Why Amazon Layoffs Won’t Stop Until 2023
The pandemic served to usher in a period of artificial growth for companies like Amazon, and that false growth is what is now perpetuating the mass number of layoffs at the company.
In business there is a fine line walked by corporate executives every day regarding the balance of the quantity required of team members, partners, employees, associates, representatives, staff members, or whatever term is used in a company to refer to the workers to accomplish the company’s goals and the fiscal health of your organization. Every business in the world must examine these two balance sheet line items daily because if the mission of a company is to be profitable and those two factors could potentially derail that mission. The Amazon layoff will affect tens of thousands of workers and will continue into next year, thus it’s important to understand what currents are rippling through our nation that are driving these job losses.
Amazon is not the only one in the headlines, it is joined by other industry giants like Twitter, Zillow, Facebook’s Meta, Zendesk, Salesforce, F5, and Stripe. The 4th quarter of each year in corporate America is focused on nailing down the company’s strategy and execution plan based on their internal forecasts of revenue generation for the following year. So, when January 1st comes their employees know exactly what all the immediate goals, targets, and expectations are for their job functions so they can hit the ground running and start the year off strong.
In these corporate strategy assessments, the balance of the quantity and cost of employees weighed against the company’s forecasted projected revenues. It’s just like our elementary school math teachers told us repeatedly throughout childhood, “math is important, and understanding it plays a crucial role in everyday life when you grow up.” It is a simple subtraction word problem that frustrated many of us in those Math classes.
The caveat in this word problem is that people’s livelihoods are determined by the outcome of the answer. The Amazon layoff is a direct example when the outcome says the remaining revenue does not equal a number that is large enough to provide investors or stakeholders with the dividends, they would anticipate being paid each fiscal quarter for their shares of Amazon stock. Digging in deeper we can see the factors that have created this problem and it is projected to continue with additional Amazon layoffs into 2023.
The first major factor that led them to reduce their workforces is rooted in why that workforce got so large to begin with. In the first months of 2020, the pandemic swept across the world and drove everyone into their homes to work, live, and most importantly shop. This caused E-Commerce to see an artificial demand in their business and Amazon was impacted the most due to the nature of its business model.
This forced Amazon to rapidly increase its staff to be able to keep up with the demand for its products and more importantly its delivery services. CNN Business quotes Amazon CEO Andy Jassy as saying, “It’s not lost on me or any of the leaders who make these decisions that these aren’t just roles we’re eliminating, but rather, people with emotions, ambitions, and responsibilities whose lives will be impacted.” This clearly demonstrates why these decisions are incredibly difficult for the senior executives that are responsible for ensuring the balance is fair and equitable for their stakeholders.
With the pandemic in the world’s rearview mirror the demand for the company’s services is in decline, thus the reason for the Amazon layoffs. Amazon and other companies will continue to assess this issue as additional factors are also considered. For example, the predicted economic recession and those impacts on consumer buying habits, diminishing its revenue forecasts even further. We will continue to see Amazon and many companies attempting to become lean in their expense spending and human capital is one of the largest expenses on a company balance sheet.
Unfortunately for the Amazon workforce reducing human capital is the quickest way for a company to see an impact and increases corporate net revenue. This is going to be a major factor as companies across America baton down the hatches and prepare to survive the potential economic downturn expected in 2023. Only time will tell what the impacts of these Amazon layoffs are for the country and if they are a precursor to a much larger national issue that is bubbling under the surface.