Performance Management at Amazon: Impact of Policies on Employees

This report provides a comprehensive analysis of Amazon's performance management system. It begins with an executive summary and introduction, outlining Amazon's core principles and its evolution in the e-commerce industry. The discussion section delves into two key policies: the 'White Paper Process,' a positive initiative fostering employee idea generation and development, and the 'rank and yank' system, a negative policy leading to employee dissatisfaction. The report critically analyzes each policy's impact on employee performance, motivation, and the overall work environment. It emphasizes the importance of real-time feedback, transparency, and the potential downsides of a highly competitive atmosphere. The conclusion summarizes the findings, highlighting the need for a balanced approach to performance management that supports employee growth while maintaining organizational goals. The report references various sources to support its arguments, including studies on employee engagement and management practices.

Running head: PERFOMANCE MANAGEMNET
Performance Management by Amazon
Name of the Student:
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Executive Summary:
Performance management system is increasingly becoming an important aspect in the
global business industry. It is the continuous process of determining the work quality of the
employees in an organisation which is directly proportional to the quality of services and
amenities that are extended to the employees which would altogether help them in improving
their performance. Therefore this report will specifically highlight on the performance
management aspect of Amazon, the global giant and will critically analyse on one positive
and one negative aspect of its managerial policies to assess how it is overall affecting the
performance of the employees. This will help the company to identity the existing
competency, skill and knowledge gap and take accurate measures for the same.

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Table of Contents
Introduction:...................................................................................................................3
Discussion:.....................................................................................................................4
Positive Policy:...........................................................................................................4
Critical Analysis of the Policy:..................................................................................5
Negative Policy:.........................................................................................................5
Critical Analysis of the Policy:..................................................................................6
Conclusion......................................................................................................................8
References:.....................................................................................................................9

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Introduction:
The field of Performance management is constantly evolving, hence the corporate
firms need to be on their toe to make the best possible use of their system and help gain the
desired results.
In this report company chosen for the performance management analysis is Amazon.
Amazon basically belongs to the e-commerce service industry which originally started as an
online market place for selling books but expanded by leaps and bounds. Established in 1994,
Jeff Bezos the founder of this corporate giant believed that his company is guided by four
basic principles which are: “Customer obsession rather than focusing on competitors, passion
for invention, a strong commitment towards operational excellence and long-tem thinking”
(Kantor & Streitfeld, 2015). This could computing giant eventually become the largest
American e-commerce company and today apart from selling books, electronics, apparels,
furniture food, toy and jewelleries it also owns a digital video streaming platform named
Amazon Prime and the overall success is unbeatable (Kristensen, et al. 2017).
Amazon is considered as one of the most customer-centric company in the business
economy. The very corporate culture is built towards increasing the brand value and
treasuring its long-tem relationship with its valuable customers. Since its inception, the
founder president Jeff Bezos followed the basic policy- “Customer is the King”. Today the
company has dozens of offices over 30 countries around the globe ("Our global offices",
2020). While each of these offices has their own unique design and identity Amazon
altogether intends to build uniformed and positive work culture across all its offices which
would altogether inspire collaboration and innovation.

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Discussion:
Now concentrating on the performance management system of Amazon, it is very
important to critically analyse two of its major policies (one being positive and another being
negative) and ascertain their impact on the performance of its employees and on the
origination as a whole.
The performance management techniques which are observed by Amazon are
undoubtedly directly towards strengthening the whole administrative system; building up a
strong communication base and helping the company identify the loopholes in the whole
process of its functioning.
Positive Policy:
Amazon largely believes in assessing real-time feedback rather than going by the age
old practice of annual performance review. Hence the HR Leaders of the organisation has
come up with their “White Paper Process” (Newcombe, 2014, June). This is purely intended
towards helping employees identify their own strengthens and potential as well as develop an
overall disciplined thinking process. This policy expects every employee to write whatever
new idea they have concerning a project. The ideas need to be expressed systematically and
judiciously. There must be enough clarity in the presentation of views as once the document
is prepared the team members are expected to sit together, read and discuss on the idea
presented. Each member is open to share, add or suggest changes. According to Beth Galetti.
Amazon’s Senior Vice President of Worldwide Human Resource, this very policy has shown
incredible results in the process of launching varied new products for Amazon (Noe, et al.
2015). Another crucial aspect of this policy is it is not just meant for launching new products
but ahs a fair share in Amazon’s pay increase or the promotion process.

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Critical Analysis of the Policy:
The managerial heads of Amazon are of the opinion that in this dynamic world of
business constant learning is the key to survive. Hence the employees through this process
are well aware of their credibility and their own value. While for most of the companies
promotions are decided on the basis of the employees overall accomplishments, here in
Amazon the manager consider the white paper document to access the employees success,
his failure and most importantly his journey of growth and learning. The managers also take
into account the opinion of other team members who have worked in close association with
the concerned employees to access his/her credibility. The company heads also ensures that
the feedback is not more than 60 words to keep it short and very appropriate. This process has
been quite beneficial in the performance appraisal of the employees as according to the
founder president Jeff Besoz, “Good intentions don’t work, but mechanisms do,” (Pfeffer,
2016). According to Mone, London & Mone, (2018) maintaining transparency in operation is
the key to increase employee participation and satisfaction. Hence this innovative and
positive HR Policy is directed towards:
 Helping employees understand their own potentials
 Increase the inflow of varied innovative and useful ideas meant for better
product and service designing
 Create an open and unbiased employee review and appraisal system
 Help in building up team spirit and encourage positive criticism.
Negative Policy:
Amazon as it identifies itself to be the most customer-centric brand often faces the
backlash of its employees for the very same reason. This customer-obsession and company’s
never-ending commitment to serve its customers sometimes goes over the top for the
employees who feel that they are not much valued by the company. Though there is no out

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and loud proof of this growing dissatisfaction among employees but going by the survey
reports of PayScale in the year 2013, Amazon is noted to be the company with least
employee retention rate among many other companies who come under the Fortune 500 list
(Spicer, 2020). The tooth-and-claw competition and to remain on top often creates a toxic
work environment for the employees in the longer run. Moreover the policy of self reviewing
one’s own value is creating another major problem which often goes unnoticed by the
managerial heads, popularly known as the “rank and yank system”.
Critical Analysis of the Policy:
While the management views the weekly performance review system as a self-
monitoring tool for improving the skills of the employees, Jeffery Pfeffer and Rober Sutton in
their work on evidence-based management retrospect the dangerous long-term effect of this
“rank and yank system” (White, 2014). According to the researchers this is becoming more of
a self-fulfilling proficiency where one employee hopes to climb the corporate ladder by
giving poor performance review of his colleague and altogether creating a negative work
environment. This approach is often known as “purposeful Darwinsim” (Sahay, 2018), which
according to the experts have existed since a very long time in the corporate history and have
resulted in devastating the whole working environment. It often leads to splitting of
employee in group where a small number of them are labelled as the high performers
enjoying al the rewards, then comes the large average performing group of employees who
just hold on to their jobs and continue to perform their daily task while the last group consist
of all those employees who have been labelled as under- performers and have lost the zeal
and strength to improve any further (). This regressive and detrimental policy often impacts
on the overall employee morale and results in:
 Decreased employee motivation and team spirit
 Unhealthy competition among employees

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 Unsatisfaction of employees with the managerial policies of the company
 High employee turnover rates

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Conclusion
The performance management system of any organisation is meant to support the
organisation in assessing the knowledge gap of the employees. It should create an open and
democratic platform for the company to discuss, develop and design the capabilities of every
individual employee and the different departments they are associated with. Amazon has no
doubt grown by leaps and bounds in a very small span of time. While the credit to achieve
what it holds today cannot be overlooked one should also remember that the regressive policy
that it has followed to achieve the same should never be idolised.

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References:
Kantor, J., & Streitfeld, D. (2015). Inside Amazon: Wrestling big ideas in a bruising
workplace. The New York Times, 15, Q1.
Kristensen, M., Penner, J., Nguyen, A., Moy, J., & Lam, S. (2017). Company
Synopsis for: Amazon. com, Inc.
Mone, E. M., London, M., & Mone, E. M. (2018). Employee engagement through
effective performance management: A practical guide for managers. Routledge.
Newcombe, C. (2014, June). Why amazon chose TLA+. In International Conference
on Abstract State Machines, Alloy, B, TLA, VDM, and Z (pp. 25-39). Springer, Berlin,
Heidelberg.
Noe, R. A., Hollenbeck, J. R., Gerhart, B., & Wright, P. M. (2015). Human resource
management. Gaining a Competitive.
Our global offices. (2020). Retrieved 27 March 2020, from
https://www.aboutamazon.com/working-at-amazon/our-global-offices
Pfeffer, J. (2016). Why the assholes are winning: Money trumps all. Journal of
Management Studies, 53(4), 663-669.
Sahay, P. (2018). Competing on Talent in Today's Business World: A Blueprint for
New Ways of Hiring. Cambridge Scholars Publishing.
Spicer, A. (2020). The tragedy behind Amazon’s toxic management fad | Andre
Spicer. Retrieved 27 March 2020, from
https://www.theguardian.com/commentisfree/2015/aug/17/amazon-management-fad-rank-
yank-jeff-bezos

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White, H. (2014). Power: why some people have it–and others don’t, by Jeffrey
Pfeffer/Hard facts, dangerous half-truths and total nonsense, by Jeffrey Pfeffer and Robert I.
Sutton/The signal and the noise: the art and science of prediction, by Nate Silver.