### Amazon's Plans to Reduce Management Roles Could Lead to Major Job Cuts and Savings

Recent developments at Amazon suggest that the company’s initiative to streamline its management structure may lead to significant job cuts and substantial cost savings. Last month, CEO Andy Jassy announced a plan to increase the ratio of individual contributors to managers by at least 15% by the close of the first quarter of 2025. Jassy indicated this move would eliminate unnecessary layers within the organization, allowing Amazon to operate more swiftly and efficiently without bureaucratic obstacles.

According to a note published by Morgan Stanley on Thursday, this restructuring could result in the removal of approximately 13,834 manager positions by early next year. The financial institution estimated that this reduction could save Amazon between $2.1 billion and $3.6 billion. This hypothesis is based on the premise that 7% of Amazon’s workforce holds management roles. By the end of the second quarter, Amazon employed around 105,770 managers globally, a number that could decrease to 91,936 by the beginning of the next year if Morgan Stanley’s projections are accurate.

Amazon, which does not publicly detail its workforce composition, noted in a statement to Business Insider that a significant number of managers had been added in recent years. The e-commerce giant remarked that now is an opportune time for this change. The company noted that every team would evaluate its structure and potentially eliminate roles deemed unnecessary. Amazon emphasized that this shift aims to "strengthen our culture and organizations" but did not address Morgan Stanley’s specific figures.

Morgan Stanley's cost calculations suggest each manager's annual compensation ranges between $200,000 and $350,000. Utilizing these numbers, the firm projected that Amazon could save an estimated $2.1 billion to $3.6 billion next year by cutting the cited management roles. These savings would represent roughly 3% to 5% of Amazon's anticipated operating profit for 2025.

Amazon employs more than 1.5 million individuals, many of whom are involved in warehouse and logistics operations rather than corporate roles. While job cuts are one method to adjust the contributor-to-manager ratio, the company could also reassign managers to different roles as an alternative.

Morgan Stanley remains optimistic about the potential for Amazon to enhance its efficiency through these substantial changes. The note concluded that "removing layers, operating with fewer managers and flattening the organization are all in focus to move faster."