Amazon and Its Employees

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.

Image result for amazon office
Example of an Amazon Corporate Office. Photo Credit: Czechleaders.com

 

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.

 

Works Cited

Avtgis, T. A., & Rancer, A. S. (2012). Organizational communication: Strategies for success.
Dubuque, IA: Kendall Hunt Pub.
Dininni, J. (2011, May 20). Management Theory of Rensis Likert. Retrieved October 31,
2016.
Greenberg, J. (2015, November 2). Amazon’s New Parental Leave Policy Is Good-And Good
Kantor, J., & Streitfeld, D. (2015, August 15). Inside Amazon: Wrestling Big Ideas in a
N/A. (2016). Mission Statement Examples: Amazon & Starbucks. Retrieved October 31,
Rosin, T. (2015, August 17). 9 key issues with Amazon’s corporate culture. Retrieved
October 31, 2016.
Soper, S. (2012, June 03). Amazon working conditions improve with new air conditioning.
Retrieved October 31, 2016.
Yarow, J., & Kovach, S. (2011, September 20). 10 Crazy Rules That Could Get You Fired From
Amazon Warehouses. Retrieved October 31, 2016.

Nothing Short of the Best: Netflix’s Unique Organizational Culture

by Susanna Savage
While every organization has its own unique culture, some stick out more than others. Netflix’s culture is one that is very different from the norm. As the organization has grown from a small DVD rental company, to the booming business that it is today, its management style and interesting culture can lend lessons to other organizations (McCord). This case study explores the culture and management style of Netflix with a critical eye to the impact of this environment on the employees.

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Photo Credit: https://www.linkedin.com/pulse/culture-new-strategy-netflixs-remarkable-view-marc-do-amaral

Netflix’s Culture

Netflix’s unique culture is based on seven basic principles. The first of these is “values are what we value” (Netflix, slide 5).  Netflix seeks to employ only those who embody all nine of their organizational values. These include communication, innovation, courage and passion, among others. Second, is “high performance” (Netflix, slide 23). Netflix wants its employees to be the best in their field. The philosophy behind this is that one incredible employee accomplishes a larger amount and puts out higher quality work then several average employees (Nisen). And when it comes to deciding who stays at Netflix and who is let go, managers make decisions by asking themselves this question; “Which of my people, if they told me they were leaving in two months for a similar job at a peer company, would I fight hard to keep at Netflix” (Netflix, slide 30).

Another aspect of Netflix culture is “freedom and responsibility” (Netflix, slide 38). Netflix believes that if it works hard to ensure that its employees are the best, it can foster a creative and mature environment that shows respect for those employees by giving them as much freedom as possible and charging them to use that freedom responsibly. As evidence of this, Netflix does not have a vacation policy. This is because it trusts that employees will take as much or as little vacation as they need while ensuring that the work that they are responsible for is accomplished. This no-policy-policy is made possible by Netflix’s focus on results rather than effort. The hours that someone puts in or the amount of effort that they invest are not as important as what they produce (Nisen).

“Context and control” refers to Netflix’ belief that directly controlling employees creates a negative culture (Netflix, slide 76). Because Netflix only employs the best, it can treat all employees like adults who do not need to be controlled. However, Netflix does not completely abandon management. Instead management is more about leading than controlling. In order to lead and guide employees in the right direction, Netflix believes that management should set contexts that maximize employees’ ability to do well. To exemplify the principle of context setting, Netflix quotes Antoine De Saint-Exuperty, “If you want to build a ship, don’t drum up the people to gather wood, divide work, and giver orders. Instead, teach them to yearn for the vast and endless sea” (Netflix, slide 77). This quote clearly shows the difference between control and context. Rather than telling employees what to do, Netflix managers set a context which will empower the employees to achieve the goal on their own.

Netflix strives to maintain a model of management that is “highly aligned, loosely coupled” (Netflix, slide 86). Being highly aligned virtually means that managers, individual employees and team members have a unified sense of their goals. At the same time, being loosely coupled means that individuals are trusted to pursue goals with what they feel to be appropriate tactics, without having to get approval from management. Netflix’s goal when compensating employees is “pay top of market” (Netflix, slide 93). This means that for any given job, Netflix plays the employee that holds that position above the highest pay for that position anywhere in the current job market. Additionally, Netflix makes use of “promotions and development” (Netflix, slide 109) to reward excellent employees.

Critical Analysis

While I have never experienced an organizational culture anything like that of Netflix’s, I believe that I would thrive in such an atmosphere. Most of the organizations in which I have worked have been much closer to a traditional organizational culture and traditional management styles. Their was little competition, and job security was fairly high. Their was also very little drive to achieve or to put in more then the average amount of effort. I have definitely not experienced an organization that focused on results above effort.

The Netflix culture is incredibly appealing to me for several reasons. When I took the StrengthsFinder 2.0 analysis , I found that one of my top strengths is “Achiever.” This means that I gain personal satisfaction from producing high quality work and going above and beyond to be “the best,” at any given area or task. The Netflix culture rewards people who are achievers and also creates an environment that enables them to achieve to their full potential and to be the best that they can be. I also think that the self management aspect of Netflix’s culture would facilitate my creativity and work productivity. I am able to work best when I am in complete control of how I spend my time and how I approach tasks. When I am managed in the traditional sense, I can feel stifled and unproductive. Netflix’s culture of trusting its employees to manage their own time, and focusing mainly on results, creates an environment in which I would thrive.

Another great aspect of Netflix is that accomplishments and not effort are valued and compensated. This model makes sense. Students are not awarded grades based on the amount of time they spend studying, but on their ability to preform on various measures of their learning. In much the same way, it seems that results are all that should matter to an employer. Any given task takes some people a longer time and others a shorter time to accomplish. For some the task might require more effort and be more challenging, while for others it is easy. The Netflix focus on results rather then effort seems to be the most fair, both to the employee, and the organization.

References

McCord, P. (2014, January). How Netflix reinvented HR. Harvard Business Review. Retrieved from https://hbr.org/2014/01/how-netflix-reinvented-hr

Netflix. (2009, August 1). Netflix Culture – SlideShare. Retrieved from http://www.slideshare.net/reed2001/culture-2009?next_slideshow=1

Nisen, M. (2013, December 30). Legendary ex-HR director from Netflix shares 6 important lessons. Business Insider. Retrieved from http://www.businessinsider.com/netflix-corporate-culture-hr-policy-2013-12

Netflix’s Culture and Succes

By Seth Ansell

This case study looks at Netflix’s unique corporate culture and highlights specific aspects and philosophies that Netflix deems important. The case study will describe and analyze the seven aspects of Netflix culture and add my input. My own experience within other organizations will be used to compare and contrast my experiences against Netflix’s unique culture.

The first aspect of Netflix’s culture is their values which they claim is shown through the behavior of their colleagues. These values are looked for in characteristics of candidates that apply at Netflix. The nine behaviors include: judgement, communication, impact, curiosity, innovation, courage, passion, honesty, and selflessness. Netflix goes into further details in why they want each characteristic. They want employees to make wise decisions “despite ambiguity,” and be able to think strategically. They want employees who can communicate well with other colleagues and treat others with respect regardless of who they are. They want their employees to not be another cog in the machine, but instead make an impact. Netflix’s key values it looks for in employees may seem like what most companies would want, it becomes more clear with their other aspects of culture in specifically what they want from their employees (Hastings, 2009).

Image result for netflix office
Work space inside Netflix’s offices. Photo credit: glassdoor.com

The second aspect of their culture is “high performance.” Netflix compares themselves to a pro sports team, “Netflix leaders hire, develop and cut smartly, so we have stars in every position” (Hastings, 2009).The managers at Netflix think “who of my employees would I fight hard to keep if they were leaving?” If a manager wouldn’t fight hard to keep an employee, then Netflix gives them a generous severance package so that role can be filled in by a superstar. This shows how Netflix actually highly values their employees. Even when they drop an employee they offer them a severance. The company wants the best of the best so that all of the large talent can pool together and assist each other in achieving the company’s goals. The company values loyalty and will give a pass to their highest achieving employees in hopes that they will perform highly again. Netflix expects the same. If the company hits a low, they want employees to stick around (Hastings, 2009).

The third trait of Netflix’s culture is freedom and responsibility. Netflix wants employees to be responsible and self-motivated but also wants to grant them large amounts of freedom. As companies grow, their employee freedom usually decreases. This results in complexity increasing while quality employees decrease which results in chaos. Companies then streamline work processes to avoid this conflict which results in difficulty in adapting to future issues and market switches. Netflix aims to do the opposite; they want to promote freedom to attract innovative employees. They are attempting to increase the percentage of high performing employees faster than the growth of complexity. This allows the company to stay innovative and able to quickly adapt to change. An example of the freedom an employee has at Netflix is their ambiguous vacation policy. Employees are able to take as long as vacation as they want, as long as they are still performing their job (Hastings, 2009).

Netflix’s fourth aspect of culture is “Context, not Control.” This coincides well with the last aspect of freedom and responsibility. This aspect is how Netflix wants its managers to behave. They do not want managers to micromanage their employees every move, but rather show them clear objectives and goals. The aspect looks to avoid things such as top-down decision making and requiring management approval. They want their managers to show clearly the goals of the employees and trust with the freedom given to the employees that they will have the responsibility to finish the task, rather than using control to force finish the task (Hastings, 2009).

The fifth aspect is “Highly Aligned, Loosely Coupled.” Netflix claims that in traditional companies there are two common models of teamwork, tightly coupled monoliths and independent silos. The first method consists of management reviewing all work and tactics, highly coordinated through centralization which causes slowness within office, and workers get exhausted trying to innovate and constantly please management. The independent silos model is the opposite were each department works on their own, little office coordination, “suspicion” between departments, and teamwork suffers. Netflix’s model combined the strengths of each model to eliminate the cons. Their model includes clear goals that are broadly understood, large amounts of team interaction, trust within departments and teams so that they don’t need to review each other, and leaders are pro-active with creating ad-hoc groups and coordination when needed (Hastings, 2009).

The sixth aspect of Netflix’s culture is to pay their employees top of the market. Netflix aims to pay top of the market for that employee as they expect top quality work. Not all employees with the same job description are worth the same, but Netflix aims to pay the highest market value on individual worth. This eliminates the 4% raise each year that many companies use, but results in raises when the individual’s worth increases (Hastings, 2009).

Netflix’s final aspect to their culture is promotions and development. Netflix aims to grow and keep their best talent. Sometimes there is no room for an employee to advance because there is no open position. Netflix recognizes this and celebrates an employee leaving for a better job if Netflix didn’t have one available for them. They truly care about the development and advancement of their employees, even if it results in them leaving (Hastings, 2009).

These aspects of the company seem to be showing good results. In 2013, Netflix had tripled its stock value. The business has won 3 Emmy awards, and has United States subscriber base of about 29 million. The seven cultural traits and aspects created a company that has succeeded through the use of creating a mutual respect/trust between employees and the company, honestly telling employees about their performance, managers creating highly-efficient teams, and leaders continuing the development of the company’s unique culture (McCord, 2016).

I have experienced some of the components to Netflix’s culture in organizations I am involved in. While I do not have very much work experience, I have seen on a small scale how managers who do not micro-manage may be more effective than those who do. In my fraternity Tau Kappa Epsilon, members are expected to work together with efficient communication among each other, but we respect each other and do not micromanage or try to control others. We expect others to do their work and others expect me to do mine. This is very similar to Netflix’s ideology on freedom and responsibility. Freedom to get the work done how and when you want but the responsibility to complete high quality work. TKE shares some of the same values of high performance, rewarding strongly, respect and freedom, and development that Netflix does. Our slogan as a fraternity is “Better Men for a Better World.” This fits strongly with Netflix’s values on employee development.

I feel I may have the tools to succeed at Netflix, but I would be cautious. I feel I could succeed because I place a strong emphasis on communication and teamwork, as does Netflix. I would be cautious because I highly value job security and Netflix stated themselves that these are not the people they are looking for. They are looking for employees who are always trying to excel. I believe I am one of those types of employees but my fear of possibly being let go would cause me to be nervous and anxious on the job. Being nervous would not allow me to relax and really get into the work I am doing as I would be too busy worrying.

References

Hastings, R. (2009, August 01). Netflix Culture: Freedom and Responsibility. Retrieved October

07, 2016.

McCord, P. (2016, January/February). How Netflix Reinvented HR. Retrieved October 07, 2016.