from the previous minimum of six. This shift mirrors similar efforts made under Jeff Bezos in 2017 when he mandated that every manager should have at least six direct reports.
2. **Pausing New Manager Hires**: Another directive from the AWS guidelines is to temporarily halt the hiring of new managers until the full impact of the organizational changes can be assessed. This move is designed to give teams time to evaluate the structure and determine if fewer managerial roles are needed.
3. **Down-Leveling Managers**: Some managers may find themselves reassigned to individual contributor roles, effectively demoting them and placing them in lower pay bands. This could lead to significant changes in career paths and compensation for affected employees. Additionally, promotion criteria may now require managers to oversee larger teams, making it harder for some to advance.
4. **Reducing Bureaucracy and Costs**: By trimming the number of managers, Amazon expects to reduce costs and improve efficiency. Bank of America analysts estimate that these cuts could save Amazon around $1.5 billion annually. However, the company maintains that not all reductions will result in layoffs, as reassignments and team restructuring are also options.
### Employee Concerns and Cultural Shifts
While the company frames these changes as necessary to maintain agility and customer focus, many employees are concerned about the potential fallout. Several current and former Amazon employees told Business Insider that the reorganization is fostering a culture of fear. Managers are reportedly becoming more risk-averse, avoiding bold decisions out of fear that failure could make them targets for demotion or termination.
"No one wants to be the one that failed," one employee said, highlighting the anxiety surrounding the changes. This shift could stifle innovation and creativity within the company, as employees become more focused on self-preservation than taking calculated risks.
### Broader Industry Trends
Amazon is not alone in its efforts to trim middle management. Other major companies, including Meta, Citi, and UPS, have also implemented similar strategies to reduce supervisory roles. Data from last year shows that many organizations are cutting middle managers without backfilling those positions, signaling a broader trend toward flatter organizational structures.
### Amazon's Response
In response to these concerns, Amazon's spokesperson clarified that there is no company-wide mandate requiring all managers to have a specific number of direct reports. Instead, the company emphasizes that individual units will adapt based on their unique needs. The spokesperson also noted that Amazon continues to hire managers where necessary and that there are multiple ways to reduce the number of managers without resorting to layoffs, such as through team reconfiguration or role reassignment.
However, the spokesperson did acknowledge that moving from a managerial role to an individual contributor role—or vice versa—can happen without changing levels, depending on the situation. They also stressed that promotion criteria involve various factors beyond just team size.
As Amazon moves forward with its plan to reshape its management structure, the company faces the challenge of balancing cost savings and efficiency gains with maintaining employee morale and innovation. While the long-term impact remains to be seen, the early signs suggest that this shake-up could have far-reaching consequences for thousands of corporate employees.