The Phenomenon that is Amazon: A Decade of Impact on the Fortune 500 - Essay Sample

Introduction

Every single Fortune 500 company is a unique economic phenomenon. Taken together, these business giants represent “two-thirds of the U.S. GDP with $13.7 trillion in revenues, $1.1 trillion in profits, $22.6 trillion in market value” (“Fortune 500”). But there are companies on this list, that have been attracting special attention over the last decade and have made headlines of the major newspapers, magazines, and journals. Amazon is one of such companies. In 2018, its revenues grew by 31% to $233 billion and the company earned over earned $10 billion (“Amazon.com”). As a result, in 2019, it landed on the fifth place in the Fortune 500 list. Its legendary CEO, Jeff Bezos, is one of the richest people on earth. But it is not only the financial success that has attracted the attention of the media. The peculiar and original corporate culture of this company has raised waves of interest and is still widely discussed in the press. While some harshly criticize the competitive atmosphere and customer-centered approach that Amazon is famous for, I would argue that these features have contributed to the company’s success and this type of corporate culture can be viewed as a transparent, honest, and extremely effective working environment that is in need of several improvements in the HR area to become optimal. To understand how exotic and audacious the corporate culture of Amazon is, one must start with defining what corporate culture is. According to Edgar H. Schein, culture can be seen as either “a static property of a given organization – its shared customs, beliefs, norms, values, and tacit assumptions” (Schein 253) or as “a dynamic human process of constructing shared meaning” (Schein 253). It seems that when it comes to corporate culture, both definitions are valid because any discussion of this problem should involve the dynamic analysis of daily practices that sustain such a culture and taking into consideration the resulting static set of norms and values that consequently shape these practices – “the informal rules and expectations that affect operations” (Hermalin 432). In her book Corporate Culture: Getting It Right (2010), Naomi Stanford uses a useful metaphor to help her readers understand what corporate culture is. She compares it to the climate in the company. Within each climate zone there are several subclimate zones in different business units and departments. And, finally, within each subclimate zone, one can discover daily weather patterns which correspond to day-to-day culture practices. And, ultimately, it is important to understand that “climate and weather are inseparable from each other (9). So, all things considered, corporate culture can be defined a system of the norms and expectations that maintain a particular social ‘climate’ within a company and daily practices that help consolidate and sustain this system.

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According to John Coleman, there are six main components of a great corporate culture. The foundational element of any corporate culture is the company’s vision or mission statement. The core of the culture is the set of values adopted by this organization which has to be enshrined in the third important component – the practices including review criteria, promotion policies, and “the operating principles of daily life in the firm” (Coleman). The fourth component deals with the people sharing the company values and the recruiting policies. The next component is the narrative, the story behind the company’s ultimate success. The final component is the place, engineered environment that promotes the friendly atmosphere and cooperation. Coleman argues that “place shapes culture” (Coleman). When all of these 6 components work together effectively and smoothly, the resulting ‘strong’ corporate culture can be highly beneficial for the company’s development contributing to the company’s identity, talent retention, and positive image (Alton). Thus, it can be said that a consistent, comprehensive, and strategically planned corporate culture is an effective business recipe for success.

Amazon is one of those companies that have found this recipe and used it to their advantage. The key ingredient of this recipe is, without doubt, the customer-centric vision. On the company website, Amazon states that its employees are “smart, passionate people who are building new products and services every day” on behalf of the customers (“Our Culture”). Thus, what the company values most in its employees, can be boiled down to four key elements: intellect, devotion, being able to think out-of-the-box, and customer-oriented approach. Amazon describes its corporate culture as “innovative and peculiar” (“Our Culture”). And peculiar it certainly is. There are 14 leadership principles that every true Amazonian should know by heart and adhere to. A virtual award “I’m Peculiar” is granted to those employees who get the best scores on the quiz testing their knowledge of these rules (Kantor & Streitfeld). The very first principle in this list is called “Customer Obsession”. It runs: “Leaders start with the customer and work backwards. They work vigorously to earn and keep customer trust. Although leaders pay attention to competitors, they obsess over customers” (“Leadership Principles”). So, in Amazon the customer is always right and the increasing speed of the delivery defines the hectic rhythm of the working schedule of its employees.

The mission of the company to serve the customer in all possible ways defines the key values that are openly stated in “Leadership Principles”. These values include ownership and acting act on behalf of the entire company, innovation, continuous learning, thinking big, openness to discussion and criticism, frugality, and, finally, “relentlessly high standards” (“Leadership Principles”). These values define daily corporate practices: employees are expected to work hard, to stay active long hours (even at the weekend and on vacation), and be completely devoted to the company. One of the important practices is openly criticizing each other’s ideas. Workers are also encouraged to send secret feedback about their colleagues’ performance to their superiors. For this purpose, Amazonians use the Anytime Feedback Tool, the widget in the company directory (Kantor & Streitfeld). In such a way, the company creates a highly competitive environment that nurtures overachievers and workaholics who ultimately cannot but adopt the ‘every man for himself’ principle.

When the standards are “unreasonably high” (“Leadership Principles”), only the best of the best can live up to them. This axiom has shaped Amazon’s HR policies which constitute the fourth component of the perfect corporate culture recipe. The sixth leadership principle is called “Hire and Develop the Best” and it asks the employees to “raise the performance bar with every hire and promotion” as well as to “recognize exceptional talent, and willingly move them throughout the organization” (“Leadership Principles”). The ultimate focus on innovation and productivity combined with the highly competitive environment leads to the development of corporate jungle culture within the company where the great fish eat the small and only the most resourceful and resolute ones survive. Many of the former employees complain that they were unfairly evaluated rather than supported after periods of serious health issues and personal problems. This harsh HR policy got the name of “purposeful Darwinism” (Kantor & Streitfeld). It is also reflected in the way the campus life is organized. The number of HQ buildings grows constantly and the campus premises have dog-friendly offices and on-site farmers’ market, but at the same time employees’ life is supposed to be governed by the principle of frugality: “from the bare-bones desks to the cellphones and travel expenses that they often pay themselves. (No daily free food buffets or regular snack supplies, either)” (Kantor & Streitfeld). While this policy has led to the formation of a skeleton staff of devoted Amazonian, another logical consequence is a very high employee turnover rate.

In Amazon, the mission statement, values, practices, campus life, and HR policies are all nourished and solidified by the story behind the company’s leap to success. The key figure in this story is Amazon’s charismatic leader Jeff Bezos. “Of all of his management notions, perhaps the most distinctive is his belief that harmony is often overvalued in the workplace – that it can stifle honest critique and encourage polite praise for flawed ideas,” write Jodi Kantor and David Streitfeld in their sensational New York Times article “Inside Amazon: Wrestling Big Ideas in a Bruising Workplace” (2015). Bezos expects utmost honesty from his employees and encourages transparency in his company. In his memo which followed the publication of Kantor and Streitfeld’s critical article, he encouraged his workers to contact him directly if they know of such embarrassing and sad stories as those described in the publication (“9 key issues with Amazon's corporate culture”). So, it seems that Jeff Bezos is as devoted to the company’s leadership principles as he expects his employees to be and leads by example. But as a shrewd leader he should also realize that isolated cases of overzealous implementation of these principles are inevitable.

While the above corporate values and practices have definitely contributed to Amazon’s extraordinary success, they also have a seam side that makes this company not the most comfortable place to work at. It is only logical that to achieve something that peculiar one needs to take peculiar steps. But at the same time the leader should not forget that the positive corporate culture is an important element of the creation of a positive brand image. Thus, I believe that while the customer-centric approach works perfectly for Amazon and its clients greatly benefit from it, some adjustments should be made to the HR-policy. Bezos should think about introducing the option of a paternity leave. Advanced compensation schemes for the best employees would be an effective motivation lever. It would also be a good idea to pay more attention to the “Earn Trust” principle which advises leaders to treat each other respectively. Mutual respect is the basis for productive co-operation and friendlier climate in the company the promotion of which could help Amazon achieve even more spectacular results.

Works Cited

Alton, Larry. “Why Corporate Culture Is Becoming Even More Important.” Forbes, 17 Feb. 2017, www.forbes.com/sites/larryalton/2017/02/17/why-corporate-culture-is-becoming-even-more-important/#3ba36bc069da.

“Amazon.com.” Fortune, Fortune Media IP Limited, https://fortune.com/fortune500/2019/amazon-com/.

Coleman, John. “Six Components of a Great Corporate Culture.” Harvard Business Review, 6 May 2013, https://hbr.org/2013/05/six-components-of-culture.

“Corporate Culture and Identity.” Oil Titans: National Oil Companies in the Middle East, by VALÉRIE MARCEL and John V. Mitchell, Brookings Institution Press, Washington, D.C., 2006, pp. 54–75. JSTOR, www.jstor.org/stable/10.7864/j.ctt12879z9.7. Accessed 24 May 2020.

“Fortune 500.” Fortune, Fortune Media IP Limited, https://fortune.com/fortune500/2019/.

Hermalin, Benjamin E. “Leadership and Corporate Culture.” The Handbook of Organizational Economics, edited by ROBERT GIBBONS and JOHN ROBERTS, Princeton University Press, Princeton; Oxford, 2012, pp. 432–478. JSTOR, www.jstor.org/stable/j.ctt1r2ggg.15. Accessed 24 May 2020.

Kantor, Jodi, and David Streitfeld. “Inside Amazon: Wrestling Big Ideas in a Bruising Workplace”, The New York Times, 15 Aug. 2015, www.nytimes.com/2015/08/16/technology/inside-amazon-wrestling-big-ideas-in-a-bruising-workplace.html. Accessed 20 May 2020.

“Leadership Principles.”...