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Amazon and Toxic Workplaces

Posted November 2nd, 2015 in Articles, Blogs and tagged , , by admin

A recent expose of Amazon’s work culture in a New York Times (link is external) report brings into focus the growing problem of toxic work cultures in North America, one that will take a huge toll on long term productivity and employee well being.

Amazon may now be the biggest retailer in the U.S. with an estimated valuation of $250 billion. As of July, 2015, Amazon surpassed that other retail giant, Walmart.

What is being said both in the New York Times report and by others about Amazon that would prompt one to conclude it has a toxic work culture, something that appears to be a trend in certain sectors of our economy. The Times describes Amazon as a place where employees are held to standards described by the company as “unreasonably high.” The report details 85-hour workweeks, regular culling of staff and back-stabbing. Former Amazon employees describe how working for Amazon where their performance is reviewed weekly through constant data collection. Workers are also encouraged to comment on each other’s performance constantly, using an anonymous online forum.

Here’s what some other publications have said about the Amazon work culture:

  • Gawker has published a series of emails describing life inside Amazon warehouses, written by former Amazon employees where temp employees toil in freezing conditions;
  • Pennsylvania’s Morning Call  published a series of stories about Amazon warehouses that were so hot workers fainted on the job and were placed on stretchers by paramedics. (Amazon has since installed air conditioning);
  • Amazon’s temp agency aggressively opposes unemployment compensation for workers who were let go because they were sick, The Morning Call reported;
  • Mother Jones  did an in-depth piece that described how Amazon workers are fired if they burst into tears on the job;
  • German unions were striking over pay rates in Amazon’s warehouses as reported in the New York Times  in 2013.

This is how working life at Amazon has been described in a New York Times investigation – though Jeff Bezos, the Amazon founder and chief executive, has repudiated its claims.  “The article doesn’t describe the Amazon I know or the caring Amazonians I work with every day,” he said in an email to staff. “But if you know of any stories like those reported, I want you to escalate to HR … our tolerance for any such lack of empathy needs to be zero.”

Amazon’s approach has been called “purposeful Darwinism, (link is external)” an often-abused concept of “survival of the fittest” from Charles Darwin. This means creating competition among employees and see who survives. In the Amazon system this idea is operationalized by measuring employees on a wide range of metrics, ranking them on the basis of their performance, then splitting them into three groups: a small number of high performers who are lavishly rewarded; a large group of average performers who hold on to their jobs; and a third group of under-performers who are fired.

Merge Gupta-Sunderji, writing in The Globe and Mail (link is external), argues :“On one hand, compelling anecdotal evidence suggests that Amazon is running the First World equivalent of a Third World sweatshop… somewhere along the way, as the company grew in size, managers in the organization became so focused on results that they lost sight of how they were obtained and the people who made these results happe… a toxic work environment is created. Empathy is discouraged while hostility and sabotage become accepted.”

Amazon’s approach has also been coined the “rank and yank” system, dramatized in the movie Glengarry Glen Ross, when a senior executive played by Alec Baldwin visits a sales team to “motivate” them by offering them first prize a Cadillac; second prize a set of steak knives; and without apology or second thought, third prize is “you’re fired”.

Rank and yank has been widely used before by companies such as General Electric but most of the available evidence by management experts such as Jeffrey Pfeffer and Robert Sutton point out that the approach can drive destructive internal competition. More recently research has shown when you introduce a forced ranking system into a workplace, people are more likely to start sabotaging each other in the hope of climbing up the ladder by steppping on the heads of others.

Think about the psychology of the “rank and yank” system, which more closely resembles the law of the jungle. When your co-workers can stab you in the back to improve their own performance ratings, it is hard to work cooperatively with them. So people protect themselves and act out of self-interest. Sharing knowledge with them or helping them can be risky. This creates a toxic work environment that undermines cooperation, sharing and innovation.The rank and yank system can become a self-fulfilling prophecy and is counter to all we know about good motivation methods.

Yet, we know from research that when people are labeled poor performers they usually conform to expectations and end up performing poorly. In contrast, the rank and yank system favors the top performers and potentials who are lavished with rewards. What does that leave? A whole group in the middle who are neither poor or top performers, who are virtually ignored. So a system of inequality is perpetuated, in many ways, mirroring the social and economic structure of the U.S.

Questions were raised about the system as far back as the early 2000s, when employees of Goodyear and Ford challenged the rankings as discriminatory. Employees at both companies claimed they were singled out because of their age and, in 2002, Ford paid $10.5 million to settle two class actions suits. Both companies later dropped the evaluation system. Microsoft also settled lawsuits with employees who claimed the forced ratings led to racial discrimination by “predominantly white male” managers, and Conoco settled a lawsuit brought by the Justice Department that accused the Houston-based company of using the appraisals to favor cheaper foreign workers over U.S. citizens. The most notable company was Microsoft, which hung onto it until only recently, finally bowing to long-standing criticism that such rigid employee ratings can stifle collaboration and creativity.

What’s interesting to note is that although companies such as Microsoft and Ford have discontinued the rank and yank system, it’s rumored that Yahoo may be instituting it. Clifford Stevenson, lead management researcher for the Institute for Corporate Productivity, a Seattle research firm, said his organization’s 2011 survey found a decline in the number of companies, especially those that are high-performing, using the rank and yank system.:“The percentage of companies reporting that they used a forced-ranking system declined from 42% to 14%,” he says.

Silicon Valley is known  for some aggressive environments like Amazon where employees getting “dressed down” is a daily event.. Apple, under Steve Jobs, wasn’t an pleasant place to work for many. Intel’s Andy Grove cultivated a workplace where all employees were encouraged to speak their minds, even if co-workers were offended.

Yet the same culture exists at most big companies and can be “used to represent either success or failure,” believes Steven Sinofsky, long-time former executive at Microsoft, Harvard professor and board member of a number of startups. Sinofsky tweeted a link to a story about Microsoft’s culture that ran in the Seattle Times back in 1989. That old article described Microsoft as a “velvet sweatshop” where employees were expected to work themselves to exhaustion.

In my book, Eye of the Storm: How Mindful Leaders Can Transform Chaotic Workplaces, I outline in detail the characteristics of toxic workplaces which include the following:

  • All sticks and no carrots. Management focuses solely on what employees are doing wrong or correcting problems, and rarely give positive feedback for what is going right. Or mostly carrots for the best performers, sticks for the the rest;
  • The creeping bureaucracy. There are too many levels of approval and management to get things done and a singular focus on micromanaging employees;
  • The gigantic bottom line. A singular focus on profits, beating the competition and cost cutting without consideration of other bottom lines;
  • When bullies rule the roost. Bullying of employees by management, or tolerated by management when it occurs among employees;
  • Losing the human touch. People are considered to be objects or expenses rather than assets, and there is little concern for their happiness and/or well-being;
  • High levels of stress, turnover, absenteeism and burnout;
    Instituting internal competition among employees enforced by a performance assessment system that focuses on individual performance rather than team performance;
  • Little or no concern for work-life balance, where a personal or family life must be sacrificed for the job;
  • Overwork or workaholism, commonly evidenced by 50 hr+ workweeks, little or no vacation time and 24/7 availability for work communication;
  • Little evidence of leaders’ compassion and empathy for employees;
  • Little or no commitment to making contributions to the community, worthy causes or making the world a better place;

Jeffrey Pfeffer, Thomas D. Dee Professor of Organizational Behavior at the Stanford Graduate School of Business and the author of The Human Equation: Building Profits by Putting People First, outlines in his book how companies that treat their people right get enormous dividends–high rates of productivity, low rates of turnover. Pfeffer disputes much of the conventional wisdom in the current conversation about work and business. Loyalty isn’t dead, he insists — but toxic companies are driving people away. There isn’t a scarcity of talent — but there is a growing unwillingness to work for toxic organizations.

The great irony, says Pfeffer, is that most workplace policies that are bad for employees are also bad for companies themselves. Organizations that are more “humane” — offering generous benefits, sick leave, vacation pay, health insurance, and so forth — are shown to be more profitable. Examples are Southwest Airlines, Kimberley-Clark, Whole Foods, CostCo and of course, Google. Google is a profitable business with high standards and where sharing differences of opinion (link is external)is encouraged, according to some. Yet the company has realized the public value of building a caring employee culture. Others do, as well. SAS, the software company, is famous for respecting the fact that its employees have a life outside the office. Workers there are on a 35-hour work week. SAS has been acknowledged as “The World’s Best Place to Work.” (link is external)

Some would argue that it doesn’t matter if the workplace culture enhances employee well-being as long as the company makes a profit for shareholders. Despite the fact that that utilitarian “ends justifies the means” philosophy is a throwback to 19th and early 20th century industrialism, it’s actually not born out by research evidence.  First, in Amazon’s case, some have argued the company is actually not profitable. Almost 20 years after it was launched, it has yet to report a meaningful profit. According to Yahoo Finance , the company earned only a slim 1% operating margin during the last 2 years. For all Amazon’s remarkable revenue growth, the company has still not demonstrated that it can generate profits consistently. Now, investors in the company may finally be running out of patience, Graham Ruddick writes in The Telegraph.

One could also argue that Amazon work practices—even the issue of productivity—is not supported by research. For example, the relentless pushing for more and more productivity through extended working hours, and even workaholism may actually harm productivity. Research shows that exhausted, overworked people make bad decisions and big mistakes. Second, (link is external) exhausted, overworked people are seldom innovative, at least not for very long.

The expression “killing yourself at work” takes on new meaning with the publication of a massive research study on the topic. The scientists looked at data from 25 studies involving over 600,000 individuals and assessed if there was a relationship between heart events like heart attacks and strokes with standard work weeks (35-40 hours a week) compared with long work weeks (>55 hours). After adjustments for age and other known risk factors, the long work week was associated with a increased risk of heart events and particularly with stroke events. In fact, the more hours one works, the greater the risk of stroke.

What about productivity?

“People-centered organizations often outperform their profit-centered counterparts seven ways to unleash the full potential of your people,” says Daniel Goleman, author of the best selling book, Focus: The Hidden Driver of Excellence, and winner of the McKinsey award for the best HBR article of the year, “The Focused Leader.”

He goes on to say “Studies conducted by companies evaluating their own executives have proven taht the the top 10 percent of performers displayed superior comeptencies in emotional intelligence, which includes empathy and a focus on teamwork.”

In his book, Drive , Daniel Pink, describes what he says is “the surprising truth” about what motivates us. Pink concludes that extrinsic motivators work only in a surprisingly narrow band of circumstances; rewards often destroy creativity and employee performance; and the secret to high performance isn’t reward and punishment but that unseen intrinsic drive—the drive to do something because it is meaningful. Pink says that true motivation boils down to three elements: Autonomy, the desire to direct our own lives; mastery, the desire to continually improve at something that matters to us, and purpose, the desire to do things in service of something larger than ourselves. Pink, joining a chorus of many others, warns that the traditional “command-and-control” management methods in which organizations use money as a contingent reward for a task, are not only ineffective as motivators, but are actually harmful.

In an article by Richard Williams, Wallace Higgins and Harvey Greenberg, published in the Boston Globe, ) they cited numerous research studies regarding leadership style and the health of employees. They concluded “your boss can cause you stress, induce depression and anxiety or even trigger the onset of serious illnesses. It is not just bad managers who can negatively affect employee health, but it is also the lackadaisical and mediocre who put employees on the sick list.” And the cost is huge in terms of lost productivity, healthcare costs and employee turnover. The authors argue that a whole new field of litigation in the U.S. is developing-“lawsuits against ‘bad bosses’ and the organizations that negligently allow them to supervise.”

Christina Boedker of the Australian School of Business conducted a research study on the link between leadership and organizational performance and collected data from more than 5600 people in 77 organizations. She concluded that the ability of leaders to spend more time and effort developing and recognizing people, welcoming feedback, and fostering co-operation among staff were critical to success. Moreover, out of all the various elements in a business, the ability of a leader to be compassionate, “to understand people’s motivators, hopes and difficulties and to create the right support mechanism to allow people to be as good as they can be,” had the greatest correlation with profitability and productivity, Boedker concluded.

William Baker and Michael O’Malley, authors of Leading With Kindness argue that the practice of kindness in corporations has a positive impact on bottom line business results. They argue that a management style, which could be called transformational, that has these traits—compassion, integrity, gratitude, authenticity, humility and humor—improves employee performance and employee retention.

Jonathan Haidt, author of Righteous Mind, (link is external) reflects the view of Edward O. Wilson, David Sloan Wilson and others who argue that when groups of animals compete, it’s the cohesive, cooperative, internally altruistic groups that win and pass on their genes.

Frans de Waal is author of The Age of Empathy: Nature’s Lessons For A Kinder Society. (De Waal is a biologist, professor of psychology and director of the Living Link Center at Emory University. In 2007, Time magazine selected him as one of the world’s most influential people. The distinguished scientist says it is long overdue that we jettisoned our beliefs about human nature—proposed by economists and politicians—that human society is modeled on the perpetual struggle for survival that exists in nature. De Waal says this is mere projection on our part. Nature is replete with examples of cooperation and empathy.

Given all we know about empathy in other animal species, why do we persist in seeing human existence, particularly in business, as a fight for survival, with winners and losers? De Waal calls this the “macho origin myth” which insists that the human species has been waging war on itself as millennia as a reflection of our true nature. What has been ignored is the fact that empathy has been evident during that entire time. De Waal points to a mass of examples of sacrifice, empathy, co-operation and fairness in humans and other animals’ species.

But there is a greater tragedy brewing if current and future business leaders think Amazon does represents the future of management. The techniques that Amazon uses to manage its own people can destroy the lives of individuals and undermine organizational performance. The decision to rank and yank is based more on a commitment to an outdated ideology than any real business benefits it might bring.

A commitment to short term profits at human and social costs can’t be the future of business in America can it? Is the proliferation of toxic work cultures really what we want for the sake of financial gain?

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