Monday 24 October 2016

Amazon exposé shows how the race to the top can actually be a race to the bottom

Published 20/08/2015 | 02:30

Workers sort arriving products at an Amazon Fulfilment Centre in Tracy, California
Workers sort arriving products at an Amazon Fulfilment Centre in Tracy, California

The American online retail giant Amazon has revolutionised the way people buy things. It prides itself on being able to deliver a doll from the 'Frozen' movie, to someone in New York just 23 minutes after the customer clicked on their electronic device to buy it.

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The company has a market capitalisation of $248bn. Its chief executive and founder, Jeff Bezos, whose personal wealth is valued at around $50bn, has even bigger plans for the company.

He is investing in drone delivery, space programmes, online TV, Kindle and everything else you could imagine.

However, Amazon is in danger of getting a reputation as a terrible place to work.

Two years ago BBC's 'Panorama' team did an undercover TV documentary inside one of its giant warehouses, called 'Fulfilment Centres'.

Pickers, the guys who retrieve the product that has been ordered, had to work ten and a half hour shifts for around £8.65 per hour. They had to get an order every 30 seconds and walked up to 11 miles on a shift while tagged to monitor performance.

Last weekend the 'New York Times' published an investigative article where it interviewed 100 current and former white collar Amazon managers and executives who described the pressure and stress they were under inside the company.

In the article former employees described managers crying at work after meetings, how poor performers get weeded out, how bosses were unsympathetic to those who had suffered personal crises and how people were expected to answer emails after midnight and got text messages asking why they hadn't answered the email.

The 'New York Times' article caused quite a media backlash and Bezos wrote an open letter to staff saying he didn't recognise the workplace depicted in the article, and how it depicted a "soulless, dystopian workplace where no fun is had and no laughter heard".

He said the company wouldn't tolerate "callous" management practices. "Even if it is rare or isolated, our tolerance for any such lack of empathy needs to be zero".

The article will not seriously affect Amazon's share price, no more than the 'Panorama' programme did. It won't seriously affect sales either.

Amazon is obsessed with putting its customers first and is driven to deliver ever better service and goods as cheaply as possible. Perhaps that is part of the problem.

The problem for Amazon lies in the question marks now placed over its corporate culture. Even if many consumers were annoyed at the work practices highlighted for blue collar workers in the BBC programme, they didn't orchestrate a huge boycott of Amazon.

One of the issues with online retailers is that consumers have absolutely no idea of what goes on inside the company. Online shopping is like a modern miracle of search, click, pay and receive. We never see anybody.

Go into a retail chain or a fast food restaurant and you will make up your mind about what kind of place it might be to work. You will meet people and see interactions and determine whether it looks like a reasonable or an awful place to work. You might be wrong in your assessments but you will make them.

The founder of Southwest Airlines in the US, Herb Kelleher, had a great phrase about corporate culture. He said: "Culture is what you do when people aren't looking."

In modern technology companies, nobody is looking because customers never see inside.

But the 'New York Times' article poses a different kind of problem for Amazon, irrespective of whether its claims paint an accurate picture of the corporation or not.

The article features disgruntled managers, executives and professionals. If the company's reputation suffers it will find it harder to attract this kind of white collar talent. There is huge competition for staff across technology companies.

This is a bigger financial and corporate problem for Bezos. He doesn't want to get to a point where a professional at a dinner party says he works for "Amazon" and people say "I hear that is a terrible place to work." Amazon doesn't want to feature in the scripts of stand-up comedians joking about workplaces.

Some will read the article, respect Amazon's drive to success, think of how the share price has risen tenfold since 2008, and say "that is where I want to work." Others may simply be put off.

Some technology commentators on social media backed Amazon all the way with comments like "well given the number of workplaces designed for underachievers to feel good about..."

The white collar focus of the piece is also the reason why a larger audience may feel less sympathy. "Why not just leave and work somewhere else" is an obvious retort.

Amazon's vice president for corporate affairs, former Obama press adviser Jay Carney, used the growth in staff numbers as evidence that the article was wrong.

This implies Amazon is no worse than others as opposed to be being great.

Speaking on CNBC television, Carney didn't point to factual inaccuracies but said the article gave the wrong impression.

There is a growing focus on corporate culture but there can be a gulf between the rhetoric and the reality.

Over 80pc of US companies do not pay any paternity leave yet they will have corporate mission statements about wanting to change the world.

Some companies are taking the "touchy feely" side to extremes adopting ridiculous mission statements with phrases like "inspire humanity".

Bezos has never done that, emphasising through his 15 leadership principles that he wants to hire the best, have a bias towards action and think big.

The problem is that he may have created a corporate behemoth whose highly effective principles are at variance with having a zero tolerance for a lack of empathy.

Empathy doesn't appear in the Amazon principles, but I am sure it is absent from virtually all corporate mission statements.

Traditionally, trade unions protected people from the kind of practices and culture that is described in the 'New York Times'. Modern US tech corporations are a million miles away from having trade unions.

It is very hard to see how any of the behaviour alleged in the newspaper article broke codes or rules other than the very important one of basic compassion and empathy.

If accurate, it shouldn't be acceptable or rewarded.

Perhaps Bezos could supplement his 15 leadership principles with a new set of principles for staff. They could outline what is acceptable and unacceptable and put in place internal systems to assess complaints about bad treatment.

Corporate culture comes from the top. Amazon may be about to discover that negative perceptions are damaging, regardless of whether they tell the whole story or not.

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