Amazon is significantly reshaping its management structure, aiming to reduce bureaucracy and speed up decision-making across the company. Internal guidelines, reviewed by Business Insider, reveal the company’s new strategy for cutting down on middle management, particularly within its Amazon Web Services (AWS) sales team. This move is part of a broader trend in corporate America to streamline managerial layers and improve efficiency.
In September, Amazon CEO Andy Jassy announced a plan to increase the ratio of individual contributors to managers by 15% by the end of March. As part of this shift, managers are now being asked to take on more direct reports, with internal guidelines stating that each manager should oversee at least eight individuals, up from six in the past. This “span of control” directive reflects a broader push to reduce layers of management and eliminate bottlenecks in decision-making.
According to the guidelines, AWS is also pausing new manager hires temporarily while the company assesses the full impact of this reorganization. AWS has been working on cutting back the number of middle managers since at least April, after internal reports indicated that the rapid hiring of managers had outpaced the hiring of entry-level employees. The company now aims to move from a “diamond” structure, with a broad base of middle managers, to a “pyramid” structure, where more employees are concentrated in lower-level positions.
These organizational changes come after a hiring spree during the pandemic that, according to Jassy, “stretched” the company and slowed decision-making. “I hate bureaucracy,” Jassy said at an internal all-hands meeting in November. He emphasized the importance of creating “customer-centric, agile organizations that empower fast decision-making.”
The reorganization plan has already led to some concern among employees. In addition to requiring managers to have more direct reports, Amazon is also “down leveling” some managers. This means that certain managers are being demoted to individual contributor roles and are facing lower pay bands. Employees have raised questions about these changes, with some fearing that managers may be reluctant to take risks or make bold decisions to avoid becoming targets for further cuts.
While the company’s spokesperson stated that there is no company-wide mandate requiring all managers to have a specific number of direct reports, Amazon’s efforts to streamline its operations reflect a larger trend within corporate America. Companies like Meta, Citi, and UPS have also begun reducing their middle management ranks, finding that cutting managerial roles can help lower costs and make organizations more efficient.
Amazon’s push to trim management layers is expected to save the company approximately $1.5 billion in annual costs, according to Bank of America analysts. Although the company may eliminate some roles, Amazon is also looking to reconfigure teams or reassign employees to keep managers in place without cutting them entirely. Despite these changes, Amazon continues to hire managers as needed, and the spokesperson noted that promotion criteria are based on a variety of factors, not just the number of direct reports.
As the restructuring unfolds, some Amazon employees have expressed concerns about the culture of fear this shift could create. With managers now facing increased pressure to oversee larger teams and avoid mistakes, there are worries that the organization’s culture may become more risk-averse, potentially stifling innovation and bold decision-making.
