ASSIGNMENT

NAME: Shubhadeep Choudhury

REG NO: 24121032
SEC: A
INTRODUCTION
AMAZON

Amazon was established by Jeff Bezos in 1995 as an online bookstore, but it has rapidly developed
into one of the largest e-commerce companies with 224,000 employees worldwide. In 2018, Amazon
became the world’s second largest company by market value with over $900 billion. Its great business
success is closely related to the unique business model and people management. According to a report
released by Kansas University, comparing to other internet companies (e.g. Apple, Google),
employees of Amazon are less satisfied with their jobs. There are still some drawbacks in the
company’s human resource management HRM practices. Based on relevant concepts, theories, and
facts, this paper critically analyses Amazon’s approach to people management and makes
recommendations for its future HRM practices.

1. Strategic human resource management (SHRM)

Amazon’s strategic goal is abandoning short-term profits but aiming to obtain long-term competitive
advantage. Amazon is a just company, but it has a flexible and dynamic structure. To support
Amazon’s corporate strategy, the company has established a unique “two pizza rules,” namely teams
should be as small as only need two pizzas as a meal. Small teams ensure high sensitivity and high
involvement Besides that, Amazon’s corporate culture pushes staff to go beyond conventions to
develop innovative ideas and solutions. Amazon has a complete employee training program. The
company sees each employee as a growing talent, and makes staff training as an important way to
develop personality and capability of employees (Amazon, 2018). For example, Bezos often stressed
that, employees’ personality should be treated equally with group character of Amazon through
training. Amazon’s training program helps employees to get involved in the organization culturally
and spiritually.

2. Recruitment and selection

Amazon implements a standardized and simplified recruitment mechanism supported by Bar Raiser.
The company has two mandatory recruitment standards, including performance and qualification.
Meanwhile, the company attaches much importance to potential long-term value contribution of
employees. Amazon assigns Bar Raisers to strictly evaluate candidates from the perspective of
corporate culture and leadership principle (Heskett, 2015). Bar Raisers also discuss with other
interviewers at the final selection stage and have the veto right, to ensure candidates can improve
talent standards of the entire organization. Bezos believes that having a diverse staff team is the key to
Amazon’s constant innovation and long-term competitiveness, so he embraces creative talents from
diverse backgrounds. As a result, Amazon’s staff team includes professional skater, literature scholar,
artist, rock singer etc. To control recruitment cost, Amazon does not adopt traditional writing test, but
implements online application and screening. Amazon’s activities and practices around recruitment
can profoundly influence the specific type and number of candidates, job acceptance and whether
applicants withdraw from the recruitment process. For Amazon, recruitment is of great importance to
organizations because less applicants can lead to lack of talents, while improper recruitment can bring
extra costs on training. Amazon has developed a “brand” as an ideal place to work. The company
always stresses “we are creating history” and “we were establishing a permanent enterprise” to attract
innovative talents with a belief in Amazon.

3. Performance and reward management

Amazon has a controversial performance and reward management system. Amazon (2018)’s
compensation system consists base salary, signing bonus, and restricted share units (RSU). It also
provides many welfares to employees, including medical insurance, 401(k) plan, family support
network, adoption subsidy, Leave Share and Ramp Back, employee discount, and paid leave. Amazon
offers limited incentives to new employees, but provides more incentives to those who have served
the company for two years or more, so as to reduce costs and retain talents with a high involvement in
the organization. Amazon implements a comprehensive performance management system. There is no
specific team performance evaluation, because it is determined by the performance of team leader
(Matthews et al., 2018). The company organizes a simple mid-year assessment in each September,
and conducts year-end review from December to next April (Bussin, 2016). Meanwhile, decisions
about salary adjustment and promotion mostly occur at the end of each year. Performance assessment
requires staff to offer self-evaluation and peer review based on the 14 leadership principles, so the
workload is very heavy in the case of Amazon, the harder approach of performance improvement is
applied, because the company imposes much stress on staff through transparent peer review.
Meanwhile, unlike typical American internet enterprises, Amazon is more of a traditional
organization. Traditional performance assessment systems offer a standardized process to review
employee performance (Houldsworth, 2014). The systems in Amazon are designed centrally by HR
functions and require line manager to appraise staff performance within a set of performance review
meetings or reports. In addition, performance-related pay is adopted by many organizations, including
Amazon. Based on McGregor’s Two-Factor Theory, employees’ reward perception can be divided
into internal (e.g. work-life balance, development opportunities) and external (e.g. salary level,
working environment) (Pilbeam & Corbridge, 2010). In Amazon, human resource value consists of
two parts. One is labour reward or traditional salary, and the other part is capital reward or RSU.
When maintaining a competitive basic salary, Amazon also implements employee stock ownership,
which realizes a close combination between individual goals and organizational goals.

Challenges in Human Resource Management at Amazon

1. High Employee Turnover

Amazon faces the challenge of high employee turnover, especially in its fulfilment centres. The
demanding work environment, long hours, and high-performance expectations contribute to this issue.
To address this, Amazon has implemented various initiatives such as offering higher wages and
benefits, but the company continues to face scrutiny over its labour practices.

2. Labor Relations and Unionization

Another challenge for Amazon's HR management is labour relations and the potential for
unionization. The company has faced criticism for its approach to labour relations, with reports of
anti-union tactics and opposition to unionization efforts. This poses a significant challenge as it
impacts employee morale and can lead to legal and reputational issues.

3. Diversity and Inclusion

Amazon has faced criticism for its diversity and inclusion practices, with concerns about
representation and inclusion of women and minority groups in its workforce. The company has made
efforts to improve diversity and inclusion, but it continues to be a challenge for HR management,
especially in a global context.