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Amazon’s CEO has finally spoken up about the company’s 14,000 layoffs earlier this week, and he claims the motive was not at all financial.
Speaking during the company’s quarterly earnings call Thursday, CEO Andy Jassy said laying off those employees was about a mismatched cultural fit—and nothing else.
“The announcement that we made a few days ago was not really financially driven, and it’s not even really AI-driven, not right now at least,” he said about the job cuts. “It’s culture.”
The job cuts this week, which mostly affected middle managers, follow a June memo in which Jassy said Amazon will need fewer employees thanks to the “efficiency gains” brought on by AI. In a separate memo announcing this week’s layoffs, Amazon’s senior vice president of people said the layoffs were about adapting to “transformative technology.”
Jassy also mentioned Amazon’s business has grown over the past years. The company has about 1.55 million total employees, with 350,000 corporate employees alone. As of December 2019, prior to the pandemic, the company had 798,000 total employees, according to a filing with the Securities and Exchange Commission.
“If you grow as fast as we did for several years, the size of businesses, the number of people, the number of locations, the types of businesses you’re in, you end up with a lot more people than what you had before, and you end up with a lot more layers,” he said.
This type of growth can lead to consequences, Jassy added.
“Sometimes without realizing it, you can weaken the ownership of the people that you have who are doing the actual work and who own most of the two-way door decisions, the ones that should be made quickly and right at the front line,” he said.
A spokesperson for Amazon declined to comment.
Amazon joins other companies such as Salesforce, Target, and Paramount who have together laid off thousands of workers in the past few months. Several large companies have cited AI as a reason for hiring pauses or layoffs recently, said Fed Chairman Jerome Powell this week, adding that the Fed is “watching that very carefully.”
To be sure, a study of Goldman Sachs investment bankers this week found only 11% of their corporate clients were actively laying people off due to AI. In contrast, about a third of companies in the technology, media, and telecommunications category are reducing headcount because of AI.
During the quarterly earnings call, Jassy seemed to echo the sentiment, saying the “technological transformation” currently underway means companies need to be nimble and adaptable.
“It’s important to be lean, it’s important to be flat, and it’s important to move fast,” he said. “That’s what we’re going to do.”
This story was originally featured on Fortune.com
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