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mazon to Competition: We Will Crush You! Amazon to Employees: We Will Churn You!

mazon to Competition: We Will Crush You! Amazon to Employees: We
Will Churn You! Amazon is not just a survivingPage 118 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 an
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.”86
Just how bad is it? PayScale ranked Amazon 464thamong the Fortune
500, with median employee tenure of approximately one year! (A
competing estimate puts average tenure at 18 months.)87 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.”88This
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.”89 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.”90 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”91 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 andPage 119 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.92 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.”93
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.94 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.”95 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.96 To be fair, surely some percentage of the company’s
more than 150,000 employees are 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. APPLY THE 3-STEP
PROBLEM-SOLVING APPROACH TO OB Step 1: Define the problem. Look
first at the Outcome box of the Organizing Framework in Figure 3.6
to help identify the important problem(s) in this case. Remember
that a problem is a gap between a desired and current state. State
your problem as a gap, and be sure to consider problems at all
three levels. If more than one desired outcome is not being
accomplished, decide which one is most important and focus on it
for steps 2 and 3. Cases have protagonists (key players), and
problems are generally viewed from a particular protagonist’s
perspective. You need to determine from whose perspective—employee,
manager, team, or the organization—you’re defining the problem. As
in other cases, whether you choose the individual or organizational
level in this case can make a difference. Use details in the case
to determine the key problem. Don’t assume, infer, or create
problems that are not included in the case. To refine your choice,
ask yourself, Why is this a problem? Focus on topics in the current
chapter, because we generally select cases that illustrate concepts
in the current chapter. Step 2: Identify causes of the problem by
using material from this chapter, which has been summarized in the
Organizing Framework and is shown in Figure 3.1. Causes will tend
to appear in either the Inputs box or the Processes box. Start by
looking at the Organizing Framework (Figure 3.1) and determine
which person factors, if any, are most likely causes of the defined
problem. For each cause, explain why this is a cause of the
problem. Asking why multiple times is more likely to lead you to
root causes of the problem. For example, do particular individual
differences employees possess help explain the problem you defined
in Step 1?Page 120 This might lead to the conclusion that the
characteristics Amazon uses to select and hire employees contribute
to the problem. Follow the same process for the situation factors.
For each ask yourself, Why is this a cause? For example, Amazon’s
HR practices likely have some effect on the problem you defined. If
you agree, which specific practices and why? Leaders (managers and
Bezos) greatly influence employees’ experiences at Amazon. Do they
cause the problem you defined in Step 1? If yes, then why? By
following the process of asking why multiple times you are likely
to arrive at a more complete and accurate list of causes. Again,
look to the Organizing Framework for guidance. Now consider the
Processes box in the Organizing Framework. Are any processes at the
individual, group/team, or organizational level potential causes of
your defined problem? It certainly seems that their emotions are
notable aspects of Amazon employee experiences. Do they help
explain the problem defined in Step 1? What about performance
management? For any process you consider, ask yourself, Why is this
a cause? Again, do this for several iterations to arrive at the
root causes. To check the accuracy or appropriateness of the
causes, be sure to map them onto the defined problem. Step 3: Make
recommendations for solving the problem. Consider whether you want
to resolve it, solve it, or dissolve it? Which recommendation is
desirable and feasible? Given the causes identified in Step 2, what
are your best recommendations? Use the material in the current
chapter that best suits the cause. Remember to consider the OB in
Action and Applying OB boxes, because these contain insights into
what others have done. Details of this case, for instance, describe
how Amazon has particular stock vesting practices to help ensure
retention. This might be part of the solution, but is it
sufficient? Be sure to consider the Organizing Framework—both
person and situation factors, as well as processes at different
levels. Create an action plan for implementing your
recommendations.

FIGURE 3.6 ORGANIZING FRAMEWORK FOR UNDERSTANDING AND APPLYING OB INPUTS PROCESSES OUTCOMES Person Factors Individual Level .Emotions Group/Team Level Group/team dynamics Organizational Level Individual Level Intelligences Personality Proactive personality Task performance Work attitudes Well-being/flourishing Turnover Career outcomes . Core self-evaluations Self-efficacy Locus of control Group/Team Level .Self-esteem Group/team performance Group satisfaction Emotional intelligence Situation Factors Organizational Level Financial performance Survival Reputation

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