BM2018

Task Performance

Case Study
Amazon.com: Selling Employee Performance with Organization and Leadership Review

Amazon.com, which started as the biggest online bookstore, has become a household name by
expanding rapidly in the retail market. It offers millions of movies, games, music, electronics, and other
general merchandise products in several categories, including apparel and accessories, auto parts, home
furnishings, health and beauty aids, toys, and groceries. Shoppers can also download e-books, games,
MP3s, and films to their computers or handheld devices, including Amazon’s own portable e-reader, the
Kindle. Amazon also offers products and services, such as self-publishing, online advertising, an e-
commerce platform, hosting, and a co-branded credit card.

To keep this megastore running at a fast pace, Amazon hired 115,000 employees who generated $74
billion in 2013. Target and Home Depot made a combined income of close to $74 billion in the same
year, yet they employed more than 340,000 people between them in their retail stores. Why does
Amazon only need one-third of its competitors’ labor force to produce the same revenue? Like the other
mega-retailer, Wal-Mart, Amazon has delivered creative business solutions to their own processes to
continuously increase their operating effectiveness. However, their strategy focuses on enhancing the
customer shopping experience and providing excellent customer service rather than providing the
lowest-priced products. To meet their customers’ needs, Amazon must deliver more speed and
efficiency in its giant warehouse. They use more automated work processes that reduce the company’s
operational costs and also increase labor efficiency and employee safety.

The quality of Amazon’s warehouse labor has become the critical issue in the firm’s success, and hence,
hiring and retaining the best, most suitable candidates for the company’s manual labor positions is a key
success factor. That being said, Amazon’s turnover rate at these lowest-ranked positions in the
organization is high since Amazon lets go of its lowest-performing employees to make room for new,
more appropriate candidates while promoting the very best. To detect the lowest- and highest-
performing employees, Amazon initiated a performance evaluation system called the Organization and
Leadership Review (OLR).

OLR has two (2) main goals: (1) finding future leaders and preparing them to be able to face the most
challenging tasks presented in a fast-paced work environment; and (2) determining the 10% of
employees who are the least effective and taking necessary corrective action with them. OLRs take place
twice a year to grant promotions and find the least effective employees. Only the top-level managers
attend these meetings, where there could be two reasons why an employee’s name may be mentioned.
Either the employee is being considered for a promotion, or the employee’s job might be at stake.

OLRs start with the attendees reading the meeting agenda. Then supervisors suggest the most deserving
subordinates be considered for promotion. All executives in the room evaluate these suggestions and
then debate the alternatives. Promotions are given at the end. During the process, instead of using hard
data, executives tend to evaluate employees’ performance on the basis of personal, anecdotal
experiences. Anyone in the meeting may deny a promotion; therefore, ambitious employees seeking a
promotion should also be very friendly with their boss’s peers. If an employee’s supervisor cannot
present that worker well enough, another’s favorite subordinate will get the promotion.

07 Task Performance 1 *Property of STI

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In terms of promotion, Amazon CEO Jeff Bezos expects the managers to set the performance bar quite
high to allow only the most exceptional talent to progress. Promotions are protected by well-written
guidelines, which focus on delivery and impact but not on internal politics. People spend less time
campaigning for their own promotions, and top performers are highly compensated based upon the
quality of their work. Therefore, only a few promotions are available each year, and receiving positive
feedback from a supervisor is quite rare. The approval that employees get from their supervisor is not
enough to earn a promotion; employees still have to “fight” for a promotion, which may not occur
immediately.

Direction: Answer the following questions. Support your answers with explanations. (5 items x 10
points)

1. What performance appraisal problems were implicitly mentioned in the study?

The performance appraisal problems mentioned in the study are bias, halo error and contrast error.
They evaluate their employee using anecdotal experience rather than relying on the hard facts. The
impression of the executives and supervisor to their friendly employee will be remain that resulted for
them to get the promotion. All employees in the organization compared themselves to one another
without using absolute measures of performance to assess each peers.

2. How might these problems impact the accuracy of the Organization and Leadership Review (OLR)?

This problem can affect the performance of every employee, it might cause competition within the
organization just for them to get the promotion. The unity and communication will be lacking that
resulted to work by their own without asking for help. Eliminating less effective employees and hiring
new one will time consuming since they need to train it and it effect the production or services they
offered. In addition, employee will become demotivated especially if their peers are very close to the
higher position.

3. How would you correct the effects of the PA problems mentioned in the study?

The executives and supervisor should use hard fact and reliable information that they can use to
evaluate the performance of their employees. By this they can maintain their goal and find future
leaders that can contribute and give positive impact to the organization. They must also train those
less effective and transform them to become efficient and productive.

4. Which appraisal method/s most closely resembles OLR?

Since it is focused on rating workers on a scale of best to worse, I think the behavior-focus
performance assessment system is the one that most closely resembles OLR. This evaluation will
determine their future, with the best receiving a promotion and the worst facing termination.

5. What appraisal method do you think would best meet Amazon’s objectives of retaining the best
employees while initiating corrective action with the bottom 10%? Justify your chosen appraisal
 method.

For me the best appraisal method for Amazon to meet their objectives is the Graphic Scale
Method, this method helps to evaluate the good and bad performance of each employee for them
to easily know which areas they need to improve or develop and for the organization to determine
which aspect the less effective employees should focus on. In addition through this they can
determine whose employee possess the character of being leader and deserve for the promotion.

Rubric for Grading:

CRITERIA PERFORMANCE INDICATORS POINTS

Content Provided pieces of evidence, supporting details, and factual 6
scenarios
Organization Expressed the points in a clear and logical arrangement of ideas in 4
of ideas the paragraph
Total 10

Reference

Lussier, R. N., & Hendon, J. R. (2019). Fundamentals of human resource management: Functions,
applications, and skill development. SAGE Publications.