Amazon is laying off hundreds of corporate employees, a rare cutback for a company that has spent most of the last few years in a frantic growth spurt.
The layoffs, underway now, will fall on several hundred employees at the online retailer’s Seattle headquarters, along with hundreds more elsewhere in Amazon’s global operations, one person familiar with the cuts said. The layoffs are primarily focused on Amazon’s consumer retail businesses, according to two people familiar with the matter.
A few hundred layoffs are modest for a company that is now the second-largest U.S.-based corporate employer, and pales in comparison to adjustments in recent years that saw Microsoft and Boeing eliminate thousands of jobs in a single cutting drive.
But at Amazon, a company with a wide range of growing businesses that prides itself on frugality and efficient allocation of resources, broad layoffs of any kind are rare.
The company has already notified some employees, according to the Times. The remaining affected employees will be notified in the next few weeks.
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The cuts come after a hiring binge that took the company’s Seattle head count to more than 40,000 people, from just 5,000 in 2010.
The news, first reported on Monday by The Seattle Times, comes at a time when Amazon is publicly searching for a location to build its second headquarters.
According to several employees, the rapid growth of the last two years left some units over budget and some teams with too much staff for their work. Amazon had implemented hiring freezes in recent months across several groups, a move that reduced the company’s open job listings in Seattle to their lowest level in years.
“As part of our annual planning process, we are making head count adjustments across the company — small reductions in a couple of places and aggressive hiring in many others,” a spokesman said. “For affected employees, we work to find roles in the areas where we are hiring.”
Some employees have already been informed of the elimination of their roles, and layoffs are expected to be completed in the next few weeks, one of the people said.
Recent layoffs at Amazon units outside Seattle suggest the company is consolidating established retail businesses.
Self-publishing unit Createspace is conducting its second round of layoffs in two years, cuts that eliminated 200 jobs from the South Carolina-based Amazon subsidiary. In Las Vegas, Amazon-owned footwear seller Zappos has laid off about 30 people. And a year ago, Quidsi, the subsidiary behind Diapers.com and other sites, cut more than 250 jobs.
The company continues to hire plenty of workers, too. Amazon’s global workforce stood at 566,000 in December, up 66 percent from a year earlier, the company said when it reported quarterly earnings this month. Counting only corporate roles outside of Amazon’s warehouses, the company had 12,500 open jobs on Monday. It’s also in the process of selecting a location for a second headquarters, where it plans to hire up to 50,000 workers.
Amazon’s job listings in its hometown have climbed in recent weeks, as executives approved plans for 2018, and granted teams — particularly those in the Amazon Web Services cloud computing unit and working on voice-activated Alexa software — permission to hire.
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The company on Monday had more than 4,000 job listings posted for Seattle, up 23 percent from the multiyear low in January. In comments earlier this month, Chief Executive Jeff Bezos said the company was going to “double down” on Alexa following better-than-expected success from its voice-activated software.
Still, some Seattle-based employees describe an environment of belt-tightening.
According to the Times, the Amazon layoffs are the result of the quick growth of late that saw it end up with too much staff in some units. The paper also said managers are under pressure to squeeze out lower-caliber employees and show more spending discipline. “Amazon has a problem right now with overpopulation,” one unnamed engineer told the Times.
A manager in one unit making cuts said his team was briefed that Bezos and the Amazon brass wanted to put more pressure on managers to weed out lower performers and enforce spending discipline after the rapid growth of recent years.
“People are in terrible shape,” he said. “There is so much stress on campus.”
An Amazon spokesman told Fortune that “as part of our annual planning process, we are making head count adjustments across the company—small reductions in a couple of places and aggressive hiring in many others.”
The company has also recently instituted a mandate that managers who oversee other supervisors must have at least four people reporting to them. The aim, the company says, is to reduce layers of redundant management and keep the company flexible and fast-moving.
“Amazon has a problem right now with overpopulation,” said one engineer at the company.
In addition to the company’s annual planning and budgeting process, the first few months of the year also bring Amazon’s employee performance reviews and, for some, notices that they need to improve or face consequences.
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Such performance improvement plans, dreaded among Amazon’s rank and file, come with a requirement that employees demonstrate improvement over a set period of time. Last year, Amazon introduced a career coaching program, called Pivot, described as a tool to help lower performers make it through such programs.
Employees put on notice can also choose to contest their manager’s determination that led them into the improvement plan in the first place, or opt not to participate at all and take a severance package to leave the company.
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Some current and former employees say that some managers wield improvement plans to trim the size of teams without resorting to layoffs.
“It’s a well-loved strategy” to cut employees, one former Amazonian said, adding that during his time at the company he saw several talented employees “managed out” that way.
“We use our performance-management process to recognize talent, help employees develop their skills, and in some cases, make employees aware that they are underperforming,” a spokesman said. “We do not use our performance management process to achieve head-count goals.”
Amazon laying off hundreds of employees, primarily in consumer retail: report
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Amazon is reportedly cutting hundreds of corporate jobs
Amazon is laying off employees in the “low hundreds” an in effort to shift head count allocation to businesses that are growing, CNBC has learned.
The Seattle Times first reported that Amazon was laying off “hundreds” of employees and “managing out” others as the company consolidates its retail operations.
A person familiar with the matter says the cuts are focused on Amazon’s Seattle headquarters and will affect some workers globally. The layoffs will occur in the consumer retail business, which includes Amazon’s toys, books and groceries units, to make room for head count in businesses that are growing, like Alexa, AWS and digital entertainment. Jeff Bezos, in a statement in the last earnings report, said Amazon would “double down” on Alexa after blowing past projections.
While Amazon supports thousands of jobs, the layoffs are in sharp contrast to its rapid expansion over the past few years. It created 130,000 jobs worldwide last year, not including the nearly 90,000 it added with its acquisition of Whole Foods. It has nearly 4,000 corporate jobs currently open in Seattle and 12,000 worldwide.
“As part of our annual planning process, we are making head count adjustments across the company — small reductions in a couple of places and aggressive hiring in many others,” an Amazon spokesperson told CNBC. “For affected employees, we work to find roles in the areas where we are hiring.”
The layoffs follow a rumored hiring freeze put in place late last year. In December, it was reported that Amazon was sharply cutting down on hiring, the first sign of a slowdown in its rapid expansion over the past few years. Amazon also had the smallest number of open positions from August to December of last year, making it the slowest hiring four-month period for Amazon in King County.
The change in Amazon’s hiring plan comes as the e-commerce giant seeks the location for its second headquarters. The company drew 238 bids from 54 different regions across North America for the second headquarters, and narrowed it down to 20 finalists last month. Amazon said the winning city will get more than $5 billion in investment and employ over 50,000 people.
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