Amazon is a multinational technology firm specializing in e-commerce, digital streaming, cloud computing, online advertising, and artificial intelligence. The firm has been on the Fortune 500 list since 2002. When it joined, it ranked 492nd, and Amazon has now risen to 2nd. It is critical to analyze Amazon's human resources management to understand the success of such a giant over the decades.
The success of Amazon is attributed to various factors. These include its creative business model, emphasis on customer satisfaction, and capacity for growth. However, one of the most vital factors in Amazon's success is its employees – thus, the need to interrogate human resources at Amazon.
A 2019 annual tech survey found that 89% of Amazon employees stated they were proud to work for the company. Additionally, 84% said they would suggest Amazon as a workplace. These figures suggest that employees at Amazon are highly satisfied with their jobs. This satisfaction is arguably one of the reasons Amazon is very successful.
Defining Human Resources Management
An interesting definition is that Human resource management is the art and science of getting the most out of people. I find this definition intriguing because it isolates two main aspects of HRM: it is both a science and an art. On the one hand, the "art" of HRM points to the ability to motivate and understand employees, whilst on the other hand, the "science" refers to the use of data and analysis to make decisions about people. Dave Ulrich argues that HRM is a science because it is based on applying scientific principles to the management of people.
Gary Dessler gave one of the popular definitions of HRM. He states that human resource management is the process of acquiring, developing, and deploying an organization's human resources in a way that achieves its strategic goals. With this background, analyzing Amazon human resource management is key to understanding the knit between human resources and strategic success at Amazon.
Research has found that effective HRM practices positively correlate with employee satisfaction, engagement, and productivity. A McKinsey study found that organizations with effective HRM practices are 1.3 times more likely to report organizational outperformance. Similarly, the Society for Human Resource Management research shows that organizations that successfully adopt the best HRM practices outperform those that do not.
Related: Amazon and Walmart Pay Practices
The Position of Human Resources in Amazon Structure
Amazon human resources management is heavily integrated with the company's corporate strategy. This follows the company's flexible and dynamic structure, particularly the human resources position in Amazon structures. The organizational structure of Amazon is functional and concentrates on various business functions and components as the foundation for establishing the interactions and reporting relationships among these various components.
Below is a snippet from the executive team organizational chart at Amazon to reflect the human resources position at Amazon.
The organogram shows that Beth Galletti, Senior Vice President – Human Resources, reports directly to Amazon's President and Chief Executive Officer. A new examination of the HR reporting structure found that 13% of the head of HR at various organizations reports directly to the chief executive officer. This is the case for Amazon human resources management. The results likely reflect the value employers place on human resources in today's dynamic working environment.
Human resources at Amazon enjoy increased visibility and importance. Research has shown that when HR reports directly to the CEO, it makes it apparent that the CEO views HR as a strategic function and values its contribution to the company. As a result, HR may become more visible and significant within the company, increasing the likelihood that HR will be heard at the highest levels.
Related: Amazon Leadership Principles
Human Resources in Amazon
Amazon human resource management is unique and very strategic. It represents a unique model of management. This is evidenced by Amazon winning the 2018 Human Resource Management (HRM) Impact Award. The principal HRM practices of Amazon refer to specific measures aimed at ensuring equal opportunities for all employees.
According to Amazon's Code of Business Conduct and Ethics on the company's website, Amazon human resources management guards against discrimination in the workplace. This is not to be underestimated, as discrimination is a growing cause of concern on a global scale. It includes anti-harassment and is complemented by safety and health policies, which are important for human resources at Amazon.
Amazon human resource management reflects the company's leadership philosophy. They adhere to the SHRM principle, which states that all choices about human resources should align with the organization's fundamental objectives (Sagar, 2019). Amazon's strategy refers to attaining long-term benefits with the assistance of qualified human resources.
Recruitment and Selection
Recruitment and selection is one of Amazon's main pillars of human resources management. The hiring and selection process at Amazon is very diverse and rigorous. According to the Amazon site, Amazon has recruited from diverse colleges and universities.
A publication by Gefen in the International Journal of Management Science stated that Amazon requires people who can contribute ideas. As such, they disregard the employees' past careers. He further asserted that professional athletes, racing fans, liberal artists, rock musicians, and Oxford University poetry academics are all possible Amazon employees.
Research has found that 7 in every 10 executives rate diversity as an important issue in hiring. A McKinsey study found that businesses that are deemed to be more inclusive and diverse in hiring are 35% more likely to outperform their rivals. Therefore human resources at Amazon continues to succeed as it leverages diversity in its recruitment and selection practices.
A former Amazon employee shed some light on Amazon's recruitment and selection process. He highlighted that candidates might take several interviews to fully being accepted. The process may include several phone interviews, online interviews and face-to-face interviews. These approaches of Amazon human resources are very scientific as they avoid perception errors by providing layers of interviews.
The compensation and performance management at Amazon is very strict. Amazon has high expectations for every employee in terms of performance management. Amazon human resources management sets specific standards for each employee, covering everything from the daily workload to the work-related materials. It also covers the overall work plan to the work procedures. Additionally, there are connections between remuneration and performance management. [Read more].
The guiding principles of Amazon's leadership determine its approach to performance management. The emphasis on an employee's unique talents and abilities fosters their capacity to handle new challenges independently rather than through teamwork. Such a system makes it necessary to evaluate the performance of all employees regularly. In that regard, it is said that Amazon uses a program called 'Anytime Feedback Tool.' This program allows employees to leave feedback on the performance of others anonymously.
The feedback tool is complemented by a program called 'Connections.' Connections allows employees to respond to a daily random question regarding their work (Kim, 2018). If a worker's performance indicators fail to correspond to the set values, they are subject to a three-month "Performance Improvement Plan." [Read More].
Amazon Human Resources Management: Critical Response
Amazon human resources management has not been without critiques. In 2021, the New York Times published an article titled Inside Amazon's Worst Human Resources Problem which investigated a major HR problem at Amazon. There were serious allegations that Amazon human resources management exploited employees. The exploitation was around unpaid leave for employees.
The New York Times conducted investigations and concluded that leave processing had gone extremely bad and was widespread. This weighed heavily on the nature of human resources management at Amazon. The scandal tempted critics to assert that Amazon human resources management was being mismanaged.
Amazon has come under fire for various human resources issues that have resulted in reduced performance and productivity. Amongst these issues is poor remuneration, lack of concern for the employee work-life balance and insensitivity to personal workers' issues (Zhu, 2021).
The research will show that poor Amazon human resources management has harmed the company. A survey of employees at Amazon found that only 3 out of 10 of them were satisfied during times of HR turmoil. This relatively low figure can lead to less motivated and engaged employees.
Diversity and inclusion, which is part of Amazon human resources management policy, also open opportunities for drawbacks for human resources at Amazon. Amazon has to deal with workforce diversity. As a result, Amazon has been accused of numerous offences like sexual misbehaviour and discrimination (Zhu, 2021).
Many women have filed sexual harassment lawsuits against Amazon in recent years. Complaints have also been about unfair, arbitrary, and secretive internal procedures. Amazon has also been charged with supporting racial prejudice within the company. Some of the complaints were looked into, and those responsible were fired. However, these problems are still not entirely resolved. [Read more].
A study by the Equal Employment Opportunity Commission (EEOC) found that Amazon had a higher rate of discrimination complaints than other Fortune 500 companies. This discrimination could result in a loss of talent. Qualified workers are deterred from applying for jobs at Amazon or leaving the company after being discriminated against.
Amazon human resources management has been the backbone of the company's success. Its close interaction with executive management strategically positions the department to foster good and best practices. However, critiques have come down on Amazon for violating numerous good governance in human resources.
Brandon Murambinda is an Organisational Design and Development Consultant at Industrial Psychology Consultants (Pvt) Ltd, a management and human resources consulting firm.