Essay: Boosting Your Career: HR Management Strategies at Amazon

Introduction

“To be the Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavours to offer its customers, the lowest possible price (Amazon, 1995).”

Amazon, founded by Jeff Bezos, is a Fortune 500 e-commerce company based in Seattle which originally started out as an online bookstore. Then it quickly expended its business by sell diverse commodities including DCDs, music, video games, electronic, and clothing (Schneider, 2018a).

As an international e-commercial leader, Amazon had approximately 269,000 employees over the world (Schneider, 2018b). In order to manage this large number of employees and achieve the business objectives, Amazon has to execute a series of human resource management activities to get “the people of the business to make things happen in a productive way” (Torrington, et al., 2014). This essay will examine Amazon’s human resource approaches in three fields: strategic human resource management, recruitment and selection and performance and reward management, then apply theories to those activities and analyse their usefulness and whether Amazon’s actions affective. While Amazon is a successful company, it is not necessarily lead to perfect human resource particles. In fact, some policies such as its intensive working culture and “rank and yank” system have been criticised.

Strategic human resource management

Amazon applies different human resource practices in blue-collar and white-collar employees. For blue-collar warehouse workers, Amazon has reduced holiday hiring by about 20,000 workers in 2018 (Griswold, 2018a). Citi analyst Mark May conjectured that it is because of Amazon’s successful plan to automate operations in its warehouse (Griswold, 2018b).

Moreover, Amazon has a narrow job design by dividing warehouse workers into four mains groups: “receive lines”, “pack lines”, “transporters” and pickers”(O’Connor,2013). With highly specialised and repeated tasks, Amazon can reduce the time cost for training. Especially a large number of short-contract workers are hired during the holiday, new workers are able to works in a short time after hire.

The warehouse job is also high demanding to fit Amazon’s cost reduction strategy.

With relentless 10-hour shifts and under an intensive pressure of dealing with a package within 30 seconds (Selby, 2017a). Workers are only provided half an hour lunch break and the manager would send them a text through their handheld devices when they are too slow (Whiteley, 2013a). “In my five weeks, I saw staff struggling to meet impossible targets, in constant fear of the sack (Selby, 2017b).”

These policies squeeze the productivity from workers, the more effective and productive they are, the less workforce is needed, and Amazon cost fewer in hiring.

Furthermore, Amazon only offers them a very low wage with no benefit and security (Whiteley, 2013b).  Although Amazon has recently increased the wage of warehouse workers in the US, it is at the cost of variable compensation pay and Restricted Stock Units (Lee, 2013), which every full-time Amazon employees in the US used to be eligible to receive (Amazon, 2013). This policy has been criticised by Amazon’s current workers that the total compensation is lower than before salary rising (Matsakis, 2018).

Michael E. Porter (1980) stated that three strategies a company can apply to achieve competitive advantage, which is cost leadership, differentiation and focus strategy (Kumar, no date). Amazon as the market leader of the e-commercial market, it has taken cost leadership strategies. Amazon takes “best fit’ strategic human resource policy, which the HR policy and business are closely linked (Beardwell and Thompson, 2017a).  Therefore, the SHRM practices have to be determined based on its business strategy in order to sustain competitive advantages.

By cost reduction SHRM practice, Amazon is able to maintain its competitive advantages, however, too demanding job design has downsides, which might damage company reputation when workers tell others about their working experience.

And the target Amazon given to works should have been associated with the SMART principle which refers to specific, measurable, achievable, relevant, and time-bound. The 30-second target, however, seems impossible and would lead to dissatisfaction. On the Black Friday in 2018, Amazon warehouse workers protested for the low wage and poor working condition (Lieber, 2018). Additionally, the business environment is not constant. The business strategy has to be adjusted as environmental change, if the SHRM policy could not react quickly enough, Amazon might lose its advantages.

Recruitment and selection

Amazon utilises online recruitment as its main recruitment method. Although everyone can apply through Amazon’s job website and other job finding websites, LinkedIn is more commonly used by Amazon to find talents (Grothaus, 2018). As the world’s biggest leader of e-commercial industry (Pike, 2014), of course, Amazon will never lack applicants. In order to find the most suitable applicants from a large pool, Amazon has a one of the most restricted hiring processes in the world (Petrone, 2014a), as Jeff Bezos, the CEO of Amazon states, “I’d rather interview 50 people and not hire anyone than hire the wrong person (Petrone, 2014b).” Amazon is willing to invest time in screening candidates.

In the selection process, Amazon would arrange one or two phone interviews, and skill tests. Amazon would adopt its unique “Bar Raisers” method to interview candidates. “Bar raisers are employees throughout the company who volunteer to be part of interview committees” (Petrone, 2014c) and “acts as a “neutral third party” on the board” (Cain, 2018) each candidate would be assigned and interviewed by 5 to 6 bar raises (Petrone, 2014d). And they will evaluate the candidate to decide whether he is a good fit (Petrone, 2014e).

Amazon uses online recruitment method as the main recruitment method. Because the digital system can simplify the administration and speed up the processes, it is less time consuming and lower cost. It also able to reach a larger range of potential employees. Whether or not Amazon actively use employee branding in recruitment, it plays an important part in the recruitment process. As a well-known international company with high efficiency and customer-oriented, and the leader of the e-commercial industry, its reputation means only a few advertisings is needed to attract high-quality candidates (Beardwell and Thompson, 2017).

Online recruitment is commonly used in a digital age, although a large amount of application will increase the time cost on filtering, Amazon uses telephone interviewing to screen out part of inappropriate candidates as it is quick and not limited by geographical distance (Beardwell and Thompson, 2017c).

Although Amazon has a unique “bar raisers” selection method, assessment centre should also be used in the selection process. As Amazon require a high level of team-work, however, neither tests nor “bar raisers” interview can assess the ability of canadine work along with others. In addition, even though employer branding is helpful in recruitment, it has risk. It may create unrealistic expectations for new staff when the brand and actually do not match, and damage employees’ experience. Then they may share the experience of working here through social media. “social media can make or break the employer brand and encourage talent to come knocking or redirect it to the competition” (CIPD, 2012, cited in Beardwell and Thompson, 2017d)

Performance and reward management

In 2016, Teal Pennebaker, the spokesperson of Amazon, announced that they would launch a new review process in 2017, which is radically simplified and focused on employees’ strength instead of absent of weaknesses (HCA, 2018). Stack ranking, or “rank and yank” system, is the previous system that Amazon used to manage performance which is“a controversial management technique used by companies to get rid of the lowest-performing employees and identify those with the most growth potential (Staff, 2016).” Amazon also creates an internal feedback channel, called Anytime Feedback Tool. The feedback is sent directly to the manager of the person receiving the feedback and the identity of the feedback provider is only revealed to the manager (Onasanya, 2018).

In terms of reward, Amazon provides variable compensation pay and restricted share units to employees as an incentive. Variable compensation pay is determined by individual employee attendance, and facility site to plan production goals (Burgett, 2016), whereas, restricted share units can be received by all full-time employs. Taking these two rewards into account, Amazon provides considered competitive compensation. Moreover, Amazon also provides paid time off, insurance, maternity and parental leave to employees.

Amazon had a performance appraisal system to assess performance, the idea of it was “by giving people a poor performance evaluation, they will work hard to lift their game. The reality is quite different. When people are labelled poor performers they usually conform to expectations and end up performing poorly (Spicer, 2015). “On the other hand, the new performance appraisal works better on motivating employees. The Herzberg’s ‘two-factor theory’ illustrates the effectiveness of hygiene factor and motivator. As Amazon provides good hygiene factors, such as security, competitive wage. The positive appraisal as the motivator can motivate employees by providing intrinsic rewards like satisfaction, achievement and sense of importance. However, Amazon decided to appraise on employees’ strength, appraiser still not an has a downside in performance management, because “Appraisers may equally be reluctant to give their staff a poor review because it might prove demotivating, could create conflict or may even suggest they lacked the necessary management skills to elicit high performance (Spicer, 2015).”

Moreover, even though Amazon provides considered competitive compensation, it is not performance-related. Employees can get more RUSs every year and vest 2 years later, however, this only encourages them to stay in the company, because once they leave, they will lose the future reward. It is not necessarily lead to improvement in performance and employees are hard to be motivated, as they cannot get a direct reward from performing better (Beardwell and Thompson, 2017e).

Conclusion

Employees are important assets to a company. “Human Resources are the key element of almost every organisation. A lot of vital organisational processes would not be possible to develop and maintain without this essential force (Hoiseth, 2017). “

Amazon applies human resource management in many aspects very carefully, we can tell by the effort it has put on recruitment processes. Spending a lot of resource and time on selecting not only good but the best employees for Amazon. Also, stick the strategic human resource management approaches to the business strategy by using a best-fit approach.

However, its human resource management practices were not perfect, some policy especially the “rank and yank” system has been criticised as a “bad” HR practice for a long time. It is good to see that Amazon has changed some of their human resource police after The New York Times revealed the working condition and demanding culture in Amazon, such as appraising employees’ strength, not weakness and increased reward to its employees.

It’s almost impossible to cover every activity Amazon has taken because Amazon runs the business in different fields and internationally, different approaches are used based on departments and nations, blue-collar workers and white-collar workers have completely different work condition. There are no doubts more approaches are used outside this essay.  Amazon as a leading company, it always keeps improving and adjusting policies as the external business environment is always changing.

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