1BUSM4554/4555/4557 Contemporary Management: Issues and ChallengesAssignment 3 – Case Study (Individual Assignment – 40%)Amazon to Competition: We Will Crush You! Amazon to Employees: We Will Churn You!Amazon.com Inc (Amazon) is not just a surviving company of the 1990s tech boom; it is now one ofthe largest and most successful companies in the world and across many industries. In January 2019,Amazon became the most valuable company in the world, above Microsoft, Apple, and Alphabet(Google). It has leveraged its game-changing approach to selling books, and now sells almosteverything to anyone, anywhere. Today, Amazon is a leader in all things customer service, and it hasachieved this leading position through ground-breaking technological innovation.Technological innovation has also made Amazon one of the largest web services companies in theworld and a formidable retailer. All these legendary accomplishments are the result of thecommitment and contributions of thousands of extremely talented Amazonians. As you wouldcertainly expect, the standards for hiring are exceptionally high. But what it takes to thrive andsurvive at the company is even more challenging.It’s Not All Sunshine And RosesWhile Amazon’s accomplishments are widely reported, until recently relatively little was knownabout its approach to managing employees. But recent reports describe a “punishing corporateenvironment: long hours, disparaging bosses, high stress, no time or space to recover, all resulting inuncommonly high employee turnover.” Just how bad is it? PayScale ranked Amazon 464th amongthe Fortune 500 companies for employee turnover, with median employee tenure of approximatelyone year! (A competing estimate puts average tenure at 18 months).What pressures drive such high turnover? In a letter to shareholders in 1997, founder and CEO JeffBezos wrote: “You can work long, hard, or smart, but at Amazon you can’t choose two out of three.”This suggests that employees must always be on, be in the game, and play it well. Amazoniansexperience many of the common pressures of today’s workplace—80-plus-hour workweeks, 24/7connectivity, no real vacations or holidays (no surprise given that Amazon is the largest retailer onthe planet).Amazon’s “always-on” culture is manifest in a number of chilling stories, such as that of an employeewho negotiated a 7am to 4:30pm schedule with her boss after having her first child. The problemwas that her co-workers didn’t see her arrive early and crushed her in anonymous peer feedback(which employees are encouraged to use). Her boss said he couldn’t defend her in her performancereview if her own co-workers were critical of her. Can it get worse? Yes.Amazon also uses a “rank and yank” performance management system. Employees are ranked bytheir managers, and those near the bottom are terminated every year. This leaves little room fortaking a breather or backing off, even if you have to take care of an ailing parent, or need to receivetreatment for cancer. For example, Amazon warehouse employees are not free to go on toiletbreaks as they risk “Tot” (time off task points) that could be used to justify job termination. Thereare stories of employees in all these predicaments who were essentially told that their lives wereincompatible with working at Amazon. It is no wonder one former employee said, “Nearly every2person I worked with, I saw them cry at their desk.” Amazon has, of course, disputed some of theseclaims.We Can Measure “That”… And “That” MattersAnother key contributor to the pressure cooker environment is that everything is measured. Forinstance, warehouse employees are monitored using sophisticated systems to track how manyboxes they pack per hour. White-collar employees participate in routine “business review” meetings,for which they need to prepare, read, and absorb 50 to 60 pages of reports amounting to thousandsof data points. During these review meetings employees are often quizzed on particular numbers bytheir managers, and it is not uncommon to hear managers say that responses are “stupid” or tellworkers to “just stop it.”To be sure, the company succeeds in large part because of the immense customer data it collectsand uses to select and sell its products. The plan is to use data the same way to make performancemanagement an efficient and effective everyday process, rather than a once-a-year event. However,many employees describe the result as “purposeful-Darwinism” in which every employee constantlycompetes with other employees. Such relentless and pervasive competition, while well-intended,has many undesirable consequences.For instance, it is common for employees to hoard ideas, because sharing becomes a personal lossfor the sharer and a gain for somebody else. Moreover, other’s ideas are not just scrutinised; theyare undermined. Groups of employees often conspire against others on the peer feedback system toget ahead (or to put somebody else behind). As for managers, they must both defend the directreports they deem most valuable to their own performance, and at the same time determine whomthey can sacrifice—not everybody can pass the performance test.AMAZON = BEZOSMuch of the praise and many of the complaints are directed at Jeff Bezos. Not only is he the founderand CEO, but he also is the chief architect of all things Amazon. His personality is embodied in thecompany values and the way it operates. Like Bezos himself, employees are expected to use data,confront, persevere, and win. This approach appeals to and is sustainable for only a very specifictype of employee. One former employee described Amazon’s hiring process as “panning for gold”.The company is looking for the rare stars who can thrive in its demanding environment, and it mustsift through many people to find them.This strategy is a real challenge for Amazon. Its size, growth rate, and turnover require the companyto hire thousands and thousands of employees every year, and this doesn’t include the thousands oftemporary workers it hires to meet the holiday rush. As of 2019, Amazon’s global workforce reachedmore than 613,000 employees worldwide, not including the 100,000 temporary employees thecompany hires for holiday seasons. Interviews with male employees in their 40s revealed that manyare convinced Amazon will replace them with employees in their 30s, who worry in turn that thecompany prefers employees in their 20s. The implication? Younger employees have fewercommitments and more energy.What Is Amazing Doing To Retain Its Employees?3To combat the churn, Amazon has structured its stock options to vest (transfer to the employee asowner) on an unusual schedule. Instead of vesting evenly over a period of years, Amazon employeeoptions vest at 5 percent in year one, 15 percent in year two, 40 percent in year three, and 40percent in year four. Employees who leave within one year of hire must repay part of their signingbonus, and if within two years they must repay their relocation package if any.However, many experts question the effectiveness of such policies. Lindsey Thorne, manager at aSeattle recruiting firm that places many former Amazon employees, says, “The potential payout ofwaiting for stock to vest won’t tie down unhappy employees who are ready to jump ship.” Still,others question whether Amazon can continue to innovate and lead in the marketplace if its mostvaluable asset is ground-up and discarded in such a way and at such a high rate.To be fair, surely some percentage of the company’s more than 150,000 employees are quitesatisfied and successful. The system works for some, and for many it works for a period of time. Andthe incredibly high bar, marquee name, and extreme work ethic required to get hired at Amazonmake former Amazonians very valuable to the company’s competitors and many other companiesboth inside and outside the technology industry.But, Is That Enough?Prepare a report for Amazon, addressing the range of contemporary management issues andchallenges raised in the case study above. Your report should be 2,500 words (+/- 10%) excludingreferences and appendices. In your report, you are required to address a number of points including:1. Identify and discuss the issues and challenges Amazon is facing.a. Why are they important?b. What are the implications for Amazon?2. How can Amazon address the issues and challenges identified in (1)?a. Identify some feasible strategies for Amazon.3. What are the risks for Amazon if the issues and challenges identified in (1) are notaddressed?To obtain a good grade for the report, your responses to the questions must be thoroughlyresearched and be well-grounded in current literature and evidence-based. You must also proofreadyour report multiple times so that it reads coherently and logically. Ideas and materials that aretaken from other sources must be cited in your report. For more information, please refer to theCanvas “Assignments” page.
- Assignment status: Already Solved By Our Experts
- (USA, AUS, UK & CA PhD. Writers)
- CLICK HERE TO GET A PROFESSIONAL WRITER TO WORK ON THIS PAPER AND OTHER SIMILAR PAPERS, GET A NON PLAGIARIZED PAPER FROM OUR EXPERTS