Case study Amazon.com: Managing companies

Amazon.com: mega-retailer extraordinaire, the gold standard of successful companies. Extensive selection of merchandise, exemplary customer service, an inspiration to e-businesses everywhere. Boon to its investors too with its superlative business model, having evolved from a mere online bookstore to a general retailer to an e-book/media distributor to a cloud service provider -- turning from startup into the 800 pound gorilla in less than 20 years.

But Amazon's biggest challenge seems to be treating its own employees well. Heck, even the part-timers are miserable.

Why is it so hard to take care of your own workers?

For 99% of us white collar workers, perhaps the dream is to become top level management. The job of management is two-fold: upwards and downwards. Sure, your board and shareholders will be demanding that you achieve maximum profit. if you don't achieve target, then you will be penalized. If you do, they may turn and say you didn't set the target high enough. In any case, as long as you are profitable and growing, then at your board meeting you can proudly stand with your head held high.

But as we can see in the Amazon example, the painfully more difficult part is managing your peers and subordinates.

In the labor market, employers are competing for talent, and the best talent is (by definition) scarce. Furthermore, attracting and retaining the best also means paying up, which is a heck of a lot more difficult if yours is a small/ medium-size business, because can you really compete with the bigger (yes, there's always somebody bigger) established businesses that can guarantee bonuses, career development, and other perks that go with them?

The typical way to boost motivation is by using annual performance review and bonuses, true.  But sometimes when business is not as vibrant as you'd like, you're limited in the way you can compensate your employees . Regardless of business climate, reward for positive achievements should never be sacrificed, and deserving employees need to stand ahead of the rest.  It's supremely important to show that good work has not gone unnoticed. There's no plague at the workplace like unhappy, demoralized employees who believe that piss poor work makes no difference whatsoever.

How to motivate then? It may be easier tha you'd think, as long as there's enough work -- indeed if there's too many people and not enough tasks, people tend to get lazy. But meaningful and rewarding work go a long way. A problem in many large enterprises, special purpose teams work towards major proposals that end up never getting implemented. Managers, please don't assign for work  the sake of work itself. Identify productive tasks that cohere with the Company's mission -- if there is none, then start rethinking whether your department really needs to exist.

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There was this one restaurant in Samarinda that we used to frequent. It's a decent Chinese dim-sum joint, and judging from the crowd, people seem to like it. Until last month it just suddenly went out of business. When I asked around why it closed up shop, supposedly because the chef moved out of town. Seriously? Come on, it's just simple dim sum, it's not authentic Northern French cuisine or anything. Surely the chef didn't work alone, couldn't the other cooks pick up the slack? This to me, means the chef (and by extension, the entire restaurant management), is guilty of mismanagement.

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In the end, retaining the best talent is not only about paying them well, but you also want to provide a nurturing environment. You want your employees to grow, to build their skill sets, and to generally have a positive experience at the job. Naturally some of them may later find other opportunities and decide to leave, but that's OK -- no point of holding back employees whose heart is no longer with the job.   If your business has problems generating enough cash flows to compensate and reward your employees, perhaps it just means you can't afford top talents. Rationalize, get younger, develop fresher talents, knowing full well that once they mature, they may leave for greener pastures. Stop fooling yourself into thinking that yours is the best firm for the best people, because even mega-successful behemoths like Amazon have flaws that they need to address. The motivated workers always seek to improve themselves, and if you aren't providing such environment, they will leave. 

Turnover does not necessarily mean something is wrong.  In fact, for the company I'm running, I feel that I would have served my job well if I find myself redundant, expendable. Why? Because that means I've hired well, SOPs are in place, and I can just sit back, take on a supervisory role, or simply move on to the next job. The opposite, when day-to-day operations can't run without me, means that systems aren't functioning, decision making procedures don't work, and people aren't learning.

Managers around the world, please stop rewarding loyalty over merit. Loyalty is NOT a positive trait.