Target has said its layoffs earlier this week reflect a desire for the Minneapolis retail giant to work more nimbly. “Layers” and “overlapping work” bog down decision-making, as incoming CEO Michael Fiddelke described in a note to employees last week, announcing the reductions. Two-thirds of the cuts are in leadership.
Specifically, Target’s cuts—which are corporate, or “non-field”—affect 1,000 workers and eliminate 800 open positions. So far, the company has laid off 287 from its Brooklyn Park office and 528 from its downtown headquarters effective Jan. 3, per WARN notices released Tuesday. The company has stressed the downsizing is not to cut costs.
This week, Amazon reported essentially the same strategy. The Seattle-based e-commerce behemoth explained the goal of its own 14,000 corporate layoffs: “reducing bureaucracy, removing layers, and shifting resources,” per a memo from Beth Galetti, Amazon’s senior vice president of people experience and technology. Galetti gestured to AI “enabling companies to innovate much faster than ever before.”
What’s implied for Amazon: AI is supplanting portions of management, as Fortune described in a piece yesterday.
John Challenger, CEO of the Chicago-based career-transition services firm Challenger, Gray & Christmas, suggests these cuts overall indicate tech-driven tectonic shifts. “[Order flow] has been getting automated over the last decade at a furious pace,” he says, explaining how automation incises management. “AI is only accelerating that.”
Regarding Target’s layoffs, it’s not clear AI plays much of a factor right now. Fiddelke may be pointing, simply, to a bureaucratic morass—which would exist alongside Target’s other troubles. In TCB’s Aug/Sept feature about those troubles, an HQ employee complained of layers of approval seeking, which they said resulted in sluggish speed to market.
Still, Challenger describes these layoffs as inevitable harbingers, signaling changes in the economy’s direction. “There are always companies or sectors that lead that change,” he says. “It looks to me like retail, in its broadest sense, is one of the sectors that seems to be restructuring.” A report from Challenger, Gray & Christmas earlier this month found job cuts in retail tripled through September compared to the same period last year.
Amazon leads the evolution, Challenger says. The New York Times last week reported Amazon’s investments in automation may result in robots replacing more than 600,000 human jobs by 2033. One of Target’s top priorities under Fiddelke is to use technology for more efficient operations. This seems to refer largely to AI, so far implemented for trend-conscious merchandise development and savvier seller selection into Target’s third-party marketplace, per a Retail Dive interview with chief information and product officer Prat Vemana earlier this month.
Challenger folds in UPS, too. The Atlanta-based package-delivery company reported this week it has made 48,000 cuts this year to the company’s “operational workforce.” This mainly impacts drivers and warehouse employees but includes 14,000 who work mostly in management. “Usually, when companies restructure, it’s eventually both areas,” he says. Of this sector, Challenger offers an anecdotal assessment: “I was just out in San Francisco, and Waymos [self-driving cars] were everywhere, ubiquitous.”
Adjusting to changes—to new demands on how much human labor companies require—poses a perennial HR question: How do companies determine who, granularly, stays and who goes? A corporate staffer at Target, who wishes to remain anonymous, on Tuesday reported the company told employees its 1,000 cuts were not performance based, adding that layoff decisions appeared to have been made at a “very high level,” above senior directors.
Challenger says the aim of that approach, with directors and senior directors keeping their hands clean, would likely have been continued good will. Keeping the decision “remote” would also prevent leaks. But mass layoffs impact all departments, and the decision is too big to keep cloistered, he says. “I would be shocked if the managers weren’t also involved.”
He suggests Target may see further restructuring. “Sometimes you see companies, when things are getting worse or really changing … take more rounds of layoffs. They’re hoping against hope that things will settle down—whatever the forces are, driving their change.”