Solving Amazons Turnover Problem Essay

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Amazon has long had a turnover problem. This is often attributed to the relationship that management has to its employees. Management at Amazon tends to be hard-driving, demanding very high performance standards of its workers. In part, this is because the company wants to compete better. If employees are more efficient, such as in its warehouses, then customers receive their goods faster. That in turn is good for business, but it is not good for employees, and high turnover is a natural result. The company's management practices have been described as "digital Taylorism," based on principles of scientific management where tasks are clearly defined and measured. This leads to jobs, ultimately, that are unsatisfactory (Stefanova, 2015). As a result, Amazon has the second-highest turnover of any Fortune 500 company (Mahapatra, 2013).



In order to address, this problem, Kotter's eight steps can be applied. The eight steps are to create urgency, to form a powerful coalition, to develop a vision and strategy, to communicate the vision, to empower broad-based actions, to generate short-term wins, consolidate gains and finally to anchor new approaches into the culture (Mindtools, 2016). Creating urgency should be the easy part. While Amazon is the leader in its field, it does face intense competition from other online retailers, and offline retailers. Ultimately, as the job market improves, it will have a more difficult time finding workers who are willing to work under stressful, difficult conditions for low wages. The problem with turnover is at the low-end jobs, not the high-end.. While Amazon does have programs for workers who can stick it out, such as stock options, it loses a lot of people getting to that point, and eventually it will find itself getting even lower marginal returns on new hires as the potential talent pool diminishes (O'Donovan, 2015).



This reality alone should be enough to create urgency within the organization. Amazon's leadership needs to recognize that a crisis will occur if it does not act, and therefore it must create the sense of crisis at the leadership levels, before the crisis actually occurs. This leads to the second element of Kotter's plan, which is creating buy-in.

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The corporate culture at Amazon comes from the top down. It is leadership, right up to CEO Jeff Bezos, that defines the culture. The reality is that without buy-in at the highest level, no plan will succeed, and that is especially true of Amazon. So much of Amazon is Bezos' vision, and what this means is that the change will need to be his vision as well. Without his support for new systems designed to reduce turnover while maintaining high performance levels, the company will not be able to implement change. The head of human resources has to therefore make a personal appeal to the CEO to champion the plan. If the CEO buys in, then as per Amazon's culture the rest of the company will fall into line. Changing the CEO's mind might require a coalition that includes a number of other senior executives, not just HR but operations and finance as well, who represent other major stakeholders. Finance is actually quite important because the change has to be framed as being in the best interests of the shareholders in order to truly get the attention of the CEO and the Board.



The third of Kotter's steps is to create the vision and strategy. The vision has to have two elements. First is that it has to fit within the current vision that Amazon has. This strategy is not designed to reinvent the company, just improve it. This means that the vision for the change has to align with the overall vision for the company, which is that Amazon wants to be the world's most customer-centric company. The vision for the change, therefore, has to tie lower turnover to higher service levels, in much the same way that companies like Costco or Fedex already do. If Amazon sees that building people up to be great workers over the long run is more sustainable and can deliver continuous improvements, then the strategy will align with the vision. This places strategic emphasis on recruiting -- finding better people initially -- as….....

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References


Mahapatra, L. (2013). Amazon.com has second-highest employee turnover of all Fortune 500 companies. International Business Times. Retrieved August 11, 2016 from http://www.ibtimes.com/amazoncom-has-second-highest-employee-turnover-all-fortune-500-companies-1361257

MindTools (2016). Kotter's 8-step change model. Mindtools.com. Retrieved August 11, 2016 from https://www.mindtools.com/pages/article/newPPM_82.htm

O'Donovan, C. (2015). Amazon rewards employees who stay but turnover is still high. Buzzfeed News. Retrieved August 11, 2016 from https://www.buzzfeed.com/carolineodonovan/amazon-rewards-employees-who-staybut-turnover-is-still-high?utm_term=.baGpLPa4l#.qq3jG5W0L

Stefanova, K. (2015). Is Amazon's ruthless management culture hurting its stock price? Forbes. Retrieved August 11, 2016 from http://www.forbes.com/sites/katinastefanova/2015/10/24/why-amazons-management-practices-will-likely-hurt-its-stock-price-in-the-long-run/#73e4d914c1f3

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