Amazon was established in 1994 and since then, the company has grown to become one of the most successful in e-commerce. When the company began, it dealt mainly with selling books online. The company’s founder, Jeff Bezos, would, in the coming years revolutionize the marketing experience. As an internet-based enterprise, Amazon got into the business of selling toys, books, movies, music, electronics, housewares, alongside other products. Central to Amazon’s continued success in e-commerce has been the company’s business model. Amazon sells either directly to consumers or through middlemen between retailers and millions of consumers interested in the company’s products and services. Arguably, through such a structure, Amazon has ensured that consumers have access to whatever products or services they need through giving other businesses a platform on which they can advertise and sell their products.
Currently, Amazon is considered the largest internet retailer. When the internet was considered open for online shopping in 1991, it only took four years for Bezos to create Amazon which has retained its position as an e-commerce giant despite continued competition from new market entrants (Green, 2017). For instance, as a strategy to help maintain its market position, Amazon has invested in development of a new delivery system thereby reducing dependence on key competitors such as FedEx and UPS. Green (2017) explained that “A new program called Seller Flex would allow more items on Amazon -- even those sold by third parties -- to be listed with the Prime badge of two-day shipping” (para. 1). Thus, with this particular approach, Amazon is looking to cut some of the costs associated with outsourcing delivery services to other companies. Furthermore, this approach will help the company leverage its chief business model. In an interview during a charity event organized by the Internet Association, Bezos spoke about different business models some of which are product or competitor-based. However, he explained that Amazon applies a consumer obsessed approach whose key target is to invent on behalf of the consumer (ExpovistaTV, 2017). Therefore, Amazon has been able to meet demands that consumers did not know they had- the company gets ahead in terms of innovation.
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From an analytical perspective, one can notice how Amazon’s strategy to introduce its own delivery system is aligned with customer obsessed model. Prior to this, Amazon outsourced delivery services thereby being forced into contractual relationships with companies such as FedEx and UPS, which have a considerable following. However, through the lens of transaction cost theory, Amazon has demonstrated its consideration of the various costs it incurs through maintaining contractual relationships (Morschett, Schramm-Klein, & Zentes, 2015). Realization the full benefit of delivery services provided by other companies is not possible due to other obligations that these companies have. However, through Seller Flex, Amazon “… will oversee pickup of packages from warehouses of third-party merchants selling goods on Amazon.com and their delivery to customers’ homes”, however, it “… could still use these couriers for delivery, but the company will decide how a package is sent instead of leaving it up to the seller” (Soper, 2017, para. 3). This emphasizes Amazon’s alignment to the consumer obsessed business approach.
A look at Amazon’s pricing shows that a warehouse worker earns an average of $12.79 per hour, while a material handler and a fulfillment associated earn $12.54 and $12.73 per hour respectively (Amazon.com, n.d.). These employees are exposed to a standardized compensation package which features financial security whereby the company’s 401(k) plan allows workers the opportunity to defer compensation for long-term savings. There are investment options which help workers reach their financial goals (Amazon’s global career site, n.d.). Apart from that workers are also provided access to an assistance program which includes financial counseling, estate planning alongside other services in case one is faced with a life-threatening illness or even death. Amazon employees get to enjoy discounts on products the company sells and are also paid for time off, which is separate from the compensation given for public holidays (Amazon’s global career site, n.d.). Thus, the company provides workers with what can be described as an all-rounded compensation package, which addresses various interests that extent beyond monetary needs.
In order to maintain its position in the market, Amazon has shifted focus towards revamping its human resource (HR) strategies to boost performance in underperforming workers. Howland (2017) explained that Amazon has introduced a retraining program called Pivot which provides struggling employees with mentors called Career Ambassadors. The work of these career ambassadors is to offer guidance and support to workers due to their expert status in various company operations and processes (Howland, 2017). A company as large as Amazon demands a competent team of workers who have skills and knowledge in managing various operations such as handling inventory, monitoring consumer orders as well as resolving any client disputes, order tracking, among other tasks. Howland (2017) explained that career ambassadors connect with employees at all levels through using a number of communication methods. Through such an interactive process, these ambassadors are able to identify employee challenges, which they can communicate to the top management if need be. In cases where they can handle the issues raised, the ambassadors have the capacity to help workers improve their skills through exposure to different techniques to carry out company operations. Therefore, the principle behind Pivot is that Career Ambassadors are a knowledge base for underperforming workers.
Despite introduction of the Pivot program, Amazon has faced strict criticism for its HR approach. Heskett (2005) noted that some employees who worked for the company accused the management for lacking empathy for their personal issues. This allegation demonstrates Amazon’s lack of consideration for employee’s personal priorities, which might, in some cases, supplant job priorities. A critique of the Pivot program demonstrates that it might segregate some workers, and with such a division employee motivation, satisfaction, and level of engagement are likely to suffer (Howland, 2017). However, in order to avoid such an outcome, the company can invest in various measures focused on improving the relationship with workers.
Amazon’s HR should develop practices that show consideration for structure, strategy, and culture. For instance, the consumer obsessed model is targeted towards promotion of optimal satisfaction in clients. In the same manner Amazon could apply HR strategies, such as leveraging the benefits of informal structures at the workplace. Imposing a formal structure on workers invites the risk of having individuals who are likely to apply the position leadership style. This involves a situation where a leader is commanding and demands obedience form followers ( Strategic Human Resource Management , 2014). However, Amazon could emphasize on leadership training and development. Individuals in senior positions could be trained to use a people-development perspective whereby they invest in exposing workers to opportunities for career growth and development ( Strategic Human Resource Management , 2014). This can help improve the relationship between the management and Amazon workers.
| Deliverable | Accountable People | Timeline |
| Leadership training and development | HR executives | Occasional training, for instance, spaced out after every three months |
| Follower mentorship | Career Ambassadors, Senior personnel such as managers and supervisors | Continued exposure to mentorship programs possible once every week |
| Career growth and development opportunities | Career Ambassadors, Senior personnel such as managers and supervisors | Twice every month |
Conclusion
Application of the said recommendations could help Amazon realize quality relationships between senior workers and their subordinates. HR issues facing Amazon are characteristic of an unhealthy relationship between employees and their seniors. Therefore, the company should adopt an employee-obsessed approach to improve skills and knowledge acquisition not only in underperforming workers, but in the entire labor force.
References
Amazon's global career site. (n.d.). Retrieved from https://www.amazon.jobs/benefits
Amazon.com. (n.d.). Retrieved from https://www.indeed.com/cmp/Amazon.com/salaries
ExpovistaTV. (2017, May 8). Amazon's Jeff Bezos: Lessons in Management at I.A. Gala 2017 . Retrieved from https://www.youtube.com/watch?v=fpDUiDQigO8
Green, D. (2017, October 5). Amazon takes on FedEx and UPS with new delivery service: The new program is called Seller Flex. Retrieved from https://www.inc.com/business-insider/amazon-launches-delivery-service-seller-flex-rival-ups-fedex-2017.html
Heskett, J. (2015, September 2). What's wrong with Amazon’s low-retention HR strategy? Harvard Business School . Retrieved from https://hbswk.hbs.edu/item/is-something-wrong-with-amazon-s-low-retention-hr-strategy
Howland, D. (2017, January 23). Amazon revamps HR strategies to aid underperforming employees. Retail Dive . Retrieved from https://www.retaildive.com/news/amazon-revamps-hr-strategies-to-aid-underperforming-employees/434526/
Morschett, D., Schramm-Klein, H., & Zentes, J. (2015). Strategic International Management: Text and Cases . Springer.
Soper, S. (2017, October 5). Amazon is testing its own delivery service to rival FedEx and UPS. Retrieved from https://www.bloomberg.com/news/articles/2017-10-05/amazon-is-said-to-test-own-delivery-service-to-rival-fedex-ups
Strategic Human Resource Management . (2014). Retrieved from https://in.sagepub.com/sites/default/files/upm-binaries/59947_rees_and_smith_ch1.pdf
