Amazon wants a higher ratio of contributors to managers to “remove layers.”
The changes will make for a flatter org structure — a recent theme for Big Tech.
Mark Zuckerberg explained why Meta thinned out middle managers last year as the industry focuses on efficiency.
Amazon is putting middle managers under the microscope as it seeks to thin out the layers of the sprawling company.
The move furthers the Big Tech trend of flattening org charts that Mark Zuckerberg and others like Elon Musk have talked about in recent years while preaching the need for efficiency.
CEO Andy Jassy announced the changes on Monday alongside an RTO mandate that will require Amazon employees to return to the office 5 days a week starting in January. The Amazon CEO wrote that he’s also asking senior leadership teams “to increase the ratio of individual contributors to managers by at least 15% by the end of Q1 2025.”
“Having fewer managers will remove layers and flatten organizations more than they are today,” Jassy wrote in a memo to staff.
“If we do this work well, it will increase our teammates’ ability to move fast, clarify and invigorate their sense of ownership, drive decision-making closer to the front lines where it most impacts customers (and the business), decrease bureaucracy, and strengthen our organizations’ ability to make customers’ lives better and easier every day,” Jassy added.
You can bet that somewhere in Silicon Valley, Mark Zuckerberg nodded his head when he heard the news — after all, he’s been speaking out in favor of flattening org charts both publicly and in private for a while now.
“I don’t think you want a management structure that’s just managers managing managers, managing managers, managing managers, managing the people who are doing the work,” the Meta CEO reportedly said in an internal meeting in January 2023.
In an earnings call a month later, Zuckerberg said the company was “working on flattening our org structure and removing some layers of middle management to make decisions faster.”
Zuckerberg also proclaimed a “year of efficiency” at Meta last year, following two rounds of layoffs that cumulatively cost roughly 21,000 people their jobs.
The Meta CEO said in a podcast interview that same year that he believed “a lot” in the need for managers, pointing to how managers help younger people “grow and learn in their career.”
But he said there was “a mathematical way” to think about the ratio of employees to managers.
Before Meta’s layoffs, Zuckerberg said he inquired about the average number of direct reports each manager had at Meta and learned it was around three to four. He felt it should be more like seven to eight. But, at the time, the lower numbers made sense as Meta was hiring a ton and helping newcomers ramp up.
“So in a world where we’re not adding so many people as quickly, is it as valuable to have a lot of managers who have extra capacity waiting for new people? No, right?” Zuckerberg said.
“So, now we could sort of defragment the organization and get to a place where the average is closer to that seven or eight,” he added. “It just ends up being a somewhat more kind of compact management structure, which, you know, decreases the latency on information going up and down the chain and I think empowers people more.”
Meta’s emphasis on leanness paid off and was rewarded by Wall Street and investors: Meta hit a $1 trillion market cap earlier this year.
The broader industry has followed suit in trimming management. Middle-managers made up 31.5% of layoffs in 2023, up from 19.7% in 2018, according to analysis.
Shopify announced last year that it would flatten its organization by grouping employees into either individual contributors or managers and incentivizing more of them to become the former.
Under pressure from activist investors to become more efficient, Salesforce last year aimed to reduce “layers of control” by giving managers a specific number of direct reports in order to trim management layers, people familiar with the matter previously told Business Insider.
At Airbnb, CEO Brian Chesky has said the company “got rid of the classic product management function” and instead changed it into an “Apple-style product marketing function.”
As for Amazon, the company hasn’t yet said publicly if layoffs are part of its strategy to increase the number of individual contributors to managers.
But if Amazon is following Meta and other Big Tech companies’ lead — don’t be surprised if a middle-management culling is on the horizon.
Just look at what Amazon’s internal document said about potential job cuts, as first reported by Business Insider’s Ashley Stewart.
“It’s possible that organizations may identify roles that are no longer required.”
Read the original article on Business Insider
