Solving Amazons turnover problem

Amazon has long had a turnover problem. This is often attributed to the relationship that management has to its employees. Management at Amazon tends to be hard-driving, demanding very high performance standards of its workers. In part, this is because the company wants to compete better. If employees are more efficient, such as in its warehouses, then customers receive their goods faster. That in turn is good for business, but it is not good for employees, and high turnover is a natural result.

The company's management practices have been described as "digital Taylorism," based on principles of scientific management where tasks are clearly defined and measured. This leads to jobs, ultimately, that are unsatisfactory (Stefanova, 2015). As a result, Amazon has the second-highest turnover of any Fortune 500 company (Mahapatra, 2013). In order to address, this problem, Kotter's eight steps can be applied.

The eight steps are to create urgency, to form a powerful coalition, to develop a vision and strategy, to communicate the vision, to empower broad-based actions, to generate short-term wins, consolidate gains and finally to anchor new approaches into the culture (Mindtools, 2016). Creating urgency should be the easy part. While Amazon is the leader in its field, it does face intense competition from other online retailers, and offline retailers.

Ultimately, as the job market improves, it will have a more difficult time finding workers who are willing to work under stressful, difficult conditions for low wages. The problem with turnover is at the low-end jobs, not the high-end. While Amazon does have programs for workers who can stick it out, such as stock options, it loses a lot of people getting to that point, and eventually it will find itself getting even lower marginal returns on new hires as the potential talent pool diminishes (O'Donovan, 2015).

This reality alone should be enough to create urgency within the organization. Amazon's leadership needs to recognize that a crisis will occur if it does not act, and therefore it must create the sense of crisis at the leadership levels, before the crisis actually occurs. This leads to the second element of Kotter's plan, which is creating buy-in. The corporate culture at Amazon comes from the top down. It is leadership, right up to CEO Jeff Bezos, that defines the culture.

The reality is that without buy-in at the highest level, no plan will succeed, and that is especially true of Amazon. So much of Amazon is Bezos' vision, and what this means is that the change will need to be his vision as well. Without his support for new systems designed to reduce turnover while maintaining high performance levels, the company will not be able to implement change. The head of human resources has to therefore make a personal appeal to the CEO to champion the plan.

If the CEO buys in, then as per Amazon's culture the rest of the company will fall into line. Changing the CEO's mind might require a coalition that includes a number of other senior executives, not just HR but operations and finance as well, who represent other major stakeholders. Finance is actually quite important because the change has to be framed as being in the best interests of the shareholders in order to truly get the attention of the CEO and the Board.

The third of Kotter's steps is to create the vision and strategy. The vision has to have two elements. First is that it has to fit within the current vision that Amazon has. This strategy is not designed to reinvent the company, just improve it. This means that the vision for the change has to align with the overall vision for the company, which is that Amazon wants to be the world's most customer-centric company.

The vision for the change, therefore, has to tie lower turnover to higher service levels, in much the same way that companies like Costco or Fedex already do. If Amazon sees that building people up to be great workers over the long run is more sustainable and can deliver continuous improvements, then the strategy will align with the vision. This places strategic emphasis on recruiting -- finding better people initially -- as one of the key elements in reducing turnover.

Moreover, Amazon will need to treat good workers better, build them up, and not view them as being so disposable. Communicating the vision must come from the top. Nobody at Amazon, especially in warehouses far from the company's Seattle headquarters, will buy into the strategy if the vision is not communicated by the CEO. It has to come from the top.

But then the communication of the vision has to come from others as well -- the head of operations, the head of HR, and then trickle down to lower managers. There needs to be repetition of the message, and ideally a slogan as well. The vision will need to be communicated in a consistent manner by a number of different people in order to get the message across that there is a change afoot with the company. It is this communication that helps to bring about broad-based action change.

Managers at lower levels are responsible for driving productivity, so if they are to be empowered to lower turnover, then there has to be some motivation created for them to do so. Ideally, this will be tied to a set of strategies. Those strategies that come from HR will provide means by which managers can achieve lower turnover without sacrificing productivity. But right now, managers at Amazon are empowered to pursue only customer satisfaction, which tends to be measured in terms of efficiency.

So the key to the change effort is to also create means by which managers are motivated to do other things as well. Short-term wins do not happen because you want them to. The strategy has to work in order for short-term wins to occur. But when they occur, they have to be noticed and celebrated. There will be units that enjoy more early success with the new strategy than others.

The company has to recognize these quickly, and tell those stories, so that the rest of the organization sees that successes have occurred. The early short-term wins should also be used as case studies to illustrate how the successes occurred -- the point of celebrating early short-term wins is to encourage others who maybe have not had the same success, but they will only be encouraged if they can see why those wins occurred.

The ultimate goal of celebrating short-term wins is that the people throughout the organization will be able to see that the strategy is a good one, and that if they continue with the strategy despite whatever setbacks may occur that they will be able to enjoy some successes. When gains are made, the seventh step is to consolidate those gains. Eventually, after a series of short-term wins, the organization will see positive results in other metrics.

For example, if turnover is reduced at multiple warehouses, and productivity increases at those warehouses, that should have an influence on the financial performance of warehouses overall. It is important to tie the strategy to such gains as a means of consolidating them. If those gains are consolidated, then the organization can really bake the new strategy into its culture. Key here is that.