Well if you read the article (and this is consistent with stories we hear from Amazon employees), the company built a talent model designed for turnover. In other words, Jeff Bezos deliberately wanted employees to leave every year. As a result, the company brutally penalizes employees for low performance, forcing a turnover rate over 100% in many areas.
While I can’t speak for the entire company, I have talked with warehouse managers who told me the turnover is sometimes over 200% (every job churns twice each year). Imagine the hiring, onboarding, and training costs this creates. I can’t see how this is a good business strategy, yet the company still operates this way.
As the article points out, many internal Amazon folks have figured out that this is a death-spiral strategy. Not only is it hard for the company to grow, high turnover damages the company’s employment brand and it becomes harder and harder to hire. (To say nothing of the union issue.)
As I write about extensively in my book Irresistible, companies that operate this way underperform over time. Aerospace contractors are famous for layoffs whenever they lose a large contract (other companies also operate this way). The HR leaders at these companies told me explicitly that this policy, while good for financial results, made it increasingly difficult to hire. Eventually, they simply cannot find long-term workers at all.
joshbersin.com
While I can’t speak for the entire company, I have talked with warehouse managers who told me the turnover is sometimes over 200% (every job churns twice each year). Imagine the hiring, onboarding, and training costs this creates. I can’t see how this is a good business strategy, yet the company still operates this way.
As the article points out, many internal Amazon folks have figured out that this is a death-spiral strategy. Not only is it hard for the company to grow, high turnover damages the company’s employment brand and it becomes harder and harder to hire. (To say nothing of the union issue.)
As I write about extensively in my book Irresistible, companies that operate this way underperform over time. Aerospace contractors are famous for layoffs whenever they lose a large contract (other companies also operate this way). The HR leaders at these companies told me explicitly that this policy, while good for financial results, made it increasingly difficult to hire. Eventually, they simply cannot find long-term workers at all.
Amazon Is Running Out Of Workers. You Can Avoid This Problem.
Amazon is running out of workers. Why? It's not just the labor market, Amazon's management practices may need to change.
joshbersin.com
