Amazon layoffs: Andy Jassy says cutting 14,000 jobs is about "culture," not AI or finances

Call it culture, but follow the money

by · TechSpot

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Facepalm: Even in this age of constant layoffs, Amazon's decision to slash 14,000 jobs this week was a shock due to the sheer numbers involved. Now, CEO Andy Jassy has revealed the reason behind the cuts: it wasn't due to pandemic overhiring, AI, or financial reasons; it was because of "culture."

It was reported earlier this week that Amazon was to lay off up to 30,000 corporate staff. According to Reuters and The Wall Street Journal, the decision was designed to counter the massive overhiring spree Amazon undertook during the pandemic years.

The tech giant later confirmed that it would be reducing its corporate workforce by about 14,000 people, though more cuts are expected next year. It said at the time that artificial intelligence played a part in the decision. That wasn't unexpected, given that Jassy told employees in June that AI would mean fewer people being required for certain jobs.

But Jassy pointed to a different reason for the layoffs during Amazon's earnings call on Thursday. He said that the move was not really financially driven or even really AI driven. "It's culture," he explained.

Jassy has talked about addressing workforce culture at Amazon before, from reducing layers of management and bureaucracy to improving discipline and bringing remote workers back into the office. He introduced an anonymous complaint line for claims of inefficiencies that has seen 1,500 responses and more than 450 process changes.

Andy Jassy's definition of culture may differ from yours

Jassy said that as Amazon has grown and added more employees, locations, and business ventures over the years, "you end up with a lot more people than what you had before, and you end up with a lot more layers […] sometimes without realizing it, you can weaken the ownership of the people that you have who are doing the actual work."

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CNN notes that Amazon's head count reached a high of 1.6 million in 2021. It ended last year with that figure at 1.5 million.

"It can lead to slowing you down as a leadership team," Jassy said. "We are committed to operating like the world's largest startup, and […] that means removing layers."

Unsurprisingly, plenty of people have questioned the wisdom of blaming the cuts on so-called culture. The company beat expectations in its third-quarter earnings report this week as revenue reached $180.17 billion, pushing its shares up 14%. The success is a bitter pill to swallow for those laid off, especially with Jassy talking about operating like a startup, removing layers, and being more efficient – saving more money, essentially.

Despite Jassy trying to move the blame away from AI, Amazon senior vice president of experience and technology, Beth Galetti, wrote in a post about the cuts that "This generation of AI is the most transformative technology we've seen since the internet, and it's enabling companies to innovate much faster than ever before."

Amazon was already facing heat over reports that it aims to replace 600,000 US warehouse workers with robots. It then tried to claim that wasn't really the case while simultaneously revealing two new robots designed to replace humans.