Archive for the ‘Vision Values And Results’ category

Amazonian (Or Is It Neanderthal) Thinking?

August 18, 2015

In Sunday’s New York Times, a front page story begins and sprawls out over more than two full pages.  It ran under the headline, “Amazon’s Bruising, Thrilling Workplace”. The story written without Amazon’s full support laid out the pressure and expectations Amazon’s white collar staff are experiencing. The sub-headline read “Giant Retailer Tests How Far It Can Push White-Collar Staff”. Hmmm.

In the early 1960’s, SRI (Stanford Research Institute) introduced the concept of “business stakeholders”.  Stakeholders are groups of people without whose full support the business could not thrive. Over the years, the term “4 stakeholders” has narrowed the many possible stakeholders to Customer, Employees, Community, and Shareholders (Owners).

The notion is that unless a business tends to the needs of all these stakeholders, the long term corporate prospects will be far less than otherwise possible and potentially truncated. The 4 stakeholder concept directs management to make decisions which involve the needs of each of these 4 groups. The implied message is business performance (what owners or investors seek) will be optimized if all 4 groups’s needs are balanced.

The NYT article was disturbing to read on many levels. The two most significant management risks involve (1) favoring or not paying attention to one or more stakeholders, and (2) creating the work atmosphere where healthy checks and balances are muzzled in favor of “A Tale of Two Cities” atmosphere of behind the back criticism.  As described in this article, Amazon has both risks.

Silicon Valley high tech firms’s personnel practices have become familiar to us.  They woo talented workers with free food, gyms, and college campus like work places. Pay and stock options are also liberally used to develop employee loyalty and hard work. The employment model seemed to be “bright people, well rewarded, produce great innovative results”.Apple and Google, for two, seem to have a bright future. What could Amazon be doing that’s so different?

This article introduced quite a different model, “bright aggressive people, adequately rewarded, continual measured for performance yields results (and some who fail or burn out are discarded)”.

Amazon employs an almost cult-like approach to white collar work. Drive, drive, drive. Beginning with recruitment (sounded like Amazon seeks all type A’s), then orientation (learn the mantras), and beginning with their initial work assignment, periodic peer ranking (who stays, who gets weeded out), Amazon makes clear to employees what personalities and output are wanted.

Amazon encourages fellow workers to secretly criticize fellow workers and expects supervisors to give weight to these comments during personnel assessments. Personnel development and  improvement results from “survival” more than from coaching and counseling.

Assignments are expected to be completed as quickly as possible demanding the workers full attention, often 7 days a week and 18 to 20 hours a day.

Amazon relies on data availability. All aspects of day to day operations are tracked and a supervisor can see “real time” measures of what his subordinates are doing. On a periodic basis, the bottom performers (regardless of how good those employee might be) are let go (timely reminder to those remaining what could lie ahead). The article reported instances of workers losing their job because of serious illness and pregnancy (failures to perform). Hmmm.

Amazon does have a carrot as well as a stick. It rewards middle level workers with stock options and given Amazon’s stock performance, these can be attractive financially. The article also spoke of the “thrill” that some workers experience with the get it done at any cost model.

Jeff Bezos, Amazon’s founder and CEO, has publicly compared Amazon to Microsoft (both firms headquartered in Seattle) and said he will not allow Amazon to calcify into a rigid bureaucracy (slow reacting) like he sees in Microsoft and promises to keep Amazon striving to deliver customer delights before the customers request them. Hmmm.

The purpose of the NYT article can only be guessed (the article was featured as news). One could think the Times published the report as an expose of questionable management practices, or possibly a warning of a coming trend in management direction (why don’t more companies fire the bottom performers?). Or could this article have resulted from encouragement from major competitive retailers like Walmart or Macy’s (to show Amazon in a poor light)? Amazon claims to have surpassed Walmart already as the US retailer, so where next?

The article is disturbing and clearly describes a workplace I would not wish to be part of.

Amazon might not be alone in these policies which de-value workers.  A recent practice involving Disney involved firing US white collar workers and replacing them with imported lower priced (special visa) white collar workers from lower wage countries.

The trend is disturbing. The early days of globalization outsource jobs to low wage countries. Then businesses used the resulting lower wage rates to pressure other blue collar workers to accept lower wages. Now this new Amazon model culls the most productive white collar workers, consume them until they become less productive, and then discards (fires) them. Hmmm.

Amazon has surged ahead of its peers by capturing the web experience market and satisfying consumers willingness to buy on-line. These competitive advantages are not unique.   Amazon growth has been built upon broadening its range of products and services. They continue to experiment with new methods of deliver such as drones and same day service. A question might be, how long can this growth be sustained?

A more relevant question would be “what will happen when Amazon can no longer grow so quickly? What will happen to its stakeholders? Will Amazon be forced to shortchange its employees, the communities in which it operates, or (OMG) abandon its customers?   Hmmm.

One cannot argue that an ideal work force contains a lot of dull, unimaginative, lazy people. It is equally hard to argue that those that produce more should not be rewarded more. The question becomes what mix of people produces the best results for the longest period of time?

Activist investor, however, see the goal as which management style produce the greatest return for their investment with little regard to any stakeholder but themselves.

If this NYT article paints an accurate picture, Amazon will almost assuredly need to evolve to another form of white collar management as their business model ages. At the current pace, Amazon is burning out the bright young people it is hiring. It would be surprising if this risk and prediction is not well known within Amazon’s top management.

Of course, Bezos might have have a vision of growing Amazon into not just the largest retailer, but one so large as to make all others subservient.

Hmmm. Don’t they call that a monopoly?

Note: to learn more about a contrasting management style, see “Visions, Values, and Results” by John R Lewis