Both Microsoft and Amazon have been known for being ruthless at setting performance standards in past. The Rank and Yank system used by the two big employers was a big pain for their employees. However, with time pressure related to ethical and responsible management of HR has increased on both companies. The result was that both were forced to discard these practices. A lot has changed inside both.
Amazon has adopted several practices that show its changed direction in terms of HR management. Its attitude towards under-performing employees has changed. Microsoft has been more open to embrace diversity practices. Amazon is lagging in behind in terms of being as open and diverse. In terms of gender and ethnic diversity too Amazon is still an under-performer. However, its step towards supporting its under-performing employees could mean that Amazon is ready to take next steps towards managing diversity and other aspects of HR.
Amazon’s record is not so impressive in terms of HR management. It is known as a white male dominated organization. Despite trying its best the company has not been able to control the high turnover rate. There are other difficulties too that arise from poor HR management. The focus has to be on keeping the employees happy and satisfied to retain them longer. The problem with the management styles of Microsoft and Amazon has been that while they are well known companies, they are stiff in terms of setting performance standards. This often leads to employee disengagement. Both the organizations have followed a performance oriented strategy which once used to be the norm at Apple.
Such cultures and cultural norms inside the organizations become a source of dissatisfaction for employees leaving them feeling demoralized. If Amazon employees do not remain long with it, then it is mainly because of the ruthless culture and management practices. However, it seems pressure from external and internal sources has worked. While it cannot be called a giant step, still Amazon may have taken the first step towards managing its employees better.
Rather than using the rank and yank system, Amazon has invested in performance improvement plans that are going to help it better manage its under-performing employees. Rather than throwing them out, Amazon is now helping them perform with a new training program called Pivot. However, this could be an attempt to manage it employees and its reputation. As an employer, Amazon has been known for maintaining an environment that favors only the best performers.
Pivot is actually a retraining program that is aimed to provide struggling employees with a lifeline before they decide to quit. The program assigns such employees to inside counselling and in-house career counselors who assist them manage their jobs and career better. This can be considered a wise step by Amazon for pressure is sometimes higher than the customers can imagine inside the technological companies. Their task is not straightforward and so the employees need support to manage the rest affairs. Apart from it, Amazon has also focused on improving HR management by using cloud based services to better its HR management capabilities.
This is a positive step by Amazon which has been known for rewarding the best performers and firing under performers. The wisest thing for big employers is to take a balanced approach. If they subject their employees to high pressure situations, they must also care for their well being and career. This will reduce the turnover rate. Setting too tough performance measures is profitable financially, but in terms of HRM, leads to disengagement. Still, Amazon may need to take more efficient steps like Pivot to support its employees. It is because Amazon still has a poor reputation in terms of diversity. It is known for being a male dominated organization. To change its image as an employer, Amazon would need to focus upon encouraging diversity, relaxing performance standards and using better employee engagement and retention techniques. Programs like Pivot just mark a start.
The technology industry is evolving day by day creating new jobs. However, jobs in the information technology have also kept growing more and more complex leading to higher pressure on the employees. Amazon has tried to compensate by using a mix of wages, perks and financial and non financial benefits. Some of the most common benefits
- Health benefits: medical plan options allows employees to choose the on plan that is right for them and the eligible family members. Apart from a health savings account, there are several plans including dental and vision plans as well as Flexible spending accounts for health and dependent care.
- Financial security- 401 (K) that helps you reach your investment goals; basic Life and Accidental Death & Dismemberment Insurance paid for by the company; Short term and long term disability benefits paid for by the company.
- Restricted stock Units: Amazon offers its employees the opportunity to become owners through the granting and vesting of Restricted Stock Units.
- Support network: Financial counselling as well as estate planning and help in the event of life threatening diseases; free 24/7 employee assistance program to support with various aspects of personal life; online support for parents having children with disabilities.
- Maternity and parental leave: A range of fully paid Maternity and Parental Leave options for parents before and after child birth or adoption.
- Time off: employees earn paid time off apart from the paid company holidays to recharge themselves.
- Employee discount: Employees get annual discounts on products sold on Amazon.
- Career choice program: An innovative program for the hourly employees that prepays their 95% tuition costs and allows employees to develop in demand skills like medical technicians, paralegals, robotics engineers and solar panel installation professionals.
For companies like Amazon which have always extracted performance from employees, there is a need to create a culture that fosters both performance and satisfaction. While the pressure level inside technological organizations is not a hidden fact, you also know somewhere too much of stress can break employees and companies cannot afford to lose their valuable workers. Apart from paying their employees well organizations can also use strategies that can help them flush out pressure. Google has since always proved itself more open minded and that could also be the right direction for Amazon. Bezos is not interested in being a tough employer and coercing performance from his employees. However, he should focus on both customers and employees equally so employees can manage better work and personal life balance.