Amazon's series of ongoing micro-layoffs is puzzling
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What can leaders learn by observing this unusual approach?
First, this post is not about the people being let go.
Layoffs are terribly disruptive to the lives of the impacted employees and families.
I have written before about how to reduce your odds of being selected for a layoff and what to do if you are let go (links below).
In this post, I will analyze Amazon's strategy, but none of that means I think layoffs are good.
The best way to "plan" a layoff is to have a successful business and not have one.
Established leadership practice says that layoffs are very damaging to the morale of those who remain behind. The remaining people worry about their own jobs and mourn the loss of friends.
They must adjust to changes in teammates, leaders, and work focus.
Layoffs are highly disruptive and they often cause your best employees to leave.
Thus, the general guidance to leaders is that if you feel you must have a layoff, do one big one.
The belief is that culture can survive a single shock, move on, and recover.
Two or more layoffs are taken as a sign of impending failure.
In the last two years, Amazon has had at least a dozen separate batches of cuts. This goes completely against the "one big one" advice.
Why?
As outsiders, we can only guess at the reasoning:
Amazon has a history of "being willing to be misunderstood for long periods of time." Amazon feels no need to follow conventional practice.
Amazon is clearly not failing. In the last year, the stock price has doubled. While they might be sacrificing long-term innovation for short-term financial gain, it is not clear that they are. Regardless, today the company itself, as a corporation, is thriving.
In a giant corporation, accurately planning and coordinating "one big cut" was probably impossible. The wisdom that applies to a startup, where the CEO or at least the leadership team knows every single person and project in some detail, does not apply to something as giant as Amazon.
A soft job market and a rising stock price have protected Amazon, at least for now, from high voluntary attrition. Every week I talk to someone at Amazon who would like to at least look at external offers, but generally, they feel either unable to get another job or worried that it will pay much less.
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My best guess is that Amazon has simply thrown the conventional wisdom about layoffs out the window.
Instead, as they review each group and find projects or costs that they no longer believe in, they will continue a rolling set of micro-layoffs.
This process will continue for as long as it takes to audit all the organizations deeply.
The point of this post is not to defend or justify Amazon's process, but to learn by studying behavior that goes against conventional management practices. This choice has to be evaluated long-term.
To be a good leader you need to study the leadership choices of others and learn from them.
Readers — insights?
Note: I have written extensively about how corporations, as legal entities chartered to create profits for shareholders, do not care about people. This is known. What is at question here is "why this approach, that goes counter to the usual way corporations act?"
And if you are a manager leading in times of layoffs and downsizing, I moderated a panel with Dave Kline and Molly Graham, watch the video recording below:
Follow-up Audience Q&A
Q1: How is employee morale factored in at top levels, and what we could do to help measure/convey the effects it has on a business?
Morale is hard to “measure” even on small teams in somewhat controlled circumstances. It’s probably impossible at Amazon scale. And yet we all know it is real. The whole field of sports psychology tells us it is real. I’m not sure how to convince leaders of this. And I do believe there comes a point where a business must change in a way that hurts morale at least short term. Morale is one variable but not the only variable.
Share this post with someone who will benefit.
Audience Insights
Additional ideas worth considering from my LinkedIn audience:
The root cause of layoffs is that the future is unpredictable. What might have worked 6 months ago no longer works. Staff up too slowly…fail. Keep people to long…also fail. It is not possible, over the long term, to be both aggressive in attempting to find opportunity and to never be wrong or overstafff. Therefore the lesson is, layoffs will happen, be prepared.
With smaller layoffs, it’s easier to find another role internally. As for why, in some states, you must give notice if you plan a large layoff, whereas smaller layoffs do not have the same requirements.
An external driver to keep in mind is that Wall Street likes cost cutting behavior across big tech. For example: look at how Wall Street celebrated Meta’s “Year of Efficiency.”
A few readers pointed out that micro-layoffs signal leadership addressing acute issues and minor course corrections vs one big layoff which signals inability to fix chronic issues.
It is important to note that while companies probably targeted some perceived low performers, they also keep shutting down whole teams. When you close a whole team, usually good performers go too.
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Level Up is your source for career growth solutions & community by retired Amazon Vice President, Ethan Evans.
This seems to be working okay for Amazon, but I doubt multiple smaller layoffs can be tolerated by smaller, growing companies.