FINAL AMAZON MEMO

Healthy Competition in Market Corporate Culture: A Case Study of Amazon.com
How do we define, establish, and instill healthy and effective competition in corporate
culture? Competition is a norm for most people inside and outside of the workplace. Although
it is natural and can be effective at encouraging high performance, it can also become a
hindrance when not appropriately defined and instilled. We will take a look at Amazon.com, the
United States’ largest Internet-based retailer, and why an overly competitive corporate culture
is failing its 230,000+ employees and misaligning management with its core values [See
Appendix 1 for Amazon’s core values].
Since its founding in 1994, Amazon has experienced massive growth and success,
surpassing Walmart as the most valuable retailer in the United States in 2015.1 From a
customer perspective, Amazon is considered top notch in terms of service and options, but
from an employee perspective, the company has had mixed reviews. The research and
recommendations that will follow will show that Amazon’s most significant issue is its
unhealthy competitive market culture2, which has led to consistently high employee turnover,
decreased diversity, misguided executive decisions, reduced employee teamwork and
collaboration, and an environment that overall, is negative. This is a massive organizational
behaviour problem for Amazon that will continue to have adverse effects if left unchecked.
With increasing competition in the Internet-based retail industry, Amazon’s industry lead is at
stake without a corporate culture that encourages diverse employee collaboration (which leads
to innovation and growth).
Thus, we will propose several recommendations aimed at enabling Amazon to maintain
a competitive market culture while changing its structure from overly competitive, autocratic,
and individualistic to collaborative and engaging. These new programs will encourage healthy
competition amongst managers and employees and discourage unhealthy competition by
shifting competitive benchmarks from being between employees, to being between an
employee and herself/himself. We will begin with some context and an overview of the role
competition plays in market culture and take a look at differences between healthy and
unhealthy competition. Following that we will provide an in-depth analysis of Amazon’s current
situation and our recommendations for improving its market culture moving forward.
Context: Competition and Corporate Culture
Competition is and always has been a regular aspect of everyday life, both inside and
outside of the workplace. Most people enjoy competition in some form, and many make a
choice to participate in it (through sports, work, gaming, etc.).3 Within corporate culture,
1 Oyedele, Akin. (July 2015).“Amazon is Now Bigger than Walmart”. Business Insider. Retrieved March 10, 2016,
from http://www.businessinsider.com/amazon-bigger-than-walmart-2015-7
2 A market cultureis oriented toward external environments (customers, suppliers,etc.) and values
competitiveness and productivity.(Cameron and Quinn.“DiagnosingOrganizational Culture:The Competing
Values Framework”.)
3 Tjosvold,D., Johnson, D. W., Johnson, R. T., & Sun, H. (2003, 01). “Can Interpersonal Competition Be Constructive
Within Organizations?”The Journal of Psychology, 137(1), 63-84.

competition can enhance motivation, hard work, dedication, and growth, but it can also
encourage cheating, aggression, poor relationships, and lower productivity and motivation.
How is it that one factor can cause such opposing results? One significant reason is human
motivation. Each individual person is motivated by different factors in different aspects of their
lives. While some people thrive on competition and see it as motivation to utilize their
strengths and move up in a company, many others perceive it as an intimidating threat, and
reduce their efforts as a result.4 However, it is impossible for a large company like Amazon to
change hundreds of thousands of employees’ personal motivations and perceptions to rally
around the idea that competition is an opportunity. Nor would it be easy or ideal for a large
company to completely change its corporate culture. In fact, a market culture for a company
like Amazon is ideal in a world where online retailers and tech companies are ever-increasing.
To stay at the top, Amazon must remain focused on its customers and suppliers, and emphasize
competition, productivity, and results. What large companies like Amazon can do, is understand
the difference between healthy (effective) competition and unhealthy (ineffective) competition
to more effectively leverage it in workplace culture.
We looked to Christie Lau and Brian Kleiner’s 2014 article on making workplace
competition healthier for some insight. Lau and Kleiner agree that competition can be effective
and productive for many companies, but only when it is managed properly. They believe
definitions of competition depend on the actions employees think are needed to perform well
and move up, which means managers and executives of a company must clearly indicate the
type of competitive behaviours they expect to see.5 This argument is backed up by Social
Interdependence Theory, which states that the way goals are structured will determine how
people will behave in a given situation.6 That is, if goals for employees are established so that
they are competing with each other for results and rewards, there is a risk that relationships
will deteriorate, collaboration will lessen, and people may even cheat to get to the top.
Lau and Kleiner believe healthy, effective competition must emphasize teamwork and
collaboration, with actual competitive measures focused on the individual, rather than between
colleagues. Employee involvement in setting her/his own targets is key to healthy competition.
This allows the employee to compete only against herself/himself to achieve higher results than
ever before. With competition focused on the individual, employees are more likely and willing
to collaborate, innovate, and perform highly in their position. Lau and Kleiner argue healthy
competition is efficient and motivating, and “forces individuals to learn about themselves and
the way they deal with adversity.”7
4 Lau, Christieand Brian H. Kleiner.“Make WorkplaceCompetition Healthier”. (Sept. 2014). Industrial
Management, Institute of Industrial Engineers. 20-25.
6 Johnson, D. W., & Johnson, R. T. (2005,11). “New Developments in Social Interdependence Theory”. Genetic,
Social, and General Psychology Monographs, 131(4), 285-358.

Let’s take a closer look at Amazon’s current situation, and what can be done to
transition the company out of its state of unhealthy/ineffective competition and into an
effective and innovative market culture.
Company Overview: Amazon.com
Founded in 1994, and run out of a garage by Jeff Bezos, Amazon.com was originally an
online book retailer, which went public in 1997 and expanded quite quickly into a one-stop
online shop for nearly anything. Amazon is known for its outstanding customer service and
quick, reliable product delivery, winning numerous awards and maintaining strong consumer
reviews.8 Based on its fast growth, industry lead, and competitive advantage, Amazon is an
attractive company for investors, and seems like it would be for employees as well. However, in
recent years this has not quite been the case.
In August 2015, the New York Times published an article about Amazon’s workplace
culture, and it wasn’t pretty. The article interviewed former Amazon employees who were
critical of the company’s employee feedback system, long work hours, and overly competitive
culture.9 One former employee Bo Wilson was quoted in the article as saying “Nearly every
person I worked with, I saw cry at their desk.” Since the Times’ article, a number of follow-up
articles were published through various media channels, delving further into Amazon’s so-
called brutal corporate culture. Glassdoor.com (a growing online database of over 8 million
company reviews) also presents less than favourable write-ups about Amazon’s workplace, with
many former employees citing competitiveness that led to no work-life balance (and eventual
resignation or firing) as their reasons for leaving the company.
Although these articles are notable, it is important that we remember they are the
opinions of only a handful of former Amazon employees, who cannot represent the opinions of
all 230,000+ employees. Thus, we found it necessary to look into Amazon’s tangible actions and
policies to better understand how it is facilitating unhealthy competition and what it can do to
change.
Amazon Culture: Stack Ranking
Issues: Unhealthy competition results in high turnover, poor management, and low
collaboration.
Recommendation: Remove Stack Ranking and empower managers
Currently, Amazon uses a stack ranking system to rate its employees. Managers review
employees, apply a numerical rating to each, and must either terminate or place into
performance-improvement programs the lowest-rated 10 per cent. Employees who enter
8 Goodfellow, Pam. (Aug. 2012).“Amazon #1 in Customer Service, but Will this Lead to SustainableLoyalty?”
Forbes. Retrieved March 13, 2016,from http://www.forbes.com/sites/prospernow/2012/08/28/amazon-1-in-
customer-service-but-will-this-lead-to-sustainable-loyalty/#7992ad867f55
9 Kantor, J., & Streitfeld, D. (2015,August 15). “InsideAmazon: WrestlingBigIdeas in a BruisingWorkplace”. New
York Times. Retrieved March 13,2016, from http://www.nytimes.com/2015/08/16/technology/inside-amazon-
wrestling-big-ideas-in-a-bruising-workplace.html?_r=1

performance-improvement programs rarely make it out. Regardless of department size and
overall performance, all employees continue to be rated this way and are aware of this quota
review system and how it works.10 The effects of stack ranking have been numerous. Amazon
currently has the highest employee turnover rate of any other large tech company, with
employees leaving after an average of one year (see Appendix 2).11 Although most tech
companies tend to have high turnover rates compared to other industries, the risk that Amazon
faces with fewer and transitioning employees is lowered productivity, overworked remaining
staff, and the loss of knowledge and information.12
Although constant turnover poses a risk to productivity, the indirect effects of the stack
ranking policy have a greater impact on Amazon’s corporate culture. Using Social
Interdependence Theory, we can see that the goals of the stack ranking system are to establish
a top, mid-range, and bottom ranking of employees, even if no employees are actually
performing poorly. Because of the goal of this structure, employees are more likely to act
independently and perceive their colleagues as competition, rather than collaborators or
teammates. No one wants to be ranked at the bottom, and employees begin focusing more on
competing to “look the best for the boss” and get credit for work, rather than sharing ideas,
building teams, and innovating.
As a result, Amazon’s department teams function as working groups that interact to
share information when necessary and make decisions to ensure performance is fulfilled.
Ideally, Amazon’s departments should function as coordinated working teams whereby
individual efforts combined in the team create a level of performance that is greater than the
sum of the inputs if they were just done individually.13 If we consider Hofstede’s cultural
dimensions, we see that with stack ranking, Amazon is instilling an individualistic (focus on
taking care of oneself over the wider group) and masculine (preference for assertiveness,
rewards, and competition over cooperation, modesty, and quality of life) culture in its
workplace through this ranking system.
The stack ranking system also has negative implications for Amazon’s managers. It
forces them to identify and reprimand their “worst” employees, even if they feel all are
performing well. The ranking system seems to instill MacGregor’s X theory into Amazon’s
management. The X Theory implies that people are lazy and don’t like to work, so they must be
monitored closely and receive threat and coercion.14 It would be easy for an Amazon manager
to think this way about her or his employees based on the strict ranking system they are
expected to follow.
10 White, Martha C. (Aug. 2015).“Amazon's Use of 'Stack' Rankingfor Workers May Backfire,Experts Say”. NBC
News. Retrieved March 13,2016, from http://www.nbcnews.com/business/business-news/amazons-use-stack-
ranking-workers-may-backfire-experts-say-n411306
11 Mahapatra,Lisa.(July 2013).“Amazon.com Has Second Highest Employee Turnover Of All Fortune 500
Companies.” International Business Times. Retrieved March 10, 2016,from http://www.ibtimes.com/amazoncom-
has-second-highest-employee-turnover-all-fortune-500-companies-1361257
12 Lucas,Suzanne. “How Much Employee Turnover Really Costs You”. Inc. (2013,August 30). Retrieved March 13,
2016,from http://www.inc.com/suzanne-lucas/why-employee-turnover-is-so-costly.html
13 Andrews, Margaret. (2016). “Reinforcement and Rewards”. [PowerPoint Slides].

Moving forward, we recommend Amazon abandons its stack ranking system. For insight,
Amazon executives could reference General Electric (GE), another large corporation that
depended on Stack Ranking for years. GE recently removed not only stack ranking but all
employee rating systems and is transitioning to the use of a continuous feedback smartphone
app for employees and managers to share and receive regular feedback without a ranking
attached.15
Instead of Stack Ranking, we recommend Amazon give more autonomy to its managers
and empower them to lead hiring and firing for their teams. According to McClelland’s Needs
Theory, most people are motivated by feelings of achievement, power, and affiliation.16 If
Amazon removes power from forced Stack Ranking and instead spreads it out across managers,
we believe increased motivation in leadership will result from increased responsibility. With
increased motivation and a major need for responsibility fulfilled, Amazon will likely see more
affiliation (close relationships and inclusion) within departments and teams, which will benefit
innovation and employee development. With less emphasis on trying to impress a manager to
get a good ranking, employees will feel more secure in their jobs, making them more likely to
collaborate and share honest insights and feedback with colleagues and management. This type
of mindset and autonomy for managers will result in a Y theory of leadership. Managers will
start to see that their employees want to work and feel fulfilled doing good work, and that they
need to be respected, motivated, and shown ways they can grow and improve.17 Overall, we
believe unhealthy competition will lessen between employees, who will focus more on
improving their work and sharing ideas rather than impressing their manager and gaining
credit.
Amazon Culture: Open Feedback System
Issues: Unhealthy competition results in poor relationships, high anxiety, and lowered
productivity
Recommendation: Feedback Fridays
Beyond a stack ranking system, Amazon also facilitates a company-wide feedback tool
through its internal phone system. Through a directory, employees can provide confidential
feedback to their colleagues’ managers at any time, as often as they want. Although feedback is
important for growth and professional development, when employees are aware they are being
rated and ranked and don’t feel secure in their jobs, a feedback systemsuch as this seems more
like a call for sabotage and unhealthy competition.
What we believe results from this type of open feedback system is poor relationships
(between manager and employee as well as employee and employee), high levels of anxiety,
and therefore lowered productivity. If we look to Maslow’s Hierarchy of Needs, we see that
Amazon is fulfilling its employees’ basic needs as well as safety and well-being, but with an
open feedback system in a competitive environment, it doesn’t seem like social well-being and
15 Nisen, Max. (Aug. 2015). “Why GE had to Kill its Annual PerformanceReviews After More than Three Decades”.
Retrieved March 13, 2016, from http://qz.com/428813/ge-performance-review-strategy-shift/

esteem would be met for many Amazon employees. This is a serious problem for productivity,
as humans are motivated by their needs, and decision-making is based off of personal
motivations.18 Working in an environment where you essentially feel like you can trust no one is
not good for social well-being or self-esteem. This puts Amazon at risk, as employees are more
likely to make decisions based in fear or self-interest (to maintain their job), rather than in the
interests of the company and its growth.
Instead of an open phone directory feedback system, we recommend Amazon adopts
“Feedback Fridays”. Every Friday, a different department (along with its managers) will
participate in a leadership and feedback workshop, so that everyone understands how to
effectively give and receive constructive feedback. Employees should be provided lunch and the
feedback sessions should be fun and interactive. After the session, employees will submit
anonymous feedback to their colleagues and managers. We believe that to give constructive
and insightful feedback, one must first, know how to, and second, be in a positive headspace.
With a free lunch, fun, informative activities, and the fact that it’s Friday, we hope most
participants will feel engaged and ready to participate.
With stack ranking gone, we recommend that the feedback be sent to department
managers, who will be transitioning to a Y theory leadership mentality, and who can work with
their employees to help them improve. Managers should use the feedback to assist their
employees in setting personal goals, encouraging them to be competitive with themselves and
try to reach new personal bests. Feedback is important if Amazon is to maintain a market
culture based on competition and results. However, with constructive feedback and education
around leadership, Amazon employees will be in a constant state of growth and improvement,
which will facilitate better results and higher motivation to be their best.
Amazon Culture: Overall Negativity
Issues: Unhealthy competition makes employees feel like they have to work long hours and
do not build collaborative relationships
Recommendation: Set time for personal and collaborative projects and introduce Positive
Rewards System
With Stack Ranking and an Open Feedback System, Amazon has really facilitated an
unhealthy competitive culture, that unfortunately, is bound in negativity. With our
recommendations to remove Stack Ranking and change its feedback system drastically, we
strongly believe the company will see improvements in productivity and teamwork. However,
after years of facilitating an overly competitive and cut-throat culture, we believe Amazon
should make some further changes to encourage positivity in its workplace. Understanding
Herzberg’s two factor theory of workplace satisfaction, we know that positive motivators can
have an influence on employee contentment. We also know that different individuals are
motivated by very different things. However, with Amazon’s previous reliance on ranking and
competition between employees, we strongly feel its culture needs some positive
reinforcement to enhance employee satisfaction and encourage further collaboration.
18 Andrews, Margaret. (2016). “Decision-MakingUnder Uncertainty”. [PowerPoint Slides].

Thus, we propose Amazon introduces a Positive Rewards System. This system would be
run by HR and will encourage positive feedback between colleagues and managers. Employees
will be able to log on to a system where they can share a positive contribution made by
someone else within the company. They will have to share what was done, why it mattered,
and the impact it had on the project/initiative. HR will redirect this positive feedback to the
employee it is based on and this employee will receive a $5 credit on their Amazon account.
With positive reinforcement, we believe motivation and job satisfaction will increase, unhealthy
competition will decrease, and employees will feel comfortable (through affiliation) to
collaborate more and share ideas.
Next, we believe Amazon would benefit from adopting a work structure model similar to
that of Google (and several other tech companies). We recommend Amazon allocates time for
their employees to participate in personal and/or collaborative projects while at work.
Entrusting employees to manage their time and allowing openness for creativity will not only
create a more positive environment, it will likely lead to more innovation for Amazon (let’s not
forget, this is how Google’s Gmail was created!). Here we can reference Vroom’s Expectancy
Theory. People generally expect that with effort comes strong performance, with performance
comes reward, and with reward comes personal goal achievement. We believe personal time at
work to create and innovate is a non-monetary reward that will create a sense of personal
achievement in employees. With personal achievement comes increased motivation, and
Amazon will likely see a shift from employees feeling like they have to stay late at work to
maintain their competitive advantage amongst colleagues, to wanting to stay at work because
they are personally fulfilled and engaged.
Conclusion
Amazon has significant issues like consistently high employee turnover and little
employee teamwork and collaboration due to its current policies and procedures that have
created an unhealthy competitive culture. Our final recommendations to transition into a
healthy competitive market environment include removing stack ranking, implementing
“Feedback Fridays” and a positive rewards system, and finally, adopting a different work
structure that allows employees to work on personal projects. These changes will encourage a
more supportive, collaborative environment resulting in happier, more productive employees
and an overall shift in attitude and behavior. Maintaining competition in a healthier way with
managerial autonomy, personal goal-setting, and constructive feedback resources and tools,
will allow Amazon to enhance innovation and maintain its competitive advantage in the tech
industry.

Appendix 1 (from Amazon.jobs/principles):
Customer Obsession: Leaders start with the customer and work backwards. They work
vigorously to earn and keep customer trust. Although leaders pay attention to competitors,
they obsess over customers.
Ownership: Leaders are owners. They think long term and don’t sacrifice long-term value for
short-term results. They act on behalf of the entire company, beyond just their own team. They
never say “that’s not my job."
Invent and Simplify: Leaders expect and require innovation and invention from their teams and
always find ways to simplify. They are externally aware, look for new ideas from everywhere,
and are not limited by "not invented here." As we do new things, we accept that we may be
misunderstood for long periods of time.
Are Right, A Lot: Leaders are right a lot. They have strong business judgment and good
instincts. They seek diverse perspectives and work to disconfirm their beliefs.
Hire and Develop the Best: Leaders raise the performance bar with every hire and promotion.
They recognize exceptional talent and willingly move them throughout the
organization. Leaders develop leaders and take seriously their role in coaching others. We work
on behalf of our people to invent mechanisms for development like Career Choice.
Insist on the Highest Standards: Leaders have relentlessly high standards — many people may
think these standards are unreasonably high. Leaders are continually raising the bar and driving
their teams to deliver high quality products, services, and processes. Leaders ensure that
defects do not get sent down the line and that problems are fixed so they stay fixed.
Think Big: Thinking small is a self-fulfilling prophecy. Leaders create and communicate a bold
direction that inspires results. They think differently and look around corners for ways to serve
customers.
Bias for Action: Speed matters in business. Many decisions and actions are reversible and do
not need extensive study. We value calculated risk taking.
Frugality: Accomplish more with less. Constraints breed resourcefulness, self-sufficiency and
invention. There are no extra points for growing headcount, budget size or fixed expense.
Learn and Be Curious: Leaders are never done learning and always seek to improve themselves.
They are curious about new possibilities and act to explore them.

Earn Trust: Leaders listen attentively, speak candidly, and treat others respectfully. They are
vocally self-critical, even when doing so is awkward or embarrassing. Leaders do not believe
their or their team’s body odor smells of perfume. They benchmark themselves and their
teams against the best.
Dive Deep: Leaders operate at all levels, stay connected to the details, audit frequently, and are
skeptical when metrics and anecdote differ. No task is beneath them.
Have Backbone; Disagree and Commit: Leaders are obligated to respectfully challenge
decisions when they disagree, even when doing so is uncomfortable or exhausting. Leaders
have conviction and are tenacious. They do not compromise for the sake of social cohesion.
Once a decision is determined, they commit wholly.
Deliver Results: Leaders focus on the key inputs for their business and deliver them with the
right quality and in a timely fashion. Despite setbacks, they rise to the occasion and never
settle.
Appendix 2: (Mahapatra, Lisa. (July 2013). “Amazon.com Has Second Highest Employee
Turnover Of All Fortune 500 Companies.” International Business Times.)

References
Andrews, Margaret. (2016). Organizational Behaviour FMBA2 Lecture Notes Class 3, 4, and 5.
[PowerPoint Slides].
Cameron, K. S., & Quinn, R. E. (1999). Diagnosing and changing organizational culture: Based on
the competing values framework. Reading, MA: Addison-Wesley.
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this-lead-to-sustainable-loyalty/#7992ad867f55
Johnson, D. W., & Johnson, R. T. (2005, 11). “New Developments in Social Interdependence
Theory”. Genetic, Social, and General Psychology Monographs, 131(4), 285-358.
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bruising-workplace.html?_r=1
Lau, Christie and Brian H. Kleiner. “Make Workplace Competition Healthier”. (Sept. 2014).
Industrial Management, Institute of Industrial Engineers. 20-25.
Lucas, Suzanne. “How Much Employee Turnover Really Costs You”. Inc. (2013, August 30).
Retrieved March 13, 2016, from http://www.inc.com/suzanne-lucas/why-employee-turnover-
is-so-costly.html
Mahapatra, Lisa. (July 2013). “Amazon.com Has Second Highest Employee Turnover Of All
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review-strategy-shift/
Oyedele, Akin. (July 2015). “Amazon is Now Bigger than Walmart”. Business Insider. Retrieved
March 10, 2016, from http://www.businessinsider.com/amazon-bigger-than-walmart-2015-7

Santora, Joseph C. “Do Competitive Work Environments Help or Hurt Employees?” (Feb. 2010).
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Experts Say”. NBC News. Retrieved March 13, 2016, from
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backfire-experts-say-n411306
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