The Reasons Behind Amazon’s HighI Turnover

It is interesting to note that Amazon continues to offer special packages as reward for employees who stay but rate of turnover remains very high (Marcus, 2014). Information available from Stone (2013) shows that Amazon has the second highest employee turnover among the Fortune 500 companies. Employee turnover refers to the number of employees who leave a company within a specific period of time (Killoren, 2014). There are several reasons that commonly account for high rates of employee turnover in organizations but in the case of Amazon, one common reason that runs through most literature has to do with a ruthless culture used within its ranks (Spector, 2000). Amazon’s organizational culture is described as ruthless largely because it lacks the kind of creativity and innovation needed for any competitive modern firm. Meanwhile, the role of creativity and innovation within organizational cultures is well emphasized in the body of literature, where it is seen as a new driving force that is quickly replacing capital as the most important factor of production (Testa, 2008).

Organizational culture is an embodiment of all the shared values, assumptions and beliefs that guide the way people behave in an organization (Helge, Sheehan, Cooper & Einarsen, 2010). The organizational culture therefore influence how all people who have any form of interactions and engagements with the company react, and are reacted to. With employees being constant internal stakeholders who are always present to roll out the company’s operations, it can be expected that they are the people who are most affected by the organizational culture. In the specific case of Amazon, there is lack of innovation and creativity within the organizational culture because most constituents of the culture are conventional and fail to fit into the expectations of the human resource of any modern organization. For example the organizational culture of the company is described as being high bureaucratic and autocratic, where employee engagement is not encouraged. Employees are virtually static human resources who only respond to specific instructions without having the chance to bring on their innovative and creative ideas to bear. This situation comes with its own problems on employees, including decreased motivation, low levels of job satisfaction, and decreased efficiency. Any of these problems however has the potential of pushing an employee away from one company and wishing to belong to another where the problems do not exist (Killoren, 2014).

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The fact that Amazon is still a very competitive market leader in the e-commerce industry cannot be denied. Indeed the company continues to record increasing revenues and profitability in the past years with its 2016 revenue estimated at $135.98 billion (22% up) and net income being $2.371 billion (United States Securities and Exchange Commission, 2017). These impressive financial statistics notwithstanding, the company still have reasons to be worried about high employee turnover. In the first place, it would be seen that the difference between revenue generated and net income of the company is very wide. This means that the rate of spending for the company is very high. In order to maximize profits, it will be important to minimize rates of spending, including the huge sums of money spent in recruiting and training new employees after each case of turnover. What is more, high turnover rates have direct influence on organizational operations, especially in terms of retaining experienced employees to contribute meaningfully to growth (Testa, 2008). Another very interesting fact is that there are notable former employees of the company who have ended up founding their own businesses to compete with Amazon. Some of these include Sachin Bansal and Binny Bansal who founded Flipkart, and Matt Williams who founded Pro.com (Lawler, 2014). These are situations that could eventually put Amazon at a competitive disadvantage and so should make it worry about the high turnover rate.