business news in context, analysis with attitude

From the Seattle Times this morning:

"Amazon systematically attempts to channel 6% of its office employees out of the company each year, using processes embedded in proprietary software to help meet a target for turnover among low-ranked office workers, a metric Amazon calls 'unregretted attrition,' according to internal company documents seen by the Seattle Times.

"The documents underscore the extent to which Amazon’s processes closely resemble the controversial management practice of stack ranking - in which employees are graded by comparison with each other rather than against a job description or performance goals - despite Amazon’s insistence that it does not engage in stack ranking. The documents also highlight how much of Amazon’s human resources processes are reliant on apps and algorithms, even among the company’s office workforce.

"And they provide the most detailed picture yet of how Amazon uses performance improvement plans to funnel low-ranked employees out of the company. The company expects more than one-third of employees on performance improvement plans to fail, documents show. Amazon has previously said that its performance improvement plans aren’t meant to punish employees."

The paper points out that "many companies have abandoned stack ranking in recent years after employee backlash. Critics of the system contend it contributes to pay and promotion discrimination, generates a toxic workplace culture and harms innovation."

The Times writes that Amazon continues to maintain that it does not use stack ranking, though it also has made similar statements over the years and then resumed a policy of "unregretted attrition."  Which human resources experts say is essentially the same thing.

KC's View:

One of those experts puts it this way to the Times:  "If I have 10 brilliant people, but the least-brilliant person is fireable? That’s stupid."

Maybe, but I think the example is flawed.  We're not talking about a company of 10 people, but rather on one with thousands of office employees.

If this is what Amazon is doing, is it cold-hearted and calculating?  Sure.  Is anyone surprised?  They shouldn't be … this is a business built on algorithms, and I'm not shocked that there is some subtraction (and maybe even some division) factored in.

I am reminded here of the Netflix approach to managing people - when it evaluates employees, the question is, "If this person wanted to leave, would you try to keep him or her?"  If the answer is no, if the person is just an adequate performer, then they are rewarded with a generous severance check.

Netflix would argue that this isn't about creating a culture of fear … but rather, as CEO Reed Hastings puts it, knowing that you have to play for your position every quarter.

I'm not sure that I'd want to work at one of these companies, but on the other hand, there must be something exhilarating about it.  These are, after all, companies that in their own way have changed the world.