amazon as an employer

AMAZON AS AN EMPLOYER1

Amazon was the biggest Internet-based retailer in the United States and had frequently been featured in

Fortune magazine’s Elite List of the World’s Most Admired Companies, ranking second in 2014 and

fourth in 2015. 2 However, in 2015, controversy erupted on social media when an article in The New York

Times portrayed Amazon as a company that was “conducting an experiment in how far it [could] push

white-collar workers to get them to achieve its ever-expanding ambitions.” 3 Many leading technology

wizards, such as former Twitter chief executive officer (CEO) Dick Costolo, as well as venture capitalists

Marc Andreessen and Keith Rabois, dismissed the criticism, arguing that such practices were part of what

made “disruptive companies disruptive.” 4

The New York Times article focused on the unconventional office culture promoted at Amazon. Particular

attention was paid to the practice of encouraging employees to be ruthlessly critical of each other’s ideas

in meetings and to surreptitiously send feedback to each other’s bosses. 5 The article also mentioned the

physical stress of Amazon’s workplace. Employees were expected to put in long hours and were

reprimanded when they failed to respond to emails that arrived at midnight. This was the inevitable by-

product of a policy that demanded that all employees work overtime, effectively forcing employees to

work harder and faster until they quit, collapsed, or were terminated. 6

As a result of its workplace policies, turnover at Amazon was high: most employees did not stay for more

than a few months. 7 Nonetheless, Amazon had climbed the ladder of achievements and accomplishments

in an unrelenting, expeditious manner. It had surpassed Walmart as the most highly ranked retailer in

terms of market valuation. 8 The company was as continuously innovative as a new start-up.

9

Amazon was on the verge of opening several new multi-floor offices in diverse locations, which would

expand its operating capacity to approximately 50,000 employees. 10

The question that arose at this critical

juncture of its growth was whether Amazon would be able to attract and retain the engaged talent it

required to fill these vacancies despite The New York Times exposé. Would Amazon’s demanding

corporate culture continue to lead to innovation?

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WORKPLACE CONUNDRUMS AT AMAZON

Amazon had always maintained a strict emphasis on customer satisfaction. The business was built around

this principle. 11

Customers around the world were familiar with Amazon, but life inside the organization

had been impenetrable until it was probed by The New York Times article. In a letter to shareholders,

Amazon CEO Jeff Bezos wrote, “You can work long, hard, or smart, but at Amazon.com, you can’t

choose two out of three.” 12

In late 1999, when the Internet boom took a precipitous fall after years of exhilarating success, Amazon

was burdened with debt and spiralling losses. Bezos needed to convince Wall Street that he was

determined to cut costs. But what costs were left to cut? Unlike other competing firms in Silicon Valley,

the company had never provided perks and benefits to its employees. The only “perk” Amazon had

offered was free Aspirin, and this was taken away. 13

Many considered the frequent temper tantrums of Bezos to be key to the survival and success of Amazon.

Employees described Bezos’ outbursts as “nutters.” 14

His favourite quips were, “Why are you ruining my

life?” and, “If I hear that again, I am going to have to kill myself.” 15

In spite of his infamous temper,

Bezos was ranked as the top innovator in 2013. 16

When The New York Times published its article, Bezos immediately sent out a company-wide memo in

which he expressed his disagreement with the article’s portrayal of the company work environment.

Bezos noted that anyone working in such an environment would be crazy to stay, and he ended his memo

by saying, “hopefully you don’t recognize the company described [in The New York Times article].

Hopefully you’re having fun working with a bunch of brilliant teammates, helping invent the future, and

laughing along the way.” 17

Indeed, “work hard, have fun, and create history” seemed to be the motto of employees at Amazon. 18

Over-achievers bubbling with innovative ideas and eager to collaborate with and learn from brilliant co-

workers thrived in the challenging, fast-paced environment and seemed to embrace the extreme demands

placed upon them — not as a problem to run from, but as an opportunity to grow. 19

Many such employees

were excited to be working on cutting-edge projects that would impact millions of people and felt that

working at Amazon advanced their careers. 20

The star performers or winners would visualize the

innovations, implement them for a quarter billion customers, and accumulate wealth from rising stock prices. 21

Amazon’s unconventional style extended beyond its office culture and into its business development

processes. Software developers were required to write an imaginary press release and complete a list of

frequently asked questions for an envisioned product before they began programming it. This strategy of

working backwards from a vision of the finished product forced the developers to detect and confront any

difficult post-production issues before moving ahead with the product. This ensured that the developers

understood the product’s unique proposition and appeal to potential clients from the very beginning of the

development process. If the developers could not write a convincing press release, then the product was

discarded as not worth the effort. 22

Many employees found this rigorous approach to software

development exciting and argued that such rigour made Amazon the best place to work for those who

were passionate about their profession. However, such employees were a small minority. In 2013, Amazon

had the second-highest turnover among the Fortune 500 companies, with a median tenure of one year. 23

The office culture cultivated at Amazon led those outside of the company to think negatively of

Amazon’s ex-employees. Many recruiters were hesitant to hire ex-employees, believing they had been

trained to be aggressive. Amazon employees were also known to be belligerent and work-fixated. A

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Seattle-based technology recruiter who had worked at Amazon for four years said that he was still

struggling with the workaholic nature from within and trying to control the urge to verbally eviscerate any

colleagues who did not perform up to his expectations. 24

PEOPLE MANAGEMENT PRACTICES AND DIVERSITY

The talent acquisition process at Amazon was rigorous and included screening by the company’s star

performers and part-time interviewers brought on to ensure the company hired only the best. New

employees had to sign a contract that required them to repay the signing bonus in the event that they left

the organization within a year of signing and to repay part of their relocation expenses in the event that

they left before the completion of two years.

Performance management at Amazon continued to be based on a bell curve approach when other

companies were moving away from it. 25

Every year, a company-level review was conducted in which

managers discussed their subordinates’ rankings. Managers came to such meetings armed with documents

and evidence to defend their key members and to incriminate the employees of competing groups. To

protect critical talent, managers chose team members who could be sacrificed in the review process.

Employees were encouraged to criticize their colleagues by sending feedback to management using a

confidential online feedback tool. Because employees were constantly under scrutiny, and bottom

performers were unceremoniously thrown out, everyone tried to outperform or sabotage everyone else.

Indeed, many employees reported in their performance reviews that they felt sabotaged by their

colleagues’ negative comments. 26

Amazon did not have female employees in the top leadership team. Many attributed this gap to Amazon’s

system of competition and elimination. Many female employees believed that some of Amazon’s

“leadership principles worked to their disadvantage”; for example, being encouraged to “earn trust,”

“have backbone,” and “disagree” with colleagues was seen as difficult for female employees to practice in

the workplace. 27

Many key employees at Amazon were told that raising children could hinder their

chances of advancing their careers because child-rearing would prevent employees from putting in long

working hours. Despite working full-time, one female employee was criticized by her boss because the

employee’s colleagues often saw her leaving early, not realizing that she was also coming in early to

complete the required hours. Another female employee who, for years, had consistently exceeded

expectations was criticized by her boss when she began taking time off to care for her critically ill father.

This employee mentioned that those who were unable to give their “absolute all” and put in 80-hour

workweeks were perceived as weak. 28

Some male employees also had to quit Amazon — or consider quitting — because the workplace pressure

was forcing them to spend less time with their families. Older employees were worried that they would be

replaced by younger employees with fewer commitments and more time to focus on work. 29

Dick Finnegan, a consultant specialized in talent retention, cautioned organizations about the cost of

mandatory cuts in the workforce:

If you can build an organization with zero deadwoods, why wouldn’t you do it? But I don’t know

how sustainable it is. You would have to have a never-ending two-mile line around the block of

very qualified people who want to work for you. 30

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AMAZON WORKPLACE: FUTURE DIRECTION

In 2014, Harvard Business Review ranked Bezos as the top CEO. 31

Yet, just 12 months later, his ranking

fell to the 87th position 32

largely because, in 2015, CEOs were evaluated not just on the basis of their

financial success but also on the basis of their performance with respect to social responsibility criteria.

However, with topline growth and controlled spending, Amazon stock prices had more than doubled. 33

In response to The New York Times article, Bezos sent the following message to Amazon employees:

The article doesn’t describe the Amazon I know or the caring Amazonians I work with every day.

But if you know of any stories like those reported, I want you to escalate [them] to HR. You can

also email me directly at [email protected]. Even if it’s rare or isolated, our tolerance for any

such lack of empathy needs to be zero. 34

Given its work culture, would Amazon continue to be a competitive employer and offer an attractive

employee value proposition? Did the strategy of keeping employees on the edge always result in

innovation?

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EXHIBIT 1: Care and Compassion

Source: Created by the authors based on the following literature: Christopher L. Kukk, “From Compassion to Innovation: The Compassionate Achiever Goes to Work,” ChrisKukk.com, October 10, 2014, accessed February 10, 2016, http://chriskukk.com/from-compassion-to-innovation-the-compassionate-achiever-goes-to-work; Paul W. B. Atkins and Sharon K. Parker, “Understanding Individual Compassion in Organization: The Role of Appraisals and Psychological Flexibility,” Academy of Management Review 37, no. 4 (October 2012): 524–546; Laura T. Madden et al., “Emergent Organizational Capacity for Compassion,” Academy of Management Review 37, no. 4 (October 2012): 689–708; Peggy Simcic Brønn and Albana Belliu Vrioni, “Corporate Social Responsibility and Cause-Related Marketing: An Overview,” International Journal of Advertising 20, no. 2 (2001): 207–222; Merve Koçoğlu, “Cynicism as a Mediator of Relations Between Job Stress and Work Alienation: A Study from a Developing Country – Turkey,” Global Business and Management Research: An International Journal 6, no. 1 (2014): 24–36; Sara L. Rynes et al., “Care and Compassion Through an Organizational Lens: Opening Up New Possibilities,” Academy of Management Review 37, no. 4 (2012): 503–523; Meina Liu and Chongwei Wang, “Explaining the Influence of Anger and Compassion on Negotiators’ Interaction Goals: An Assessment of Trust and Distrust as Two Distinct Mediators,” Communication Research 37, no. 4 (2010): 443–472; Edward H. Powley and Kim S. Cameron, “Organizational Healing: Lived Virtuousness Amidst Organizational Crisis,” Journal of Management, Spirituality & Religion 3, no. 1–2 (2006): 13–33; Mary Ann Hazen, “Societal and Workplace Responses to Perinatal Loss: Disenfranchised Grief or Healing Connection,” Human Relations 56, no. 2 (2003): 147–166.

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Exhibit: Keeping Employees on the Edge

Source: Created by the authors based on the following literature: “Distress and Eustress. Do You Know the Difference?” Dr. Jack Singer, accessed February 10, 2016, http://drjacksinger.com/distress-and-eustress-do-you-know-the-difference; Howard J. Karger, “Burnout as Alienation,” Social Service Review 55, no. 2 (June 1981): 270–283; Sanjeev Agarwal, “Influence of Formalization on Role Stress, Organizational Commitment, and Work Alienation of Salespersons: A Cross- National Comparative Study,” Journal of International Business Studies 24, no. 4 (1993): 715–739; Harry Mills, Natalie Reiss, and Mark Dombeck, “Stress Reduction and Management: Types of Stressors (Eustress vs. Distress),” Gulf Bender Center, accessed December 21, 2015, www.gulfbend.org/poc/view_doc.php?type=doc&id=15644&cn=117; D. M. Pestonjee and Satish Pandey, eds., Stress and Work: Perspectives on Understanding and Managing Stress (New Delhi: Sage, 2013).

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Exhibit: Integrated Branded House Model.

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ENDNOTES 1 This case has been written on the basis of published sources only. Consequently, the interpretation and perspectives presented in this case are not necessarily those of Amazon or any of its employees. 2 Christopher Tkaczyk, “The World’s Most Admired Companies,” Fortune 171, no. 3 (March 2015): 97–104. Also available as an online feature at http://fortune.com/worlds-most-admired-companies, accessed January 19, 2016. 3 Jodi Kantor and David Streitfeld, “Inside Amazon: Wrestling Big Ideas in a Bruising Workplace,” The New York Times, August 15, 2015, accessed September 20, 2015, www.nytimes.com/2015/08/16/technology/inside-amazon-wrestling-big- ideas-in-a-bruising-workplace.html. 4 Jon Russell, “Jeff Bezos Says the New York Times’ Amazon Exposé Got It All Wrong,” Tech Crunch, August 16, 2015, accessed September 20, 2015, http://techcrunch.com/2015/08/16/computer-says-no. 5 Jodi Kantor and David Streitfeld, op. cit. 6 Spencer Soper, “Workers Complain About Amazon Warehouse Jobs,” Seattle Times, September 24, 2011, accessed September 20, 2015, www.seattletimes.com/business/workers-complain-about-amazon-warehouse-jobs. 7 Lisa Mahapatra, “Amazon.com Has Second Highest Employee Turnover of All Fortune 500 Companies,” International Business Times, July 26, 2013, accessed December 22, 2015, www.ibtimes.com/amazoncom-has-second-highest- employee-turnover-all-fortune-500-companies-1361257. 8 Simon Head, “Worse Than Wal-Mart: Amazon’s Sick Brutality and Secret History of Ruthlessly Intimidating Workers,” Salon, February 23, 2014, accessed September 20, 2015, www.salon.com/2014/02/23/worse_than_wal_mart_amazons_ sick_brutality_and_secret_history_of_ruthlessly_intimidating_workers. 9 Peter Cohan, “Amazon’s One-Hour Delivery: Another Reason to Sell Apple and Bet on Bezos,” Forbes, November 17, 2015, accessed January 7, 2016, www.forbes.com/sites/petercohan/2015/11/17/amazons-one-hour-delivery-another- reason-to-sell-apple-and-bet-on-bezos. 10 Jodi Kantor and David Streitfeld, op. cit. 11 Ibid. 12 Jeffery Bezos, Letter to Shareholders, 1997, accessed December 21, 2015, http://media.corporate- ir.net/media_files/irol/97/97664/reports/Shareholderletter97.pdf. 13 David Streitfeld, “Expecting the Unexpected From Jeff Bezos,” The New York Times, August 17, 2013, accessed September 20, 2015, www.nytimes.com/2013/08/18/business/expecting-the-unexpected-from-jeff-bezos.html. 14 Joshua Kandall, “The Temper Tantrum: The Key to Smart Management?” Fortune, November 22, 2013, accessed September 20, 2015, http://fortune.com/2013/11/22/the-temper-tantrum-the-key-to-smart-management. 15 Ibid. 16 Joel Holland, “The New Establishment: 2013,” VF News, October 31, 2013, accessed September 20, 2015, www.vanityfair.com/news/business/2013/11/new-establishment-2013. 17 John Cook, “Full Memo: Jeff Bezos Responds to Brutal NYT Story, Says It Doesn’t Represent the Amazon He Leads,” Geek Wire, August 16, 2015, accessed December 20, 2015, www.geekwire.com/2015/full-memo-jeff-bezos-responds-to- cutting-nyt-expose-says-tolerance-for-lack-of-empathy-needs-to-be-zero. 18 Larry A. Downs, “Work Hard. Have Fun. Make History,” LarryADowns.com, August 8, 2013, accessed January 7, 2016, www.larryadowns.com/2013/04/english/work-hard-have-fun-make-history. 19 G. Sampath, “In Love With Work, Amazon Style,” The Hindu, September 17, 2015, accessed September 20, 2015, www.thehindu.com/opinion/op-ed/in-love-with-work-amazon-style/article7659931.ece. 20 “Amazon.com Reviews,” Glassdoor, accessed September 20, 2015, www.glassdoor.co.in/Overview/Working-at-Amazon- com-EI_IE6036.11,21.htm. 21 Jodi Kantor and David Streitfeld, op. cit. 22 Jillian D’Onfro, “Here’s the Surprising Way Amazon Decides What New Enterprise Products to Work on Next,” Business Insider, March 12, 2015, accessed September 20, 2015, www.businessinsider.in/Heres-the-surprising-way-Amazon- decides-what-new-enterprise-products-to-work-on-next/articleshow/46544156.cms. 23 Lisa Mahapatra, op. cit. 24 Jodi Kantor and David Streitfeld, op. cit. 25 TNN, “Accenture Too Drops Bell-Curve Appraisals,” Economic Times, July 27, 2015, accessed September 20, 2015, http://economictimes.indiatimes.com/news/international/business/accenture-too-drops-bell-curve- appraisals/articleshow/48230902.cms. 26 Jodi Kantor and David Streitfeld, op. cit. 27 Ibid. 28 Ibid. 29 Ibid. 30 Ibid. 31 Adi Ignatius and Daniel McGinn, “The Best-Performing CEOs in the World,” Harvard Business Review, November 2014. Available from Ivey Publishing, product no. R1411B. 32 Ibid. 33 Rose Pastore, “Amazon’s Jeff Bezos Takes Dramatic Plunge Down List of Top CEOs,” Fast Company, October 13, 2015, accessed September 20, 2015, www.fastcompany.com/3052272/fast-feed/amazons-jeff-bezos-takes-dramatic-plunge-down- list-of-top-ceos; Peter Cohan, op. cit. 34 John Cook, op. cit.