Is Amazon a Harsh Mistress?
Nick is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
In “Part 4: Worked Over in the Warehouse – Amazon warehouse jobs push workers to physical limit” the Seattle Times once again takes a sensational headline and mixes it with anecdotes, and then presents facts that indicate Amazon (NASDAQ: AMZN) is actually better than the average bear – though confirms what every Seattleite (and by now much of the country) believes: Working for Amazon is not for everyone. What the Seattle Times calls “unrelenting efficiency”, Amazon refers to as “relentless improvement”. One employee that has been with Amazon almost its entire existence (and loves it) summed up the secret to longevity, “Amazon is not a place for cynics.”
According to Richard Brandt, author of One Click: Jeff Bezos and the Rise of Amazon.com, if little Jeffy could not be Spock or Kirk, he would play the Computer.
While the company has never attempted to respond to specific incidents covered at length by the Seattle Times, Morning Call, Mother Jones, and others, Amazon does put the issues surrounding problems in their (Orwellian-sounding) fulfillment centers into perspective with its statement regarding warehouse safety:
We measure progress on safety using the 'recordable incidence rate,' which is the primary metric defined by the Occupational Safety and Health Administration...From January 1, 2006, to September 30, 2011, our U.S. fulfillment network had an annual average recordable incidence rate ranging from 2.5 to 4.2. These rates are lower than for auto manufacturing, the warehousing industry, and even for department stores. To put it simply, it's safer to work in an Amazon fulfillment center than in a department store.
Furthermore, while other major warehouse operations have been fined hundreds of thousands of dollars, the Seattle Times concedes that over the last decade, “Amazon has been fined less than $6,500 for safety violations at its facilities around the country.”
Moreover, while corporate starting salaries rank in the middle among comparable options in Seattle, warehouse and call center pay is 30% to 40% better than comparable jobs in the regions in which they are located. Even while trying to paint the RV-driving migrant workampers in some sort of Grapes of Wrath light, the Seattle Times also pointed out:
In an industry that often offers scant benefits, Amazon provides full-time employees with stock shares after two years on the job, a matching 401(k) and health insurance. Temporary workers, such as those hired during the holiday rush, can buy medical coverage through staffing agencies.
Amazon has kept unions to less than 8% of its workforce, and the drive by WashTech to organize technology workers in the Puget Sound region does not seem particularly threatening – they don’t even have an e-mail contact on their rickety "Union Made in the USA" web page.
The anecdotes presented by call center staff, fulfillment center workers, center employees (popularized as “Am-holes” by the Seattle Times), and a number of other Amazon refugees sounds similar to what one hears from the survivors of Big 4 accounting firms (Deloitte, Ernst & Young, KPMG, PricewaterhouseCoopers). When first joining, say goodbye to your loved ones and decide if you want to do what it takes to make partner or VP, or opt instead to use your next three to five years to learn everything you can (on little or no sleep), and then use your contacts you will develop to get the hell out and go on to the next party.
Sure there are horror stories, like the Amazon VP that was so obsessed with his work that he stopped having sex (with anyone) and his wife left him for a fat Algerian flight attendant. But there are also a number of ’Zoners that will talk passionately and sincerely about how meaningful their time at Amazon has been to them and the customers they have helped. One manager recounts a particularly memorable call center employee:
We had one lady that was just a tragedy magnet. I’m talking acts of God tragedy as if she was cursed by gypsies in a former life. Her husband was killed by a drunk driver on Christmas. The next Christmas her sister was killed by a drunk driver on the same corner as the husband. And then the next summer, her house – not the one next to it or across the street – but her house was exploded by a tornado.
But she was fantastic on the phone. Fantastic! She was in her mid- to late fifties. She had a mom vibe going on with the glasses, the graying hair, and the sweatshirts with the patchworks, buttons, and sequins around the holidays. Just a genuinely nice lady that happened to have a whole lot of tragedy in her life. The only thing she wanted to do was come in and make things better for somebody else, “I can fix that for you,” “I can make that work for you,” “I can help with that.” I think that was really powerful for her.
On the other hand, one international recruiter interviewed by the Motley Fool represented a firm with a long, distinguished track record placing highly-skilled combat veterans into private sector jobs. When asked about Amazon which specifically targets recruits with military experience (due to their skill sets in key areas like logistics – and possibly a high tolerance for pain), the recruiter responded without hesitation, “Amazon chews people up and spits them out. We do not work with companies that do not share our values.” Now when a highly experienced good conservative capitalist pro-God businesswoman holds that opinion, one cannot dismiss such an observation easily.
Still, from the anecdotes marshaled against Amazon and the company’s general response it is clear that Amazon’s blue collar workers enjoy defensible conditions and wages. However, it is also clear that Amazon’s unwillingness to respond or clarify a number of outstanding questions hurts them far more than the usual garbage they would get dragged into if they did cooperate with the frequently predatory and often incompetent media trying to create Pulitzer-worthy material.
No doubt some of the specific warehouse incidents covered at length by local and national media arise from bad management (which may or may not have been replaced – that remains a mystery). Still, the crux of the problem actually seems to lie with federal regulations which prevent Amazon and medical personnel from allowing liberal treatment because it then becomes a “recordable incident”, triggers reams of useless paperwork, and opens them up to liability.
Blood Kindles? Hardly.
So, while customer focus is king, it is not hard to see that as labor again becomes more valuable as the recession recedes (in one to five years…) Amazon is going to have to step up its game as retention become more of premium. Until then, there is little reason to believe Amazon will be radically altering its current management style which to their decision-makers (and most shareholders) seems to work well. This might not be a completely out of touch perception either according to one ’Zoner,
The natural call center attrition is 4% and is similar for Amazon. Also, Amazon never really has to lay people off. After ramping up for the holiday season and the winter college text book rush, attrition works the numbers down to the levels needed for the summer season.
On Amazon being tough the ’Zoner responds:
There’s an expectation that you are going to attract a certain level of talent because we pay well. And we pay well because the work is hard, and we expect the good pay is going to make good people step up…When someone slows down (beit at the call center or at corporate), [being fired] doesn’t happen immediately. Someone’s going to ask what’s going on, people are going to come along side and help with the slack, and your manager is going to lay out the timeline for reversing the trend…When someone gets managed out, it’s usually because they did not avail themselves of the resources offered to them. Amazon makes it real easy for you to keep your job…We are making an investment in a person getting really good at what they do because when they nail that experience, people buy things.
Nick Slepko has no position in any company mentioned here at the time of publication. Motley Fool newsletter services recommend Amazon.com. The Motley Fool owns shares of Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.