Management Practices Affect the Bottom Line
At Amazon and Twitter Compared to Salesforce
In the United States, the labor-management relationship has always been fraught with tension. Generally, both sides want different things and have different ideas of what works and how to reach the desired outcome. Some companies may employ strict rules while others may be more worker-centered. Then there are companies who ignore their workforce so much that it is detrimental to employees’ physical, mental, and emotional health. Most of us have heard, read or seen such workplaces in the news when a company’s policies result in some event related to high worker dissatisfaction. What many company C-suite executives don’t realize is that treating their employees badly negatively affects their profits.
Amazon
One high-profile example of a business where employees have reported being treated poorly is Amazon. News reports about the multinational company over the past several years have been consistent in their reporting on the mistreatment of employees.
Amazon workers have reported harsh working conditions that include mandatory 60-hour work weeks and working without breaks (even to go to the bathroom) in order to meet production rates. This forces workers to experience an ever-increasing risk of injury as they try to keep pace with production demands. In more egregious cases, the “profits over people” mentality has even resulted in death. In January 2022, six people working in Amazon’s Ewardsville, Illinois warehouse died because they were expected to remain at work during a tornado and could not get to the facility’s safe room in time. Workers in some facilities have been successful at unionizing, but not for a lack of the company doing all it can to prevent it.
This culture has also started to gain traction with Amazon’s business partners and competitors as they strive to keep up with the frenzied pace set by the distribution behemoth. In a Vox article about the company, Marc Wulfraat, a logistics industry consultant, said, “It’s very rare to walk into a warehouse in any industry at all and see a million units being shipped. A million a week is a high-volume operation, but Amazon, on a peak day, is doing a million units a day.”
White collar personnel are treated no better, according to this former Amazon staffer whose wife was diagnosed with terminal brain cancer. “I tried to explain to my boss, the person I love the most is dying. How would you be able to cope as an employee?” they told Mother Jones. “He didn’t care at all. I get the sense that Bezos doesn’t care about your personal life. You gotta care about the work and the work only.”
Amazon’s company culture is that workers are expendable, treated like cogs in a machine, no more valuable than the actual machinery they operate. Not surprising then that the company’s attrition rate is 150% annually or that Amazon’s stock share price, omitting the pandemic boom, has hovered around $90 per share over the past three plus years. This is, in large part, caused by Bezos having failed to capture the discretionary effort, from inspired employee performance, that is necessary for realizing outsized gains.
Twitter is another company whose management-labor relations have been in the news. Even folks who never use Twitter can read about what has happened since Elon Musk became CEO in October 2022. Since he took over, Musk has laid off thousands of employees in a supposed attempt to make the company profitable. Many employees only realized they had been fired when their access to company emails and other tools were removed. Others still resigned as they didn’t want to work under this new dictatorial leadership, uncertain whether they would have a job tomorrow. When employees spoke out about his decision making and management style, Musk ridiculed them publicly on Twitter. In several cases where the employee challenged him, the employee was fired.
For remaining employees, Musk made production demands so steep that some employees chose to sleep at the office to meet them. By then, however, things had already begun to breakdown as many of those who were laid off were key to running the business, including production and ads teams responsible user experience and revenue. Musk’s actions illustrate just how the decisions of C-suite individuals can negatively affect not just employees’ well being, but also the company’s ability to function and create value.
Salesforce
In comparison, Salesforce’s method of employee relations is completely opposite of Amazon and Twitter. Salesforce and its CEO, Marc Benioff, were on various “best company” lists over the past several years.
In a company blog post, Salesforce C-Suite Marketing Coordinator Taylor Coblentz says that most companies measure customer experience, but only 31% measure employee experience. Paying attention to employees’ needs, she claims, can raise revenue by 50%. “Make sure your employees are on board with your customer goals,” Coblentz advises. “Values misalignment is not only bad for morale, it can also be costly and result in higher attrition and lower customer satisfaction scores, ultimately impacting revenue growth. Unaligned workers predict financial decline and uncertainty for their company’s future.”
Coblentz’s argument is supported by Salesforce’s stock performance which, even omitting the pandemic boom, has been steadily rising over the past three plus years from $114 to $184 per share.
Conclusion
Watching these examples occur in real time, leadership and management may wonder how employee dissatisfaction negatively affects company performance. A 2020 study published in the scholarly journal “Employee Relations” discusses Psychological Contract Violation (PCV). Workers who feel that the company has not kept its promises and does not regard them highly will become disengaged in their work and seek employment elsewhere.
These are just a couple compelling examples demonstrating why companies should want to revisit their management practices. Most companies will find that there are areas in which they can improve treatment of their employees.
To recap then, treating employees poorly leads to job dissatisfaction and turnover, which leads to a decrease in employee engagement and a loss of human capital, which are necessary for achieving desired levels of performance and, ultimately, higher company valuations and profits.
Written and Researched by Dawn Heinbach
Commission and Edited by Hason Greene