Amazon the Realities of the New Economy

Amazon the Realities of the New Economy

Amazonthe Realities of the New Economy

  1. Problem definition

NewAmazonians are told to do away with their poor habits learnt atprevious jobs. When one hits the wall due to the unrelenting pace atAmazon, the only viable thing to do is climb the wall. This is whereemployees are encouraged to work long and late, with emails coming inpast midnight followed by text messages requiring them to beanswered. Most workers last a few years as they find the pressure toomuch to bear or are sacked in yearly staff culling, otherwise termedas purposeful Darwinism (Bodik, et al, 2006).

WhileAmazon is testing drone delivery, it continues to push and pressurewhite collar workers to their limit, redefining what is acceptable.Jeff Bezos, Amazon founder and owner rejects most popular managementbromides adhered to by other companies. Instead, he has designed whatmost workers terms as an intricate machine pushing them to achieveBezos’ insatiable ambitions. It is no coincidence that the firsttwo words of the company’s motto are ‘work hard’(Bergvall‐Kåreborn&ampHowcroft, 2014).

Thecompany’s uncompromising attitude has played its part in buildingthis retail powerhouse with an estimated $250 billion marketcapitalization. However, Amazon now has to deal with a portrayal ofall-tough-all-the-time culture towards most of its employeesincluding both blue-collar and white-collar staffs.

Problemstatement

Tocome up with recommendations for addressing allegations of increasedemployee exploitation and high employee turnover

  1. Case analysis

Increasedexploitation of laborers

Thethousands of workers at Amazon warehouses are just scraping by fromday to day, even though they work more than 40 hours per week, whichis a number that surpasses higher wage earners. Their worry is howabout they will put something on the table and pay rent and are inperpetual fear of the worst should something go wrong, for example ifthey lose work hours or if a family member gets sick (Albelda&ampCarr, 2012). Due to not earning a sufficient amount to sustain theirhouseholds, most workers go into debt as they take loans from friendsor family, use credit cards, sell their properties to pawn shops andeven take payday loans. With such debt, people don’t get ahead,leave alone saving for retirement or investing in education. Amazonworkers utilize government programs like Medicare and Food Stamps inorder to get by.

Newrecruits at Amazon are constantly reminded that they should alwaysthink about the customer and not their own selfish interests. Amazonmanagers aim at pushing up workers’ productivity while at the sametime maintains hourly wages at or around poverty levels. This isachieved with a dose of immense workplace pressure, where targets forunpacking goods, their movement and repackaging are relentlesslyraised to levels which workers must struggle in order to reach theirtargets. The less dexterous employees and the older ones begin tofail and are wiped out in a Darwinian model. Amazon has a pervasiveculture of “three strikes and you are out,” and when theunderperforming workers get too many “points” or demerits, theyare sacked.

Amazon’semployee monitoring system is overly oppressive and combines Taylor’s“functional foreman” system with state-of-the-art surveillancetechnology. At Amazon’s warehouses worldwide, employees are taggedwith personal satellite navigation computers which direct them theroute they have to follow to shelve consignments (Bales, 2012).However, the tags also set the target times for employee warehousejourneys and evaluate whether the timelines are met. Management getsall this info in real time. When a worker is behind schedule, theworker gets a text message telling him this and pointing out that heshould meet his targets or face the consequences.

Apartfrom this poisonous mix of Taylorism and twenty-first centurytechnology, there’s also a pervasive culture of mistrust andmeanness in how Amazon treats its employees. While the companymoralizes trust and care for customers, employees have no suchprivilege. For instance, all Amazon employees must go throughcheckpoints for scanning whenever leaving or entering the depots, toprevent pilferage. Also, there are checkpoints within the warehousethat workers must line to clear prior to entering the cafeteria. Thisessentially shrinks employees’ lunch break to twenty minutes fromthirty minutes, yet these workers hardly have time to consume theirmeal.

Highstaff turnover

Amazonretains new employees partly by demanding them to refund part of thesigning bonus when leaving within one year, and part of thesubstantial relocation payment when leaving within two years. Mostworkers have said that they are considering quitting or they havealready left due to pressure from bosses and peers to spend littletime with families. Employees, recruiters and human resourceexecutives at other companies pronounce a steady stream of exodusfrom Amazon. Amazon’s burn and churn culture results to a bignumber of former Amazon workers showing at the doorsteps of othercompanies. Former employees claim that the departures should not beattributed to failure in the system, but rather the rationalconclusion: consistent mass intake of fresh recruits, who help thecompany machine spin, they wear out and are churned out, and leavingonly the most committed workers to survive (Ritala, 2014).

  1. Generating alternatives

  1. Increase workers’ wages and improve perks.

  2. Conduct marketing campaign to reassure customers and stakeholders.

  3. Do nothing, as in the company should not change its strategy.

  1. Selecting decision criteria

Thechosen alternative should:

  • Maintain or improve the budget,

  • Improve return on investment,

  • Maintain customer satisfaction,

  • Be consistent with the company’s mission and strategy,

  • Be within the company’s present resources and capabilities,

  • Be within acceptable risk parameters,

  • Be easy to implement,

  • Improve employee morale and turnover, and

  • Retain flexibility.

  1. Analyzing and evaluating alternatives

Increasingworkers’ wages

Increasingworkers’ wages and their perks would see their hard work beingrewarded with more money. They will be encouraged to toil harder andlonger. The higher pay would enable them increase their families’incomes and cater for their loved ones better. However, this willincrease labor costs and disrupt the budget. A salary raise is likelyto greatly improve employee morale and reduce employee turnover, aswell as increase productivity.

Marketingcampaign

Amazoncan undertake a marketing offensive in order to reassure customersand stakeholders. The four P’s of marketing include promotion,place, price and product. Promotion will help Amazon provideconsumers with necessary information about the products and thecompany in general. With sales promotion, advertising and publicrelations, the company will gain bigger return on investment as moreconsumers will buy products, will maintain customer satisfaction ascustomers have more information about the products they’re buyingand it is consistent with the company’s strategy. It is howeverunlikely that it will impact on employee morale and turnover.

Donothing

Doingnothing will mean that the company’s strategy will remain as itis.With Amazon’s use of class leading monitoring technologies intracking employees’ performance and movement, the company willascertain that targets are met and its bottom line improved. Workerscan recognize that the general job sector is bad. With unemploymentlevels above 7 percent, workers will work hard to maintain their jobsbecause more people are ready to take the jobs. When workers leave,more people are ready to work with the wages being offered and theprevailing conditions. Doing nothing resonates well with the companyas it doesn’t affect customer satisfaction, flexibility isretained, is within company’s resources and maintains the budget.

  1. Select the preferred alternative

Sincethe Great Recession, labor productivity has shot up. Workers areincreasingly afraid of losing their jobs and are compelled to toilharder, produce bigger economic surplus and larger profit margins forthe employer. Workers see a reduced demand for labor – they canmake out that there are only few well-paying jobs, and even moreunemployed persons hunting for them. Workers have thus responded byincreasing output. With poorer alternatives, as the job marketcontinues to shrink, Amazonians are more likely to increase theireffort on the job. As such, it is not very necessary for managementto hike wages as an alternative to improve productivity because thelack of viable alternative employment does just well. This optiondoes not add labor costs and it increases profit margin.

Whilemarketing will improve customer relations, it will hardly change themorale of workers, which are our focus here. It is not so easy toimplement and can be very costly.

Doingnothing and letting the company’s strategy run as it is fulfillsall the decision selection criteria. The company continues to makeprofit and is within acceptable risk parameters. Doing nothing is thealternative of choice.

  1. Implementation plan

Nofurther action is required

References

Albelda,R., &amp Carr, M. (2012). Low-Wage and Low-Income Workers In The US,1979-2009.

Bales,K. (2012).Disposablepeople: New slavery in the global economy.Univ of California Press.

Bergvall‐Kåreborn,B., &ampHowcroft, D. (2014).Amazon Mechanical Turk and thecommodification of labour.NewTechnology, Work and Employment,29(3),213-223.

Bodık,P., Fox, A., Jordan, M. I., Patterson, D., Banerjee, A., Jagannathan,R., …&amp Ingalls, J. (2006). Advanced tools for operators atAmazon.com. In TheFirst Annual Workshop on Autonomic Computing.

Ritala,P., Golnam, A., &ampWegmann, A. (2014).Coopetition-based businessmodels: The case of Amazon. com. IndustrialMarketing Management,43(2),236-249.