As businesses grow, they need to keep track of their assets and keep improving them regularly. Amazon’s growth over the last few years has demanded that proper strategic management is prioritized. However, a strategic management approach is broad, with many assets for a large company such as Amazon to take into consideration. Human capital is central to any strategic management plan and should be clearly stated so that an organization can achieve its goals. Companies such as Amazon need comprehensive human capital strategies incorporated in their strategic plans to not only make their workforce as robust as possible but also ensure that their business and organizational goals are met. Since a large company such as Amazon has a wide range of goals, it also deploys different human capital strategies, including crowdsourcing and remote hiring via the MTurk, issuing competitive contracts to employees relative to its competitors, hiring in large numbers, and preventing unionization of workers.
Before understanding the specific approaches that Amazon undertakes in the management of human capital, it is necessary to have a background on the definition of human capital. According to the resource-based theory, human capital in any organization plays an important role in the maintenance of other forms of capital that are either physical or financial. Therefore, human capital should be accorded as much attention as other forms of capital for an organization to run effectively. With that in mind, human capital is a term used to refer to the attitudes, skills, knowledge, and abilities of personnel within any organization or business entity who are tasked with supporting organizational success (Usman et al., 2021). For a business such as Amazon, human capital creates incremental value through effective teamwork, motivation, and competence.
As a large business, Amazon has an array of different human capital strategies it employs in its operations. The first strategy is that relies on the structure of the gig economy to hire part of its personnel. The gig economy refers to a type of employment relationship where an employee is only hired for specific tasks and only for a given amount of time (Xu et al., 2018). Under such an arrangement, a company often outsources employees and gives them short contracts, which are immediately dissolved once the task has been completed. At Amazon, the gig economy model has been popularized under the Mechanical Turk (MTurk), which was a serendipitous facility that emerged when the company required the completion of simple classification tasks that would be completed efficiently by human beings at low costs rather than computers (Keith et al. 2019). Essentially, anyone who signed up for an Amazon account was immediately eligible for MTurk work. With this model, the company was able to attract the interest of all persons who interacted with its website.
The MTurk database has since evolved from a facility that solves Amazon’s internal issues to one that serves other people outside the company. In the initial years, MTurk was a human resource strategy that enlisted workers temporarily, where a global workforce was invited to fork out replica products and web pages (Bergvall-Kåreborn & Howcroft, 2014). It was favored because it was simpler and cost effective. However, MTurk gradually evolved into a global crowdsourcing platform that marketed other online tasks. It has since become an emblem of microwork crowdsourcing and has become another product that the company sells as brokers rather than simply using it for its internal work.
MTurk was a facility that recognized the importance of remote work and sought to promote it in Amazon. Traditionally, the hiring of employees has often required that they show up at a designated workplace and sit behind a desk or offer other forms of physical labor. At Amazon, for instance, that would involve hiring people to work not only at their headquarters but as delivery people and in their fulfillment stores around the country. With MTurk, however, the idea of digital nomadism among in employment has been made a reality. Digital nomadism provided by MTurk allows employees to exercise location independence – they do not choose their work location based on their work but on leisure and independence (Thompson, 2018). With such flexibility, the idea of MTurk was not only beneficial to the company’s ability to access cheap human resource, but was also a means that benefitted temporary workers who valued their freedom of movement.
While MTurk facilitates Amazon with an easy way of outsourcing human capital, it has glaring weaknesses. Since MTurk operates on the gig economy model, it is prone to a lack of employee loyalty. Unlike long employment formats, the gig economy model reduces the constraints that a company often imposes on its employees, and the mediating zero-work model does not command enough loyalty from employees. Since it is a temporary arrangement, gig workers do not fully share or commit to the company’s vision and mission as they would in a long-term engagement. The resulting lack of loyalty may reflect in the form of poor quality work or serious issues such as leakage of customer data (Xu et al., 2018). Therefore, for a company such as Amazon, MTurk is a tool that should be approached with caution as its disadvantages could easily outrun its benefits.
Furthermore, the idea of remote work is limited to a certain degree. While crowdsourcing and digital nomadism are cheap sources of human capital, they can only accommodate certain types of workers and not others. There are only few types of work that can be conducted without physically showing up at one’s workplace such as web design, software engineering, video language tutoring, and digital marketing (Thompson, 2018). At Amazon, there are limited opportunities for work for people who value location independence that comes with remote work. Most of the workers at Amazon are in their fulfillment centers, where they inspect and pack the customers’ orders from around the world. With such limitations present with the MTurk, Amazon can only use it to a certain degree and has to rely mostly on traditional methods of employment where workers have to show up at designated workstations.
Another component of Amazon’s human capital strategy is that it offers its employees competitive contact offers. Amazon is not only one of America’s highest employers but also one of the companies that offer the best working conditions. Amazon employees are usually offered double the minimum wage requirements in whichever state they are employed in, and they are entitled to numerous benefits such as a comprehensive health insurance plan that is similar for employees at all senior and junior levels (PBS Frontline, 2020). Therefore, regardless of one’s position as a senior executive or as a worker in Amazon’s fulfillment stores, their salary is always higher than what they would earn at a different company doing a similar job. With this strategy, Amazon is able to attract potential employees easier than most of its competitors and maintain them in their company once they have been hired.
Besides offering competitive work contracts and other benefits, Amazon’s other human capital strategy is to hire employees in large numbers. For most companies, reducing employees so that the overall cost of operations is brought down is usually an option that is constantly explored. Amazon often prefers to hire employees in large numbers as this ensures work is done efficiently. According to PBS Frontline (2020), for example, when the company rolled out the Amazon Prime campaign to reach out to more customers, there was need to hire more people who could fulfill the promise of delivering to its customers within two business days wherever they were in the country. However, the company only had ten warehouses across the country, and such an infrastructural insufficiency needed to be addressed immediately. As a result, the company embarked on an aggressive mission to build Amazon fulfillment warehouses across the country and hired workers in large numbers. In San Bernardino, for example, the company hired more than 15,000 people, and its proposed new headquarters in New York had promised another 50,000 jobs in the city (PBS Frontline, 2020). The idea of hiring people in large numbers ensures that the company is able to fulfill and address the needs of its customers without compromise.
In the recent past, however, Amazon’s human capital strategies have come under serious criticism. Despite being a popular employment center, Amazon has also been accused of subjecting workers to less than ideal working conditions. The idea of hiring people in large numbers is seen as a positive move for all involved persons – the company is able to fulfill its large orders while simultaneously creating employment opportunities for others. However, recent reports have suggested that Amazon workers have to walk at least 10 to 15 miles per shift given the huge nature of their warehouses (PBS Frontline, 2020). For most people, such jobs became a source of their troubles and endangered their health despite the financial benefits that were on offer. The vastness of its employee workforce and the idea of hiring people in large numbers soon became a huge concern as the company needed to find different solutions in the management of its human resource.
Amazon has further been criticized for treating employees as robots. In addressing the complaints of its employees who had to walk for many hours in the warehouses as they fulfilled customer orders, Amazon deployed specially designed robots to assist in the movements (PBS Frontline, 2020). Subsequently, the warehouses became equipped with both human and robot personnel. While the robots offered one solution, they also posed another problem. Employees were asked to work at a relentless pace to keep up with the robots and had a computer counting down the amount of time it took for them to fulfill an order. Cameras were also installed everywhere in the warehouses to monitor their movements and whoever slacked in their job was often relieved of their duties without warning (PBS Frontline, 2020). The relentless pace that Amazon workers were subjected to became another source of concern for the company as it was a source of criticism by labor unions and aggrieved ex-workers. Combined with a lack of proper ventilation in the fulfillment warehouses, some of Amazon’s employees found the working conditions too much to bear and opted to quit.
Another human capital management strategy that Amazon has sought actively is separating its workers from labor unions. Instead of looking for employees who are enrolled and active in labor movements, Amazon has often recruited persons who are not enlisted in any organized workers’ unions. The company has been vocal in speaking against employee labor unions, with its executives explaining that such organizations would not ask the company to perform any employee welfare duties that it has not already done (PBS Frontline, 2020). For Amazon, such a strategy allows everyone to have an equal opportunity of being hired. Since the work of picking, packing, and stowing does not require any professional background, Amazon’s human capital strategy emphasizes that being separate from labor unions enables them to acquire and train potential employees without a lot of impediments. Furthermore, separating its human personnel from labor unions allows for its employees to be trained faster and have work allocated to them arbitrarily without discrimination while simultaneously fulfilling organizational needs (Massimo, 2020). In so doing, Amazon has won the trust of many prospective employees who do not have professional qualifications or are in search of unskilled jobs.
Despite being an attractive place to work, Amazon’s policy of staying away from labor unions has been criticized heavily. On the one hand, it is a tactic that has enabled the company to easily streamline its human capital to fulfill its objectives without a lot of impediments. However, critics have argued that denying its employees membership in labor unions is a means of circumnavigating labor laws. Such a tactic has also had serious negative effects on the company, and a prime example is when it was denied an opportunity by New York City officials to set up a second headquarters unless it enrolled its members in an established labor union (PBS Frontline, 2020). Amazon subsequently lost an income-generating opportunity and was equally defamed. Recently, the company has also lost a court battle against the Amazon Labor Union (ALU) – an independent organization of Amazon workers unaffiliated with any registered labor union – who pushed for the company to allow for unionization of its workers (Sainato, 2022). The aggressive move against Amazon’s policy to keep its workers away from labor unions seems to be unraveling despite the company’s best efforts.
In conclusion, Amazon’s human capital strategy takes on a multifaceted approach to suit its needs as a large company. At the core of its strategy is the periodic remote hiring via MTurk, issuance of competitive work contracts, hiring in large numbers, and preventing unionization of workers. The company’s diverse tactics in its human capital strategy is reflective of the need to meet different demands and fulfill different goals. The success of these strategies is reflected by the financial might that the company has today. Similarly, the company is one of the largest employers in America as a result of its scale of operations and effective human management efforts. However, the company has come under scrutiny for how its human capital strategies disregard employee rights and benefits on numerous occasions. Court battles and lack of loyalty from employees engaged on short-term contracts are some of the issues the company faces in its current state and has to address imminently. As a result, the company’s strategies are always under constant revision to avoid possibly antagonizing its workers and authorities. However, for the most part, Amazon’s human capital strategies have been successful and are a template from which similar-sized businesses could learn from in dealing with their workers.
References
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