Amazon’s latest organizational shake-up is making waves, and not just within its own ranks. The retail giant’s controversial “down leveling” strategy—reducing middle management, increasing direct reports per manager, pausing senior hires, and even cutting salaries—is garnering the attention of senior leadership across industries looking to streamline leadership and cut costs.
Amazon’s CEO Andy Jassy says the move is about “decreasing bureaucracy” and speeding up decision-making. But is Amazon streamlining for efficiency, or is it playing a dangerous game with leadership development and company culture?
For C-suite executives, Amazon’s approach presents both opportunities and, perhaps, a cautionary tale. The push to flatten hierarchies is gaining traction, and how companies handle it could define their long-term success. Let’s discuss.
Leaner Teams, Faster Execution—Or Just More Pressure?
Amazon’s pandemic-era hiring spree left it with a bloated managerial structure that, according to Jassy, led to slower decision-making and operational inefficiencies Now, by raising the minimum number of direct reports per manager from six to eight, the company hopes to cut costs and push decision-making down the chain. The financial payoff? An estimated $1.5 billion in annual savings.
And Amazon isn’t alone. Meta, Citi, UPS, and other major corporations have all trimmed middle management in recent years in a trend dubbed the “Great Flattening” of corporate America. The goal is clear: fewer layers, faster decisions, more agility.
But while cutting management might look good on an org chart, the reality for employees can look very different. With fewer leaders, managers face greater workloads, direct reports may lack proper guidance, and decision-making can become even more chaotic. What’s meant to streamline operations could actually just add more pressure.
The Hidden Costs
On paper, reducing management sounds like a win for efficiency and cost-cutting. But inside Amazon, employees are telling a different story—one of growing fear and uncertainty. With fewer leadership roles, managers are taking fewer risks, fearing failure that could make them expendable. Long-term, the effect of this strategy is the stifling of innovation.
Additionally, “down leveling” managers to individual contributor roles with lower pay—while framed as a restructuring tactic—could lead to leadership attrition. It shouldn’t be overlooked that this sends a clear, company-wide message: leadership isn’t valued. The best and brightest in the talent pool won’t stick around if they feel undervalued or fail to see a future. The long-term impact? A company that’s lean on paper but struggling with gaps in experience, strategy, and execution.
So the big question: Is Amazon truly empowering frontline teams, or is it simply offloading managerial responsibilities onto employees without giving them the support they need? If it’s the latter, it’s only a matter of time before cracks start to show in this real-time case study. And for other CHROs and COOs, the challenge is clear: How do you maintain a strong leadership pipeline while flattening hierarchies? Without a clear succession plan, organizations risk losing institutional knowledge and leadership development momentum.
Lessons for the C-Suite: Cut Smarter, Not Just Deeper
If you’re eyeing a similar restructuring move, tread carefully as the stakes are high. The cost savings are real, but so are the risks. Here’s what to keep in mind:
Trimming Middle Management Can’t Mean Gutting Leadership
Cutting costs is smart business, but eliminating too many experienced leaders can leave an organization directionless and stagnant. Leadership isn’t just about titles—it’s about mentorship, problem-solving, and keeping teams aligned on long-term strategy. Without it, execution suffers.
Fewer Managers Won’t Fix Decision-Making—You Need the Right Tools
Flattening hierarchies sounds efficient, but it doesn’t automatically improve speed. If anything, it can create bottlenecks. Without clear decision-making frameworks, strong training programs, and the right tools, fewer managers may just mean more confusion. Ensure your frontline workers can take on more responsibility by prioritizing these in your leadership.
Culture and Retention Are Make-or-Break Factors
If employees think taking risks could cost them their jobs, they’ll default to playing it safe—and your company will stagnate. Companies need to be transparent about restructuring goals, invest in upskilling, and ensure employees see a future for themselves—even in a leaner organization. Communicate restructuring goals clearly, offer leadership development, and make sure employees see a path forward.
The Bottom Line: Efficiency or Long-Term Gamble?
Amazon’s restructuring is a case study in the trade-offs between cost-cutting and leadership development for all C-suite executives. Done right, flattening can improve agility and reduce bureaucracy. But done wrong, it leads to high talent attrition, decision paralysis, stagnancy, and low morale.
For executives considering similar moves, the lesson is clear: efficiency at the expense of leadership strength and company culture isn’t efficiency at all. The real challenge? Striking the right balance before your best people walk out the door.
SOURCES: Business Insider, Forbes
