The world’s largest e-commerce retailer Amazon.com’s (AMZN) CEO Andy Jassy issued a memo yesterday asking corporate staff to return to office five days a week, while also discussing other structural changes. Jassy said that the organization needs to return to its pre-pandemic state when every employee came to the office, except in “extenuating” or emergency circumstances. The work-from-office mandate will become effective starting January 2, 2025.
During the COVID-19 pandemic and after, Amazon allowed corporate staffers to work from home two days a week. Amazon’s S-team (senior leadership team) leaders will decide if a worker can work from home under unusual circumstances.
Jassy Wants Amazon to Become Nimble Again
Jassy announced several other organizational changes that are expected to have a lasting impact on Amazon’s efficiency and will help it become nimble again. Andy believes these changes would help the company “operate like the world’s largest startup.” Like every other tech company, Amazon rapidly increased its workforce during the pandemic, only to slash it later.
Some of the benefits of the work-from-office mandate that Jassy highlighted include the constant desire for innovation, high accountability, reduction in the timing and layers of decision-making, and a deeper connection between team members.
Among other changes, Jassy wants to streamline and flatten the corporate structure and get rid of any unnecessary layers that may cause a delay in decision-making. He asked the S-team leaders to review and increase the ratio of individual contributors to managers by at least 15% by the end of the first quarter of 2025.
Union Pressure Continues at Amazon
In another key development, Amazon’s contract delivery workers who are employed through the Delivery Service Partner (DSP) program from one of New York’s facilities joined the International Brotherhood of Teamsters yesterday. They are asking Amazon to begin negotiations in terms of consistent schedules, maintenance of delivery trucks, and reasonable workloads among others. Labor unions are putting added pressure on Amazon to treat its delivery drivers as employees and grant them more benefits.
Bowing to the union pressure, Amazon last week increased the average hourly pay for drivers delivering Amazon parcels to $22. This reflects a 7% jump over last year’s average pay. Drivers across the delivery channel have been pressuring Amazon with strikes, higher wages, and safety improvements. Amazon has resisted the pressure so far, stating they are contracted third-party workers and cannot be termed as Amazon employees.
Is Amazon a Buy or Sell Stock?
Given its streamlining measures and well-established businesses, Amazon is one of the most favored tech stocks for Wall Street. On TipRanks, AMZN stock commands a Strong Buy consensus rating based on 42 Buys versus one Hold rating. Also, the average Amazon.com price target of $222.88 implies 20.6% upside potential from current levels. Year-to-date, AMZN shares have gained 21.7%.
