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  • Subject Name : Management

A Study of Amazon’s Fulfillment Center Network

Table of Contents

Introduction.

Discussion.

2.1 Does people management strategies of care and compassion make business sense? How does the practice of keeping employees on the edge impact business in the short and long-run?.

2.2 Is Amazon’s employer brand, as reported by The New York Times, sustainable?.

2.3 Are Amazon employees Thriving/Barely Surviving?.

Conclusion.

References.

1. Introduction to Economies of Density in E-Commerce

Amazon is 26 years old leading e-commerce multinational that has radically transformed the way customers shop online. The company is essentially customer-driven and has done exceedingly well in becoming the market leader in innovation and providing the best services to its prime stakeholder. However, the perfect picture of the most recognized brand in the world was tainted by an article published in The New York Times that brought forth several revelations regarding the tough and hard work conditions that have created a negative environment full of stress and anxiety for its employees. The following report aims to analyze some key questions that arise out of the published article followed by a conclusion summarizing the key points understood from the analysis.

2. Discussion on Economies of Density in E-Commerce

2.1 Does People Management Strategies of Care and Compassion Make Business Sense? how Does the Practice of Keeping Employees on The Edge Impact Business in The Short and Long-Run?

People management strategies of care and compassion make absolute business sense for most of the organizations (Worline and Dutton, 2017). It is a fact that human resource capital is an organization's most important and critical asset. The well-being of a company's human resource results in the achievement of organizational goals most effectively and acceptably (Arvanitis, Seliger and Stucki, 2016). Every person willing to work for a business entity has his/her own set of expectations in terms of monetary compensation, workplace environment, rapport with colleagues, seniors and supervisors and an ultimate relationship that is developed with the organization itself. Several studies have indicated that an employee who is satisfied with the offerings of an organization is a productive employee contributing significantly and positively to achieving organizational goals and objectives (Raziq and Maulabakhsh, 2015). Such employees feel more inclined and committed towards the organization and are willing to share a long-term association (Raziq and Maulabakhsh, 2015).

In terms of contemporary human resource strategies applied by various organizations, it has been evidenced that people management strategy of care and compassion go very well with the Soft Human Resource Management (hereafter, Soft HRM) strategies, that place human resource at the core of its objectives (Das, 2015). The organizations can look to aim better goals and achieve better results when they lay essential emphasis on the growth and well-being of their employees and take necessary steps to formulate a conducive environment for the resource capital to thrive. However, the strategy of care and compassion tends to bring a laidback attitude and a sense of complacence among employees as well which can lead to them holding on to their respective “comfort zones” and not willing to explore their capabilities and potentials (Bright Hr, 2020). In such cases, the scope of innovation and the corresponding drive to excel gets severely impacted and excessive leniency on part of the management in an attempt to ensure employee satisfaction can cost them their overall efficiency and objectivity in achieving company goals (Bright Hr, 2020). 

In the case of Amazon, the company is a stark example of a business entity that does not necessarily thrive on the strategies of care and compassion for its employees. The company is known to have a tougher work environment and constantly pushes people to the edge to achieve intended objectives (Moriez, 2016). While it has been argued on several platforms including the famous article published by The New York Times regarding the issues faced by several Amazon employees while working for the company, it does not stop the company from reinforcing the similar work culture till date (Becker’s Healthcare, 2015). Amazon’s approach to human resource management is rather traditional and known to follow Hard Human Resource Management practices (Hereafter, Hard HRM) that places company goals much above the interest of employees (Harney and Dundon, 2020). Amazon is essentially a customer-obsessed company and a large part of their objectives push the employees excessively towards delivering solutions that not only benefit the existing customers but also lead to the creation of new customers (Denning, 2019). This means that the company aggressively demands the employees to work in tougher and challenging situations with the constant pressure of targets and achievement of complex deliverables.

While pushing the employees harder and keeping them on the edge may lead to gaining short term benefits which are reflective in terms of customer satisfaction, evidently measured through quarterly results and overall market share standing, in the longer-run it is not likely to pose a benefitting position for the company. That said, Amazon is now 26 years old and it can be easily pointed out that a company practising Hard HRM through a traditional approach has achieved commendable milestones and has come thus far (Rivet, 2017). But these facts cannot conceal a critical truth that the company has also been susceptible to higher attrition rates with employees unable to value or even imagine a long-term association with the brand as big and as widely recognized and respected as Amazon (Ashford, 2020).

Another aspect to be considered in evaluating the correctness in the approach of keeping employees on the edge is the personal goals and ambitions of an individual working for an organization. Every human being is different from another and may be guided by different motives while working for an organization (Kim and Beehr, 2020). For some employees who are most likely single and do not have much of family, responsibilities may be guided positively by the organization's heavy and aggressive work demands. Whereas, employees backed with family responsibilities or childcare may not have the aggressive drive to commit more than usual time to business while compromising on their personal lives (Kim and Beehr, 2020). As such, for a company like Amazon which has a unidimensional fixed policy of Human Resource Management, their lack of care and compassion towards the employees may be addressed as the fundamental reason of high attrition rates and lesser long-term association by employees.

Although factors stated above do not affect the financial performance of the company; it has only seen a steady growth contrary to expectations based on a not so apt Human Resource Management gathered for the organization (Palmer, 2020). But profit is not the only goal that can keep a company sustaining forever. Therefore, it is imperative at a certain point for a company like Amazon to have a sense of balanced approach (that is applying a measured mix of both soft and hard HRM) while dealing with its employees. As established, it does make sense in the contemporary times to lay focus on the people management strategy of care and compassion which if applied to an organization like Amazon can help them in lowering their attrition rate to an acceptable level. The practice of keeping employees on the edge does face a likely burnout and may thus work in a short run leading the employees to identify their maximum potential and capabilities that they might not be previously aware of, it might, however, not be as formidably effective in the long run for a company's growth prospects (Garrad and Chamorro-Premuzic, 2016).

2.2 Is Amazon’s Employer Brand, as Reported by The New York Times, Sustainable?

As an organization facing the external stakeholders, Amazon is a flagship brand that stands tallest amongst its competition and has even seemed to withstand the turbulence caused in the present time due to Novel Coronavirus that has left the whole world grappling and disturbed the financials of many companies (Semuels, 2020). The company has been able to deliver a flourishing bottom line in the present time when the majority of the business cycles were non-operational and it's a fact hard to ignore (Semuels, 2020). Accomplishing such feats comes at the back of human resource and the efforts poured in to achieve the high benchmarks established by the organization.

However, a company’s achievements cannot be merely measured by its financial standing. In the present scenario, the rapid growth of technology and the instant circulation of sensitive information means that nothing stays concealed within the walls of the organization. This is why the article published by The New York Times in 2015 took a massive shape and brought the company into a questionable and critical spotlight in terms of the bad working environment within the company leading to grave health and mental issues besides many other problems in its employees. Going by the revelations shared in the article, it does come out that the employer brand as reported by the New York Times is NOT sustainable for Amazon's employees.

But there are certainly other factors that also need to be analyzed before forming a conclusive remark on this judgement.

  • The information revealed by the article followed by the validity of those facts by several past employees of the organization urged various entities including the CEO himself to probe and clarify the concerns raised regarding the employees. The article in question was immediately refuted by previous employees who came to the rescue of the company as well as many people working in Amazon stating that it did not show a complete picture of the organization culture and painted a partial picture of the issues faced in a particular department of the organization (Yohn, 2018). This was specially brought to notice by employees working in the programming and coding department stating they were never asked how they felt and had many positive attributes about the work culture to acknowledge the learning and growth opportunities they got through the company.
  • Many Amazon employees stated that the tough environment of Amazon is not meant for everyone and that is clarified by the company while conducting aggressive rounds of interviews and at the time of induction and orientation program (Yohn, 2018). The employees also highlighted that the article’s claims about the alleged bias towards female employees are not given a chance to hold senior or a board-level position is not completely correct as many of the employees (previous or presently working) got the opportunity to work with female bosses in the top management who even held the position of Vice President, in some cases, at one point of time or other (Matthews, Harbin and Daigle, 2018).
  • A good part of Amazon’s revenue is derived consistently from its web-based services (online sale of products and deliveries of the same) meaning that the company is heavily reliant on workers in its various warehouses (Houde, Newberry and Seim, 2017). Despite the higher attrition rate in the particular department, Amazon is never out of hiring a bulk load of talent pool which leads to believe that they must be doing something right to be able to sustain and maintain a market leader position all these years.
  • The company is not very good at giving variable perks and privileges which does mark to be a notable limitation while recruiting and retaining talent (Matthews, Harbin and Daigle, 2018). Eventually, an employee likes to feel valued and respected with more than just a paycheck and stock options and it does pose a problem for the management to retain good employees in the long run when they are aware that the long and hard, work culture won't entail into any other incentive from the company's end. Therefore, sustainability, in the long run, becomes a cause of concern.

In 2018, Amazon launched an employer branding strategy targeting effective use of the power of social media by letting its employees share positive feedback of working in the company through platforms such as Twitter. However, the move received questionable responses from various users who even alleged that the responses shared by the employees weren’t real (Ranosa, 2018).

Thus, to conclude from the above, it becomes clear that no matter how well the company's market position and profitability are and no matter what steps they are taking to ensure a positive image regarding the work culture, the fact is that the employer brand of Amazon as published by the article has eroded over time due to their constant insistence on tough and challenging work culture. The sustainability might look good in the short-term perspective but in the longer-run from employee's point-of-view, the sustainability does not seem very strong.

2.3 Are Amazon Employees Thriving/barely Surviving?

Amazon’s employees cannot be singly classified as either thriving or barely surviving. Amazon is a company that in the span 26 years has established its magnanimity in various countries across the world and is an employer to more than seven hundred thousand people. The extent and wide scope of business operations of the company require a different kind of talent pool for a different position and functions (Majed, Nuraddin and Hama, 2018). As evidenced from the case analysis and observed from various reports, in the first instance, it can be easily judged that the employees at Amazon work in a hard-task environment and are susceptible to stress and anxiety leading to believe that they are barely surviving. Assuming this theory to be the only truth brings a stark contradiction offered by the incredible achievements and milestones that the organization has embarked upon in 26 years.

To analyze the situation, it is important to consider the perspective of both organization and the employees. The Founder and President of Amazon, Jeff Bezos has on several occasions spoken in-depth about what Amazon’s vision is and what the company expects out of its present and prospective employees (Hammett, 2018). Amazon essentially works on the concept of agile management, although the term has not been formally coined by the company but is reflective in its culture. The organization focuses highly on customer needs and expectations and has always openly clarified that working in Amazon “is not easy” taking pride in the tough work culture (Hammett, 2018). Therefore, it may not be exactly right to say that any working or prospecting employee is not aware of the kind of work culture they might have to get exposed to while agreeing to work for Amazon. 

Companies oriented highly towards customer needs and expectations tend to be constantly innovating in terms of products and services as is evident from the case of Amazon that takes pride in hassle-free customer service and has over the time successfully carved a competitive advantage out of this skill (Ladd, 2018). This means that the backend of the company is duly responsible for ensuring high-quality service and product standards which further entails aggressive involvement in work, insistent focus on innovation and constant commitment to deliverables. As such the employees being consciously aware of company expectations engage in their responsibilities knowing the road ahead of them will demand more of their time and effort.

A large part of any organization's success or failure is based on the orientation of its employees and their commitment to organizational goals. There is no denying that human resource is the most important investment for any business entity. Technology oriented organizations have to think much ahead of the present technological environment which is why they expect a stronger commitment from their employees (Anning-Dorson, 2017). The constant demand at the end of management and the nature of competition in the market tends the employees to be pushed to the points where it becomes difficult to manage situations at times. That is perhaps the reason why Amazon has been subjected to allegations through an article published in The New York Times of tough work culture where employees seem to be barely surviving. This fact, however, has been refuted by several previous and presently working employees from Amazon who also claimed that the article published by The New York Times was based on partial facts and did not take into account reviews and feedbacks from other departments where employees are appreciative of the opportunities (Matthews, Harbin and Daigle, 2018). The CEO, Jeff Bezos himself has acknowledged the hard work done by Amazon’s employees and even teaches work-life harmony as part of his leadership series arranged for the employees (Hammett, 2018).

But, as they say, there is no smoke without fire. Apart from the article published by The New York Times, the human resource has on several platforms and through various mediums have communicated their dissatisfaction of working with Amazon claiming that the organization has made them feel disposable and replaceable at all times. The higher attrition rate of Amazon limits any long-term association of the employee with the organization. Thus, it can be concluded that the employees of Amazon are trying to survive for the long-term yet are barely surviving in the short-term perspective.

3. Conclusion on Economies of Density in E-Commerce

The report analyzes some critical questions that arise out of the article published in The New York Times regarding Amazon’s Human Resource Management. The report identifies that in contemporary times it makes business sense to follow the people management strategy of care and compassion. The practice of putting employees on the edge has different repercussions in the short and long run. While the employees in the short run may be able to identify and explore their potential, they might not necessarily be able to continue working in an extreme work environment and may likely not be able to sustain it in the longer run. The employer brand of Amazon, through its hard task policies and oddly tougher work environment, have eroded over time making it difficult for employees to sustain in the longer run. The report also discusses whether the employees of Amazon are thriving or barely surviving and concludes that the employees may be thriving in short term perspective but in the longer term might be barely surviving.

4. References for Economies of Density in E-Commerce

Anning-Dorson, T. (2017). How much and when to innovate. European Journal of Innovation Management, 20(4), 599–619. Retrieved from https://www.emerald.com/insight/content/doi/10.1108/EJIM-05-2016-0050/full/html

Arvanitis, S., Seliger, F. and Stucki, T. (2016). The relative importance of human resource management practices for innovation. Economics of Innovation and New Technology, 25(8), 769–800. Retrieved from https://www.tandfonline.com/doi/abs/10.1080/10438599.2016.1158533

Ashford, M. (2020). Amazon Flexed: Delivering Smiles (and Exploitation). Retrieved from https://ojs.leedsbeckett.ac.uk/index.php/SOC/article/view/4601

Becker’s Healthcare (2015). 9 key issues with Amazon’s corporate culture. Retrieved from https://www.beckershospitalreview.com/hospital-management-administration/9-key-issues-with-amazon-s-corporate-culture.html

Bright Hr (2020). What Is Soft HRM and Hard HRM? Retrieved from https://www.brighthr.com/articles/hris/hard-and-soft-hrm/

Das, M. (2015). Hard HRM vs Soft HRM. Retrieved from https://www.academia.edu/9235838/Hard_HRM_vs_Soft_HRM

Denning, S. (2019). How Amazon practices the three laws of Agile management. Strategy & Leadership, 47(5), 36–41. Retrieved from https://www.emerald.com/insight/content/doi/10.1108/SL-07-2019-0104/full/html

Garrad, L. and Chamorro-Premuzic, T. (2016). The Dark Side of High Employee Engagement. Retrieved from https://www.me.mercer.com/content/dam/mercer/attachments/middle-east-and-africa/me-employee-engagement-harvard-business-review-aug-2017.pdf

Hammett, G. (2018). Why Jeff Bezos Believes Company Culture Will Make or Break You. Retrieved from https://www.inc.com/gene-hammett/why-jeff-bezos-believes-company-culture-will-make-or-break-you.html

Harney, B. and Dundon, T. (2020). Case Studies In Work, Employment And Human Resource Management. S.L.: Edward Elgar Publishing.

Houde, J.-F., Newberry, P. and Seim, K. (2017). Economies of Density in E-Commerce: A Study of Amazon’s Fulfillment Center Network. Retrieved from https://www.nber.org/papers/w23361

Kim, M. and Beehr, T.A. (2020). Thriving on demand: Challenging work results in employee flourishing through appraisals and resources. International Journal of Stress Management, 27(2), 111–125. Retrieved from https://psycnet.apa.org/record/2019-26303-001

Ladd, B. (2018). These Tools Are Why Amazon Is Successful. Retrieved from https://www.forbes.com/sites/brittainladd/2018/08/27/these-two-things-are-what-make-amazon-amazon/#5149c855fd51

Majed, S., Nuraddin, S. and Hama, S. (2018). Analyzing the Amazon success strategies. Journal of Process Management. New Technologies, 6(4), 65–69. Retrieved from https://scindeks-clanci.ceon.rs/data/pdf/2334-735X/2018/2334-735X1804065M.pdf

Matthews, B.L., Harbin, J. and Daigle, J. (2018). The New York Times Versus Amazon: Is Jeff Bezos’ head still in the clouds? Journal of Organizational Psychology, 18(3). Retrieved from https://articlegateway.com/index.php/JOP/article/view/1290/1227

Moriez, D. (2016). Amazon Pays to Quit! International Fragmentation, 121–130. Retrieved from https://link.springer.com/chapter/10.1007/978-3-319-33846-0_6#citeas

Palmer, A. (2020). Amazon sales soar as pandemic fuels online shopping. CNBC. Retrieved from https://www.cnbc.com/2020/07/30/amazon-amzn-earnings-q2-2020.html

Ranosa, R. (2018). Is Amazon’s employer branding campaign backfiring? Retrieved from https://www.hrtechnologynews.com/leadership/strategy/is-amazons-employer-branding-campaign-backfiring/110199

Raziq, A. and Maulabakhsh, R. (2015). Impact of Working Environment on Job Satisfaction. Procedia Economics and Finance, 23, 717–725. Retrieved from https://www.sciencedirect.com/science/article/pii/S2212567115005249

Rivet, D. (2017). Amazon ’s Superior Innovation: A Study of Amazon's corporate structure, CEO, and reasons behind why it has become the most innovative company in today's market. Retrieved from https://scholars.unh.edu/cgi/viewcontent.cgi?referer=https://scholar.google.com/&httpsredir=1&article=1347&context=honors

Semuels, A. (2020). Many Companies Won’t Survive the Pandemic. Amazon Will Emerge Stronger Than Ever. Retrieved from https://time.com/5870826/amazon-coronavirus-jeff-bezos-congress/

Worline, M.C. and Dutton, J.E. (2017). Awakening compassion at work : the quiet power that elevates people and organizations. Oakland, Ca: Bk Berrett-Koehler Publishers, Inc A Bk Business Book.

Yohn, D.L. (2018). Amazon proves company culture doesn’t need to be “warm and fuzzy” to be effective. Retrieved from https://qz.com/work/1227352/amazon-proves-company-culture-doesnt-need-to-be-warm-and-fuzzy-to-be-effective/

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