Tag: turnover

OM in the News: Want an 80-Hour Workweek? Try Amazon!

A company picnic. Some fathers said they considered quitting because of pressure from bosses to spend less time with their families. “Nearly every person I worked with, I saw cry at their desk.” states a former marketing exec.
A company picnic. Some fathers said they considered quitting because of pressure from bosses to spend less time with their families. “Nearly every person I worked with, I saw cry at their desk.” states a former marketing exec.

On Monday mornings in Seattle, recruits line up for an orientation intended to catapult them into Amazon’s singular way of working. They are told to forget the “poor habits” they learned at previous jobs. When they “hit the wall” from the unrelenting pace, there is only one solution: “Climb the wall.” To be the best Amazonians they can be, they should be guided by the leadership principles, 14 rules inscribed on laminated cards. At Amazon, workers are encouraged to tear apart one another’s ideas in meetings, toil long and late, and held to standards that the company boasts are “unreasonably high.” The internal phone directory instructs colleagues on how to send secret feedback to one another’s bosses.

Most of the newcomers filing in on Mondays will not be there in a few years.  Losers leave or are fired in annual cullings of the staff — “purposeful Darwinism,” says former HR director. Some workers who suffered from cancer, miscarriages and other personal crises said they had been evaluated unfairly rather than given time to recover. “When you’re not able to give your absolute all, 80 hours a week, they see it as a major weakness,” stated one former employee. “Amazon is in the vanguard of where technology wants to take the modern office: more nimble and more productive, but harsher and less forgiving,” writes The New York Times (Aug. 16, 2015).

 “You can work long, hard or smart, but at Amazon.com you can’t choose two out of three,” says Jeff Bezos. If Amazon becomes the country club like Microsoft, “We would die,” he adds. The firm retains new HQ workers in part by requiring them to repay a part of their signing bonus if they leave within a year, and a portion of their hefty relocation fees if they leave within 2 years. The median employee tenure is 1 year, among the briefest in the Fortune 500. Only 15% of employees have been at the company more than 5 years.

Classroom discussion questions:

  1. Would the Amazon model work in the typical firm?
  2. Why do employees seek out Amazon jobs?

OM in the News: Burger King–A Tale of Two Countries

Anthony Moore, at Tampa Burger King, calls his wage "very inadequate"
Anthony Moore, at Tampa Burger King, calls his wage “very inadequate”

Hampus Elofsson, ending his 40-hour workweek at Burger King, had paid his rent and all his bills, stashed away some savings, yet still had money for nights out. That is because he earns $20/hour — the base wage for fast-food workers throughout Denmark and 2.5 times what many fast-food workers earn in the U.S. “You can make a decent living here working in fast food,” he says. “You don’t have to struggle.”

In Denmark, fast-food workers are guaranteed benefits their American counterparts could only dream of, writes The New York Times (Oct.28, 2014). There are 5 weeks’ paid vacation, paid maternity and paternity leave and a pension plan. Workers must be paid overtime for working after 6 p.m. and on Sundays, and they often get their work schedules a month in advance.

In contrast, fast-food wages in the U.S. are so low that half of the nation’s fast-food workers rely on some form of public assistance: they earn an average of $8.90 an hour. As a shift manager at a Burger King near Tampa, Anthony Moore earns $9 an hour, typically working 35 hours a week and taking home around $300 weekly. Not surprisingly, turnover rates differ significantly: Danish estimates are that 70% of  Burger King and Starbucks workers stay for more than a year. By contrast, McDonald’s found its workers’ average tenure in the U.S. was 8 months.

So if Danish chains can pay $20 an hour, why can’t those in the U.S. pay the $15 an hour that many activists and fast-food workers have been clamoring for? Economists say the comparison is “apples to autos” because of fundamental differences between Denmark and the U.S., including Denmark’s high living costs and taxes and a generous social safety net. The Danish fast-food restaurants are also less profitable than their American counterparts. The higher wages and the higher menu prices help explain why there are 16 McDonald’s per million inhabitants in Denmark, but 45 McDonald’s per million in the U.S.

Classroom discussion questions:

1. Why does the U.S. restaurant industry predict “a wave of woe if pay were to jump toward Denmark’s levels?”

2. What are the advantages and disadvantages of each system?