Amazon’s culture and objectives demonstrate that Jeff Bezos, the corporation’s founder, embraces an unconventional strategy. It emphasizes a strong focus on satisfying clients’ needs to increase the company’s performance and growth. Employees are often compelled into an environment that encourages original thinking and is regarded as an alluring workplace by Amazon’s distinctive communication of its environment. Thus, Amazon’s current performance management system lacks proper incentives and feedback system, causing an increase in attrition rate and dissatisfaction of the workforce.
Current Performance Management System
The current performance management system is focused on software use and methods. For example, the company utilizes a performance improvement plan (PIP), usually referred to as a performance action plan, is a method for assisting a worker improve their performance. The employees struggling to achieve the performance plan gradually improve their work behavior and professional skills (Sadq et al., 2018). Moreover, Amazon has a “time off task” metric, which tracks workers’ performance. Thus, if employees do not complete assignments on time, it can negatively affect their status in the company (Sadq et al., 2018).
However, “time off task” metric is not the only approaches to managing performance. The Times claims that employees who identify with Amazon’s highly competitive and creative environment are protected from exclusion by being a part of the in-group (Matthews et al., 2018). Employees especially diligently come up with unique and creative concepts that might turn into workable products and services in order to generate revenue (Matthews et al., 2018). Through its “Anytime Feedback Tool,” Amazon likewise uses continual feedback (Matthews et al., 2018). On this private forum, staff members can privately compliment or criticize coworkers.
The organization is transparent concerning its principles of leadership and performance. In addition, the company’s employees are customer oriented, which implies high productivity. Leaders work backward from the consumer starting point. Amazon employees should use certain measurements and achieve the set goals. The company’s workers work every day to satisfy the requirements of customers (Sadq et al., 2018). At the same time, the management of the corporation appreciates experienced employees who can constantly enhance their professional development, which will contribute to the efficiency of Amazon’s work (Sadq et al., 2018). Leaders always depart a situation better than they discovered it and produce more than they take. This indicates the pressure on employees within all departments.
Communication of Performance Management System to the Employees
Communication of performance management system to the employees is usually overt, and the staff is aware of the software or metrics that are needed to evaluate their performance. For example, Forte is a system that Amazon uses to assess employees every year and decide potential earnings. The guide teaches managers to assess employees in light of their performance relative to competitors, future prospects, and the company’s leadership ideals (Hitt et al., 2019). Meanwhile, when employees are hired, the managers educate them on the performance management system. Therefore, employees are aware of constant monitoring from the management.
Effectiveness of Current Performance Management System
While Amazon is among the biggest companies in the U.S. market, its current performance system is ineffective. The first indication of its inefficiency is the stress that comes with constant performance evaluations and principles to which the employees must adhere. As seen above, methods such as the “Anytime Feedback tool” and “time-off-task” tend to be overwhelming metrics of performance evaluations (Hitt et al., 2019). Thus, all employees of the company have in common the challenge of receiving stress at work.
Furthermore, the most obvious indicator of the system’s inefficiency is its high turnover rate. By letting staff members understand where they rank and providing them with the resources they need to advance professionally, a good performance evaluation process helps lower staff turnover. According to statistics, the company loses valuable employees every year, and the overall turnover is more than 150% (Hitt et al., 2019). The turnover rate in different departments of the company ranges from 40 to 60 percent of employees each year, which exacerbates the coordination of the company’s work (Hitt et al., 2019). This is less than half of Amazon’s turnover, which is detrimental to its image as an employer.
Differences Between Formal and Informal Performance Feedback Processes
When it comes to informal and formal performance feedback processes, it is noteworthy that informal feedback is the regular discussion of the tasks being performed. In turn, formal feedback refers to a more structured and recorded kind of communication that is frequently used in yearly reviews, reward schemes, or disciplinary actions. In Amazon, informal feedback processes take the form of frequent feedback from the management (Mazzei & Noble, 2017). In turn, hourly associates have the opportunity to ask questions about any subject and to share their opinions about their job, the workplace, and any difficulties they may be experiencing at Associate Roundtable meetings (Mazzei & Noble, 2017). Thus, an informal feedback system involves personal and corporate meetings.
On the other hand, a formal feedback system involves covert performance management systems. As per advice from an Amazon network site for management, Amazon urges executives not to disclose to the office staff that they are on a formalized performance-management plan (Mazzei & Noble, 2017). Focus is a tool for assisting underperforming employees in regaining their productivity (Matthews et al., 2018). For several weeks or months, supervisors are mandated to provide workers with Focus coaching that is documented. However, several employees who were placed on Focus claim they were never informed of their performance issues or how they could fix them (Matthews et al., 2018). When they sought to shift to another department and were informed that they would require further permissions, for example, four current and former Amazon employees claimed they discovered they were in Focus by mistake (Matthews et al., 2018). They said it was very taxing not to know whether they were on Focus or how to escape it (Matthews et al., 2018). In this way, it puts employees in stressful situations and creates a lack of transparency.
Best Practices to Improve Employee Performance
While there might be shortcomings of the performance management system, there are always practices to improve employee performance and the company’s image. An important practice is to establish feedback from the employee to the manager. This helps the manager to respond promptly to challenges and prevent the emergence of global concerns (Paais and Pattiruhu, 2020). By incorporating feedback possibilities into their daily tasks, the staff will be better able to gauge how well they are performing in comparison to the standards (Paais and Pattiruhu, 2020). Similar to most businesses that focus on direct interaction with customers, staff are the most valuable resource (Mazzei & Noble, 2017). A range of engagement, feedback, and correction systems help them maintain an improved working environment (Mazzei & Noble, 2017). In this sense, the company agrees with the statement that every staff member should be heard, and the management should listen to them.
Moreover, aside from taking employee feedback into account, it is vital to offer rewards and have an efficient incentive system. Among the best ways to boost employee performance is to motivate them to work harder by providing incentives and other advantages (Paais and Pattiruhu, 2020). The company can think about giving its workers unique rewards when they work hard and produce outstanding results (Paais and Pattiruhu, 2020). In Amazon’s case, the company provides a wide range of benefits to help employees and qualifying relatives, especially domestic partners and their children, in addition to an average starting salary of $18 per hour, which is more than double the federal minimum salary (Mazzei & Noble, 2017). These all-inclusive benefits, which start on the first day of employment, cover health insurance, paid parental leave, means to save money for the future, free college tuition, and other tools to promote wellbeing (Mazzei & Noble, 2017). Therefore, Amazon strives to provide at least the minimum expected benefits to its employees.
Lastly, the organization must focus on training its workforce to improve performance. Employees are more likely to do their duties accurately when they receive the necessary training to assist them in comprehending their roles and developing their abilities. As a result, the company should make an effort to put in place effective training programs that will adequately prepare personnel for success as they transition into new roles. Amazon has a specific budget that addresses the issue of training.
Importance of Training to Meet Organizational Needs and Goals
Training is important to meet organizational needs and goals, which is frequently emphasized by Amazon. Managers’ reports of employee problems should be considered when designing an effective training system; for example, communication rules with customers, time management, or compilation of logistical processes. Amazon is reviewing its training policy and expanding it, which means the company aims to provide additional knowledge to more than half of the workforce. (Sadq et al., 2018). These programs are intended to assist its workers in advancing their positions within the firm or pursuing new careers outside of it. The Seattle-based business said the program is optional, largely free for staff, and will not compel applicants to stay at Amazon (Sadq et al., 2018). Although training at Amazon will not require participants to stay with the company, it will establish a trusting and honest relationship between employees and the company initially (Sadq et al., 2018). Accordingly, Amazon will not spend significant funds on continuous training of new employees. Thus, training is essential as the company minimizes costs by maintaining stability, a talent pool, and reducing the attrition rate.
Designing an Effective Training Program
Amazon strives to create an effective training program and aims to teach individuals who are not adept at IT. Thus, the management of the company aims to provide basic knowledge to people (Hitt et al., 2019). In order to achieve that goal by 2025, they are undertaking two sizable investments (Hitt et al., 2019). One investment includes a large budget for employee training. Advanced training will allow employees to hold higher positions and receive certain privileges (Hitt et al., 2019). Additionally, they will spend hundreds of millions of dollars on public programs that will train 29 million individuals worldwide in cloud computing skills (Hitt et al., 2019). This way, in order to design an effective training program, there is a need to provide learning opportunities to every staff member so that they can advance in their careers.
Additionally, Amazon desires to succeed with its technical academy services. Company tuition-free training and job matching programs give non-technical Amazon workers the fundamental skills they need to successfully move into technical positions at Amazon and succeed in them (Hitt et al., 2019). Participants grasp the most frequently used software development abilities and technologies, notably AWS cloud computing technology, through instructor-led, project-based training and real-world applications (Hitt et al., 2019). As a result, more learning opportunities create bigger talent pool within the company.
Training and Performance Management Protection from Litigation
In order for employees to follow policies in the company, it is necessary for management to be aware of the latest changes in the law. In this situation, establishing an employee handbook can significantly reduce the danger of litigation. According to Amazon, the company trains its employees protects performance management from litigation. The Code of Business Conduct and Ethics covers a variety of issues, including how to file an anonymous complaint (Paais & Pattiruhu, 2020). In order to minimize the risk of claims and lawsuits, the organization offers employees legal advice and attempts to legally resolve disputes (Paais & Pattiruhu, 2020). Moreover, at every level of the organization, the company is dedicated to inclusion and diversity. Amazon encourages cultural diversity in the workplace and fights discrimination (Paais & Pattiruhu, 2020). Thus, the company ensures that there is full equality and no hindering factors when it comes to performance.
Types of Litigation
However, even when striving for equality and urging all employees to bring results, there can be litigation processes due to partial discrimination. The company monitors such cases and analyzes them for further elimination of these problems (Matthews et al., 2018). It is worth mentioning the case when Molly Jay, a female employee, traveled to care for her parent who had cancer; the female started to experience criticism despite her work performance being above complaint (Matthews et al., 2018). In a related manner, Michelle Williamson, a 41-year-old mother of three, is described by Matthews et al. (2018). In the woman’s own comments, Michelle Williamson notes that having children was strongly suggested to her that having children would likely prevent success at a higher level due to the long working hours required (Matthews et al., 2018). Another answer from a female employee mentioned the retailer’s lack of regret when her child was born and was given a cancer diagnosis (Matthews et al., 2018). As a result, focusing on results and principles while discriminating against female employees might lead to litigation.
Hence, due to improper incentives and a lack of a feedback system, Amazon’s existing performance management system results in a higher attrition rate and employee discontent. Methods like “Anytime Feedback Tool” and “Time-off-Task” are frequently used as performance evaluation metrics, which tend to create more tension between employees. Furthermore, the system’s high turnover rate, which is 150%, is the most overt sign of its inefficiency. Nevertheless, Amazon strives to incorporate training and retrain 100,000 people in total. For this purpose, the company has an academy that allows employees to learn new skills.
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2019). Strategic management: Concepts and cases: Competitiveness and globalization. Cengage Learning.
Matthews, B. L., Harbin, J., & Daigle, J. (2018). The New York Times versus Amazon: Is Jeff Bezos’ head still in the clouds? Journal of Organizational Psychology, 18(3), 73-87.
Mazzei, M. J., & Noble, D. (2017). Big data dreams: A framework for corporate strategy. Business Horizons, 60(3), 405-414.
Paais, M., & Pattiruhu, J. R. (2020). Effect of motivation, leadership, and organizational culture on satisfaction and employee performance. The Journal of Asian Finance, Economics and Business, 7(8), 577-588.
Sadq, Z. M., Sabir, H. N., & Saeed, V. S. H. (2018). Analyzing the Amazon success strategies. Journal of Process Management and New Technologies, 6(4).