Amazon CEO Andy Jassy has finally spoken out about the company’s layoffs of 14,000 employees earlier this week, claiming that the motive behind it was not financial.
Speaking during the company’s quarterly earnings call on Thursday, October 30, CEO Andy Jessee said the layoffs were about a cultural fit and nothing more.
“What we announced a few days ago wasn’t really financially motivated, and it’s not really AI-driven, at least not right now,” he said of the job cuts, which he said were a culture change.
This week’s job cuts, which mostly affected middle managers, follow a memo from June in which J.C. said Amazon would need fewer employees because of the “efficiency gains” brought by AI. In a separate memo announcing this week’s layoffs, Amazon’s senior vice president of people said the layoffs were about adapting to “changing technology.”
CEO Andy Jassy also mentioned that Amazon’s business has grown in the past few years. The company has a total of about 1.55 million employees, of which only 350,000 are corporate employees. According to filings with the Securities and Exchange Commission, as of December 2019, before the pandemic, the company had a total of 798,000 employees.
“If you grow as quickly as we have over many years, in terms of the size of the businesses, the number of people, the number of locations, and the types of businesses you’re in, you’re going to have a lot more people than before, and you’re going to have a lot more layers,” he said.
CEO Andy Jassy: This kind of growth can lead to results…
“Sometimes without realizing it, you can undermine the ownership of the people who are doing the real work and who are making most of the two-way decisions that should be made quickly and directly at the front line,” he also said.
An Amazon spokesperson declined to comment…
Amazon joins other companies such as Salesforce, Target, and Paramount that have laid off thousands of employees in the past few months. Fed Chairman Jerome Powell said this week that many large companies have recently cited AI as a reason to pause hiring or layoffs, adding that the Fed is “watching it very carefully.”
Sure enough, a study by Goldman Sachs investment bankers this week found that only 11% of their corporate clients were actively laying off people because of AI. In contrast, nearly a third of companies in the technology, media and telecommunications categories are reducing headcount due to AI.
During the quarterly earnings call, JC seemed to echo the same sentiment, saying that the “technological transformation” currently underway means companies need to be agile and adaptable.
“It’s important to stay lean, it’s important to stay flat, and it’s important to move quickly,” he said. “That’s what we’re going to do.”
