Comment: Until it fixes its culture, Amazon’s success in doubt

Amazon has more recently suffered a string of negative headlines for its brain-drain problem.

By Sarah Green Carmichael / Bloomberg Opinion

Just because the Great Resignation may be greatly exaggerated doesn’t mean managers can breathe a sigh of relief.

Yes, as my colleagues Justin Fox and Allison Schrager have each pointed out, it’s front-line and blue-collar workers — not office workers — who have been leaving their jobs at historically high rates. And even so, the quits rate is still only about 3 percent. And it’s a metric we’ve only tracked for about 20 years.

But managers still need to remember: Talented people always have options.

I’ve come to think of this as the first law of firm-o-dynamics. It’s true in good economies, it’s true in bad economies, and it is especially true now, when it is still a great time to be looking for a job. Especially if you’re someone who can do their job from anywhere in an industry that has embraced remote work.

Which means that bosses still have to worry about retaining people. Consider the case of Amazon, the unique mash-up of online retail, cloud computing, groceries, streaming media, shipping and smart-home products that has come to seem as necessary to modern life as electrical wiring and indoor plumbing. Even consumers who eschew ordering products from on ethical grounds (whether to protect their local Main Street or because of concerns about the company’s treatment of warehouse workers) likely shop at Whole Foods, or use websites that run on the Amazon Web Services cloud platform.

The company’s ubiquity is how former CEO and current chair Jeff Bezos has ended up with a yacht that has its own yacht, a boat so big that a Rotterdam bridge will be (temporarily) disassembled to make room for it. It’s how Bezos’s ex-wife automatically became, by some estimates, the fourth-richest woman in the world. It’s why, as I type these words, I see one Prime van after another driving past my office window.

Yet despite all this success, Amazon has more recently suffered a string of negative headlines for its brain-drain problem. My Bloomberg colleague Brad Stone reports that turnover in some engineering units is over 50 percent (a figure the company disputed). Business Insider has cataloged a litany of complaints about below-market pay, unreasonable hours and a toxic culture.

Certainly, it doesn’t help that Amazon, even more than other tech firms, relies on access to its stock to compensate employees; and that the stock has lost nearly a thousand dollars per share since the summer. Of course, it’s still a very valuable stock, and investors took heart from Thursday’s better-than-expected earnings report. But there are still plenty of reasons for the company to turn the talent management problems around before they get worse.

So what’s a wildly successful business to do? CEO Andy Jassy is reportedly already trying to fix Amazon’s culture problems, which is the right place to start. A Glassdoor analysis from January said culture was more than 12 times as important as compensation in predicting whether employees would leave. What keeps people from leaving? As my Bloomberg colleague Ella Ceron writes, “Predictable job schedules, job growth and recognition.”

Let’s focus on the first one. Predictable schedules have been hard to come by over the past two years, with kids in and out of school and work-from-home arrangements feeling more like “living at work” arrangements. But horror stories out of Amazon seem especially pervasive.

One engineer, Patrick McGah, told Business Insider that his manager suggested he take a “power nap” from 9 to 10 p.m., then keep working until perhaps 2 a.m. (Confession time: I also take a “power nap” at 9 p.m. Mine just lasts until about 5 a.m.) Other employees who’ve left have shared similar stories of late-night work-a-thons. Curtailing such expectations should be a priority.

People also like to feel the work they’ve done has been noticed. These efforts don’t have to be elaborate or complicated; a simple “nice one” goes a long way. But not all forms of recognition are free: Amazon clearly needs to review its compensation strategy for key roles, and there are signs it is doing so. While it has long said it wants to hire “missionaries, not mercenaries,” that becomes harder to say with a straight face when global headlines are focused on the company founder’s boat. And it’s a problem any time employees feel that in order to get a raise, they need to get an outside offer; or even quit and get rehired.

It’s tough to change a culture that’s soured, but it isn’t impossible. Part of the problem for Amazon is that these problems have become so well publicized that it may have trouble replacing the people it’s losing. Who wants to work for lower pay at a company that demands longer hours? Especially if that company is also known for being the come-into-the-office stickler in an industry that has embraced the work-from-anywhere craze?

Some degree of turnover is healthy, even refreshing. But great new employees can take a long time to find, as any number of bosses right now can attest. Maybe for Amazon’s next trick, it could figure out one-click hiring.

Sarah Green Carmichael is an editor with Bloomberg Opinion.

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