By Seth Ansell
This case study aims to analyze Amazon’s organizational relationship and how they structure communication between managers and employees. This case study reviews the Likert System 4 Management Approach model and attempts to identify which system Amazon uses, based on the company’s practices. This case study will also compare Amazon’s strategy to other similar competitor’s strategies. It will be discussed in detail whether this strategy seems to work for Amazon or if there is another strategy that the company could utilize instead.
There are many types of strategies and theories an organization can use to organize and structure itself. The Likert System 4 Management Approach describes four different types of management approaches that range from low to high concern for workers. The first system is the exploitative-authoritative type of management, which uses threats and fear to motivate employees within the organization. All communication within a company that uses this type of management is downward, employees under a manager can’t make suggestions to higher-ups. This system uses punishment to motivate workers. The communication that flows downward from managers is usually task based. This approach has high concern for task and low concern for the employee. System 2 is the benevolent-authoritative type of management which rewards employees when they complete tasks and uses punishments to motivate. While this system uses both punishments and rewards to motivate employees, it favors punishments. System 2 also mainly consists of downward communication but is more open to upward communication than the first system. Managers may rarely take subordinate’s suggestions seriously in this model, or the organization may say they allow upward communication just to appease employees (Avtigs, 2012).
System 3 of the Likert System 4 Management Approach is the consultative type. This manage approach uses rewards and punishment to motivate employees, and is more likely to favor rewards as means of motivation. This system is very open to upward communication and involves subordinates in the organization’s decision making process. Managers still have final say in the decision-making process, but subordinates still have a strong say within the organization. The final system is the participative type of management. This approach allows all upward communication and encourages subordinate involvement and input. This approach results in both high productivity and quality interpersonal relationships between subordinates and managers (Avtigs, 2012). Generally companies may not fall directly into one category, because the theory acts as a scale with organizations following somewhere between them (Dininni, 2011).
Amazon started out as an online book store in 1995, but has evolved to be one of the biggest online retailer stores of all merchandise. In addition to being an online retailer giant, they are also known for online and technology services. They launched the Kindle e-reader, made their own tablet called the Kindle Fire, their own multimedia TV box system titled Amazon Fire TV, their own smartphone, and more. Amazon, like other tech giants, attempts to be innovative and produce unique groundbreaking services and products. This puts the company in direct competition with other online retailers and other innovative tech giants like Google, Microsoft, and Apple. Amazon’s mission statement is “It’s our goal to be Earth’s most customer-centric company, where customers can find and discover anything at Amazon.com” (Pestleanalysis, 2016). Amazon tries to deliver the best experience it can to its customers, to the point where a very strict system of rules and policies is put into motion for Amazon employees. These set of policies sets Amazon between exploitative-authoritative system and benevolent-authoritative system on the Likert System scale.
Amazon has a very cutthroat corporate culture, were unlike other similar companies, employees are encouraged to harshly criticize each other’s decisions during meetings. It is encouraged to the point where Amazon’s internal phone directory has directions on how to send “secret feedback” to each other’s bosses (Kantor, 2015). This is an example of when upward communication is allowed in Amazon’s workplace culture. If it were not for this limited upward communication, Amazon would fit more closely to exploitative-authoritative system rather than in-between exploitative and benevolent.
Many employees at Amazon do not stay long unless they are very successful. If they are not superbly successful they are driven to quit or are outright fired. Amazon human resources calls it “purposeful Darwinism.” Past employees said that they believed they had been let go unfairly for suffering from cancer, having a miscarriage, and other personal life crises. In one specific case, a woman was put on probation because Amazon claimed difficulties in her personal life was affecting her work goals. Her life difficulties were being diagnosed with breast cancer. Other employees were fired because their performance dropped after major negative life events and the company did not give the employees time to recover (Kantor, 2015).
The company also has started a project to learn how far it can push white-collar employees, sometimes bordering on the line of unacceptability. A past employee who worked on book marketing, said that “Nearly every person I worked with, I saw cry at their desk.” Part of Amazon’s success is due to its method of extracting everything it can from their work force. It does this differently than other companies like Google and Facebook. At first glance, Amazon’s office campuses look like Google’s and Facebook’s with dog-friendly offices, mainly young employees, and up-beat posters. When it comes to how they handle employees, Amazon doesn’t claim to make pleasing employers an important task. Amazonians aren’t motivated with on-site gyms, buffets, cash handouts, or other incentives. Instead Amazon embraces frugality with bare-bone decorations, and even having employees pay for their own company cell phone and company travel expenses. In addition to not being motivated by incentives, Amazon frequently uses fear to motivate its employees. Amazon ranks all their employees, and at the end of each year, the employees at the bottom are purged (Rosin, 2015). This strong use of fear rather than using rewards as motivation is a large part of the benevolent and exploitative-authoritative approach. Because the only incentive Amazon uses to encourage employees is a good pay, they rely almost all on fear as a tool of motivation.
Amazon not only pushes their white-collar workers to their limits, but many of their blue-collar workers in their shipping plants as well. There are a lot of policies in place to stop employees from doing certain things. For example, employees are not allowed to use any product on the warehouse floor that was sold from Amazon, this makes certain items like cosmetics and lipsticks not allowed. Amazon even has policies on foods allowed; water is the only drink allowed while at work and employees are not allowed to chew gum. In addition to strict on-the-job policies, Amazon has little tolerance for sickness. Some employees have said they got fired for being sick, Amazon stated that they didn’t disclose prior illness before being hired which their decision of firing them legal and ethical (Yarow, 2011).
Amazon also had an incident where their warehouse in Breinigsville would have ambulances and medical personnel on standby because it was so hot in the warehouse during the summer. The ambulances would take workers suffering from heat related injuries to the hospital. Amazon opted to keep the warehouse open and keep the workers working rather than closing for the extremely hot days. OSHA had received numerous complaints against the facility from harsh and unbearable working conditions. One worker stated that at least 15 people collapsed in one day. After a federal investigation was done on the company, temporary air conditioners were installed and later permanent air conditioners added. Employees of the facility were very pleased when air conditioning was installed. This shouldn’t take away from the fact that Amazon only installed the air conditioners after being federally investigated and called out by the press (Soper, 2012). This only solidifies the view that Amazon has low concern for their workers. It is obvious they have high concern for the task, by forcing employees to continue working while others were collapsing from the heat.
When looking at all the variables on how Amazon treats their employees, such as: low concern for worker health and safety, no sympathy or time for employees to recover from personal tragedies, making employees work to exhaustion in the heat, no direct rewards used as motivation other than salary, fear used as main motivator, restrictive worker policies, making employees constantly competing for un-achievable goals, and very little upward communication; Amazon could be seen as following either the exploitative-authoritative or the benevolent-authoritative Likert System Approach. While many other similar companies do not use this same approach, it may work exclusively for Amazon. As shown earlier by Amazon’s mission statement, they are extremely focused on the customer. They want to get their quality products to their customers as fast as possible. Creating a constant sense of urgency, fear, and strict rules may help keep the sense of resolve that is needed to force innovation and fast delivery service.
In fact, while many employees had negative things to say about their experience with being Amazon employees, others said that the company’s goal to strive for innovation through competition and constant pressure helped them grow as individuals or grow their career. Employees claim that they believe they work with some of the smartest and committed colleagues they have met. They credit their success and determination to Amazon’s relentless pushing of them to do better. That doesn’t change the fact that a large portion of employees still feel mistreated. Several lawyers in the Seattle area stated that they got consistent calls from employees or past employees of mistreatment from Amazon- usually for being pushed out due to performance related issues. One lawyer stated that while it is unfair, that does not mean that it is illegal (Kantor, 2015).
Amazon seems content to bring in a large number of new employees and utilize them until majority of them are burnt out, while retaining the super stars. In this regard, the benevolent-authoritative model will work for Amazon. If their goal is to always focus on bringing the best they can to their customers, they may burn out many employees in the process. As long as Amazon feels ethically okay with constantly cutting employees due to them burning out from being over worked, then this model is a good fit for Amazon. It may not seem like a good public relations move, now that the public has wind of how the employees are being treated. But Amazon may feel that quality and innovation results in better views of the company than what it would cost to slow down with better treatment for their employees.
Amazon may be coming around to changing their current organization culture to move away from the benevolent-authoritative style it seems to currently employ. Around a year ago, Amazon announced that they were improving their parental leave policy. This was around a month after other companies, like Adobe, Microsoft, and Netflix, had announced similar plans. Amazon is now offering new mothers 20 weeks of paid leave and new fathers up to 6 weeks of paid leave. This may be a response to attempt to improve public relations after the New York Times had criticized the organization’s treatment of employees. It also could be a sign that Amazon is realizing that better treatment of employees may result in better work from their workers. It cannot be said indefinitely whether the move is for public relations, or if this is a start of Amazon changing their whole organizational structure (Greenberg, 2015).
Other companies can learn a lot from Amazon’s current situation. Another organization may see that would to have a high turnover rate for employees like Amazon to keep the workers constantly fresh and not “burnt-out,” but they could also learn a lesson from the backlash the company has received from the public. An organization that would like to follow a similar model to Amazon’s would probably want to find a median of putting pressure on your employees but also rewarding and keeping a positive image of the company to its employees.