Question

Amazon is not just a surviving company of the 1990s tech boom; it is now one of the largest and most successful companies in the world in any industry. It has leveraged its game-changing approach to selling books to sell almost everything to almost everybody almost anywhere. Today Amazon is a leader in all things customer service, and it has achieved this leading position through groundbreaking technological innovation. Technological innovation also has made Amazon one of the largest web services companies in the world and much more than a formidable retailer. All these legendary accomplishments are the result of the commitment and contributions of thousands of extremely talented Amazonians. As you would certainly expect, the standards for hiring are exceptionally high. But what it takes to thrive and survive at the company is even more challenging.

It’s Not All Sunshine and Roses

While Amazon’s accomplishments and future endeavors are widely reported, until recently relatively little was known about its approach to managing employees. But recent reports describe a “punishing corporate environment: long hours, disparaging bosses, high stress, no time or space to recover, all resulting in uncommonly high employee turnover.”¹ Just how bad is it? PayScale ranked Amazon 464th among the Fortune 500, with median employee tenure of approximately one year! (A competing estimate puts average tenure at 18 months.)²

What pressures drive such high turnover? In a letter to shareholders in 1997, founder and CEO Jeff Bezos wrote: “You can work long, hard, or smart, but at Amazon you can’t choose two out of three.”³ This suggests that employees must always be on, be in the game, and play it well. Amazonians experience many of the common pressures of today’s workplace—80-plus-hour workweeks, 24/7 connectivity, no real vacations or holidays (no surprise given that Amazon is the largest retailer on the planet).

Amazon’s “always on” culture is manifest in a number of chilling stories, such as that of an employee who negotiated a 7 to 4:30 schedule with her boss after having her first child. The problem was that her coworkers didn’t see her arrive early and crushed her in anonymous peer feedback (which employees are encouraged to use). Her boss said he couldn’t defend her in her performance review if her own coworkers were critical of her. Can it get worse? Yes.

Amazon also uses a “rank and yank” performance management system. Employees are ranked by their managers, and those near the bottom are terminated every year. This leaves little room for taking a breath or backing off, even if you have a miscarriage, take care of an ailing parent, or receive treatment for cancer. There are stories of employees in all these predicaments who were essentially told that their lives were incompatible with working at Amazon. It is no wonder one former employee said, “Nearly every person I worked with, I saw cry at their desk.”⁴ Amazon disputes some of these claims as simply those of disgruntled former employees. And because it has so many, even a small percentage is a big number.

We Can Measure “That” … and “That” Matters

Another key contributor to the pressure cooker environment is that everything is measured. For instance, warehouse employees are monitored using sophisticated systems to track how many boxes they pack per hour. White-collar employees participate in routine “business review” meetings, for which they need to prepare, read, and absorb 50 to 60 pages of reports amounting to thousands of data points. During these review meetings employees are often quizzed on particular numbers by their managers, and it is not uncommon to hear managers say that responses are “stupid” or tell workers to “just stop it.”⁵

To be sure, the company succeeds in large part because of the immense customer data it collects and uses to select and sell its products. The plan is to use data the same way to make performance management an efficient and effective everyday process, rather than a once-a-year event. However, many employees describe the result as “purposeful-Darwinism”⁶ in which every employee constantly competes with other employees. Such relentless and pervasive competition, while well intended, has many undesirable consequences. For instance, it is common for employees to hoard ideas and talent, because sharing becomes a personal loss for the sharer and a gain for somebody else. Moreover, other’s ideas are not just scrutinized; they are undermined. Groups of employees often conspire against others on the peer feedback system to get ahead (or to put somebody else behind). As for managers, they must both defend the direct reports they deem most valuable to their own performance, and at the same time determine whom they can sacrifice—not everybody can pass the performance test.⁷

Amazon = Bezos

Much of the praise and many of the complaints are directed to Jeff Bezos. Not only is he the founder and CEO, but he also is the chief architect of all things Amazon. His personality is embodied in the company values and the way it operates. Like Bezos himself, employees are expected to use data, confront, persevere, and win. This approach appeals to and is sustainable for only a very specific type of employee. One former employee described Amazon’s hiring process as “panning for gold.”⁸ The company is looking for the rare stars who can thrive in its demanding environment, and it must sift through many, many people to find them.

This strategy is a real challenge for Amazon. Its size, growth rate, and turnover require the company to hire thousands and thousands of employees every year, and this doesn’t include the thousands of temporary workers it hires to meet the holiday rush. Interviews with male employees in their 40s revealed that many are convinced Amazon will replace them with employees in their 30s, who worry in turn that the company prefers employees in their 20s. The implication? Younger employees have fewer commitments and more energy.⁹

What Are We Going to Do About It?

To combat the churn, Amazon has structured its stock options to vest (transfer to the employee as owner) on an unusual schedule. Instead of vesting evenly over a period of years, Amazon employee options vest at 5 percent in year one, 15 percent in year two, 40 percent in year three, and 40 percent in year four. Employees who leave within one year of hire must repay part of their signing bonus, and if within two years they must repay their relocation package if any. Many experts question the effectiveness of such policies, however. Lindsey Thorne, manager at a Seattle recruiting firm that places many former Amazon employees, says, “The potential payout of waiting for stock to vest won’t tie down unhappy employees who are ready to jump ship.”¹⁰ Still others question whether Amazon can continue to innovate and lead in the marketplace if its most valuable asset is ground up and discarded in such a way and at such a high rate.¹¹

To be fair, surely some percentage of the company’s more than 150,000 employees is quite satisfied and successful. The system works for some, and for many it works for some period of time. And the incredibly high bar, marquee name, and extreme work ethic required to get hired at Amazon make former Amazonians very valuable to the company’s competitors and many other companies both inside and outside the technology industry.

What is the problem?

What is the root cause of the problem?

Can you provide any recommendation to solve this problem?

Answer 1

Amazon is one of the largest online retail E-commerce giants that distinguishes itself by providing a wide range of services such as starting from books to groceries, clothes, tech-gadgets & other prime services in the recent global market. Its philosophy driven by Mr. Bezos founder of Amazon of proving A to Z service & products to the customer is widely spread across the globe as a world's most valued company in the E-commerce segment.

Every company aspired to standalone in its own business segment but it must not outshine or override the following:

1. The definition of thier existence & core values & principles.

2. The environment & culture of it.

3. Corporate governance & how they incorporate the organizational goal to individual goals.

As per the above case on Amazon, I witnessed a lot of issues which is been unaddressed on neglected in terms of only commercializing the business which is not good. Following are the problems:

1. The first problem that is witnessed here is High employee turnover which punishes the employee for long working hours, corporate environment, disparaging bosses, High stress, & no time as well as space to recover.
2. Another problem is Payscale given by the company to an employee where it states that it is among 464th among the fortune 500 with median employee tenure of approximately one year.
3. Working hours & peer pressure is the issue which has been neglected as stated in the case many employees have witnessed the stress in working hours & the culture of work designed by the company.
4. Always 'On Culture' is another problem which is stated in this case as the company doesn't recognize the situation & problem the employee undergoes in personal or family and there is no such work balance which is a problem. The work has to done even the mother lost her child in miscarriage, there is a lot of pressure by the company's end with this culture.
5. There is a lot of internal favoritism & political influences which is another problem witnessed in this case as even after working on long hours on a desk or back end in its production activity the employee couldn't complete the orders or commit any mistake the managers doesn't recognize or motivates the employee to correct the mistake but complaints & says negative to them as 'stupid' or 'idiot' & measure on it.
6. There is 'Rank & Rank Performance Management' review which the company undertakes in its performance review of every employee or worker in the firm. A lot of times the rank pressure so much that employees should take beyond a specific rank otherwise they are fired & not given any suggestion on how to improve & so on.

These are the problems which can be addressed as per the case at its internal & external analysis. There are another root cause of the problem which is very important to address even with the above problems mentioned as per the case. Following are those problems:

1. There are lot of core issues on grounds of morality which is not addressed & the problem here is an employee is treated as a machine who has to work on 24/7 which there is no work-life balance & also even if there is any issues in thier personal life the manager should understand it but there is so pressure given that due to business the employee is enforceable to work.
2. The core culture, the mission, the vision, & the goals of the company is have the root cause of the problem where there is no proper culture, proper environment for the employee who should feel that they are at a safe place as they are the internal customers. If the internal customers are happy then only the external customers of the company will be happy & satisfied which is ignored here as core fundamentals of any business.
3. The company is ignoring the complaints while addressing the competition to survive in the market for a longer run. As the agreed company is here to generate business, revenue & profits but they cannot forgo thier internal customer (Employees) conflicts, complaints which are against thier core root of the values of the firm.

Every business or company is perpetual in thier nature & it is managed & organized with proper plans, policies & guidelines specified by it with core values, mission, vision & culture. The company should be clear with business & their purpose but more than that they must be clear with that they should not harm humanity, society & environment by & large. Following are some remedies & recommendation which the company like Amazon can undertake :

1. Firstly, what the company sows, so they reap in the future. So it must be clear with their fundamentals as it is most important to acknowledge the efforts of every human & treat them as humans & not with machines. Involve employee engagement & employee participation wholeheartedly as just in policies to showcase or advertise just in case to market. Employees being the most valued & important asset any investment in such will generate more profits then the monetary profits.
2. Apart from employees, I recommend that the managers should be trained in motivating the employees & also must reward or acknowledge positively the efforts. Even there is any mistake by anybody see that they are humans, not machines, Machines also have capacity if it is crossed then it losses its working pattern & breakdown, so as humans. Using them as machines are not as good as it is against the morale & culture of any firm.
3. There are issues & problems as all brains are not the same and they are different. The company should train them & also see that thier performance is not ranked as per any pressure or political influence but by the sheer efforts & motivation if they are not able to perform. If any issues are going in personal life or any internal conflicts or complaints the manager must address that and how best they can support as they are the most valued asset in the firm.

All these can make the company in controlling their employee turnover rate, managing thier peer pressures, maintaining the proper culture with governance & compliance & checking that there no harm in the internal working pattern & external to the environment.