Amazon’s return to office order provides excellent cover to cut headcount

On Monday, Amazon’s CEO Andy Jassy announced that, beginning in January 2025, the company will mandate that employees return to the office for a full five days per week, “the way we were before the onset of COVID.” The reason for this shift, according to Jassy, is to strengthen Amazon’s culture, with the CEO using the word “culture” 11 times throughout his memo. There probably is some truth to the culture comment, but I think the return-to-office mandate has more to do with another one of Jassy’s goals noted in today’s memo:

So, we’re asking each s-team organization to increase the ratio of individual contributors to managers by at least 15% by the end of Q1 2025. Having fewer managers will remove layers and flatten organizations more than they are today.

There are only two ways to “increase the ratio of individual contributors to managers by at least 15%,” you can either add individual contributors or remove managers. Considering that Amazon already had at least two rounds of job cuts (see here and here) in 2024, number one doesn’t seem all that likely, which leaves us with “remove managers.”

Jassy mentioned throughout the memo that he wants to “decrease” bureaucracy throughout the company, and removing managers is his solution to that problem. However, decreasing bureaucracy by removing managers has another benefit: it reduces costs. And that, I think, is the ultimate goal here: cost-cutting without having to call it “cost cutting.”

The simplest way to remove managers is through layoffs, but layoffs create poor optics. Mandating a five-day return-to-office will naturally cause some employees to lay themselves off, providing the desired outcome without the unpleasantness of job cuts.

For context, most big tech companies have not mandated a full return-to-office for their employees: Google, Meta, Apple, and Microsoft expect employees in the office 2-3 days per week, according to The New York Times, and Nvidia continues to ignore the return-to-office trend. And all of these big tech companies, and the S&P 500 as a whole, have actually outperformed Amazon over the last three years:

Obviously, companies can do just fine with remote and hybrid policies, but if you want to trim your headcount glut, return-to-office to improve “culture” provides excellent cover to achieve that goal. Also, if this were truly a culture decision, there wouldn’t be any exceptions to the rule, but workers who already have approved Remote Work Exceptions will keep their perk:

Before the pandemic, it was not a given that folks could work remotely two days a week, and that will also be true moving forward—our expectation is that people will be in the office outside of extenuating circumstances (like the ones mentioned above) or if you already have a Remote Work Exception approved through your s-team leader.

Top performers in any company have leverage, and Amazon is no exception. If you’re indispensable to your company, and you value work-from-home flexibility, your company will grant that demand, because they know you’ll easily be able to find work elsewhere if they don’t. We live in a world where the new CEO of Seattle-based Starbucks is working from Orange County, California. I’m sure that top Amazon employees who want to stay remote will be able to continue doing so.

Yes, for many employees, being in the office and interacting with coworkers throughout the day is valuable, but you can capture most of that value in 3-4 days per week. Forcing everyone to go to the office on Fridays is less about improving the culture and more about trimming the fat.