Innovation At Amazon Through Culture And HR Technology
Innovation At Amazon Through Culture And HR Technology
<p style="text-align: justify;"> </p><p style="text-align: justify;">The world’s most successful companies acknowledge that their most valuable resource is their people. And Human Resources (HR), when properly invested in, is a lynchpin to their success. Innovative HR systems are being introduced at a dazzling pace, and HR departments and practitioners must keep up. Attracting the best and brightest talent is a highly competitive game. Employees today are used to fast, intuitive, effective technology as consumers and they expect this from their employer as well. For those contemporary employees choosing where to work, the line separating traditional companies and companies with innovative, high-technology systems is increasingly obvious. The talent gravitates to progressive companies with creative cultures and leading-edge HR technology. Where traditional companies make do with pen-and-paper and semi-automated solutions, progressive companies gain a competitive advantage not just in acquiring top talent, but in all aspects of supporting them with an engaging organizational culture relying on data and technology. Employees expect instantaneous, exhaustive technological systems: HR must be no different.</p><p style="text-align: justify;">Amazon is a prime example of a company taking advantage of every opportunity technology presents. In October of 2019, I left Amazon after two incredible years as HR Head. While there, I saw first-hand just how seriously the company takes applying technological advantages to every problem set including its workforce. In order to do so, Amazon gathers far more data than traditional companies do, and treats it with scientific complexity. That data and analysis provides Amazon with actionable insights that have provided enormous gains in managing its workforce, HR and across the entire company. I explore two interrelated themes: how Amazon has leveraged different forms of information technology to accomplish its HR objectives and how decisions are supported by a principled organizational culture. Amazon is uniquely positioned to discover innovative technological solutions by virtue of its status as one of the largest e-commerce and technology-integrated companies on the planet. Yet, that isn’t why they’ve been so successful at integrating them. Amazon demands a culture of creativity, efficiency and innovation – and companies of any size should take note. Discrete, arbitrary or random technological solutions are insufficient to meaningful change: a risk-tolerant, innovative culture must be embraced to achieve profitable success.</p><p style="text-align: justify;"><strong>Amazon’s (HR) Successes through Big Data, Artificial Intelligence and More</strong></p><p style="text-align: justify;">Despite HR being considered overhead rather than a profit center, HR is responsible for maintaining a well-trained, highly engaged, well-supported workforce crucial to exceeding customer expectations and creating value for the internal customer. And Amazon, recognizing this, has piloted and championed products and processes that leverage high-technology solutions, including AI, cloud computing, data mining and cryptoanalytics, in furtherance of the company’s HR and talent objectives. The following examples of Amazon’s successes can help other HR professionals around the world rock the boat of their own businesses.</p><p style="text-align: justify;"><strong>‘<em>Lights out</em>’—Recruitment, Selection and Onboarding through Algorithms</strong></p><p style="text-align: justify;">In October 2019, Amazon had approximately 660,000 employees and 63,000 vacancies. For most HR professionals, those numbers may boggle the imagination. It is estimated that an average company in the U.S. has approximately 100 employees. In contrast, Amazon needs to find, hire and place employees on a scale several orders of magnitude greater and needs to bring in 60,000 wage associates annually. To keep the enormous machine moving, a scalable recruitment and election solution was absolutely necessary, but one that did not sacrifice quality of hire or applicant experiences. Amazon implemented a process termed “lights-out.” Initially, the salesforce was used to find wage associates, but using AI all applicants were brought through the recruitment and placement process – all with no human recruiter involved. The process occurred ‘in the dark,’ or “lights-out”. Applicants were found, solicited, given personality, capability and language tests on line. Those who met the threshold were extended offers and invited to a training class. As a result, 60,000 new hires were placed without HR teams needing to be involved directly. Through the implementation of this “lights-out” approach, Amazon was able to recruit and onboard a massive amount of talent to locations all around the globe. On analysis, the gaining teams in the field never experienced significant downtime, and quality of hire and employee experience remained at the same, if not better levels than previous, human-based hiring processes.</p><p style="text-align: justify;"><strong>‘<em>Nostradamus</em>’—Retention through Data Mining and Stay Interviews</strong></p><p style="text-align: justify;">Retaining valuable employees is a classic conundrum in HR. The cost of attrition to a company can be devastating especially in terms of the high cost of replacing an employee. Amazon sought ways to understand, anticipate and act on employees’ reasons for departing a job. The Amazon solution came to be named Nostradamus, after the 16<sup>th</sup>-Century, purported French seer who published predictions and prophecies. The system mined employee data— far more data than a human team could ever handle — and analyzed metrics, attributes and changes about them. Nostradamus converted all the data about employees into actionable insights for managers. Those insights provided information and context for decision makers and managers to positively influence employee outcomes in terms of retention. In total, 28 attributes were identified that could produce leading indicators about the likelihood of an employee leaving the company. These ranged from the ordinary (gender, performance rating and years of service), to the complicated (level to which the employee was represented in diversity in the work center as well as engagement and participation data), to the slightly more obvious (recency and frequency of LinkedIn profile updates). Amazon compared a group being analyzed by Nostradamus against a control group and found Nostradamus to have a 70% accuracy rating in predicting which employees would leave the company. Most importantly, however, Nostradamus’ findings were used to hold “Stay Interviews” – interviews held with contented team members to find out what about the workplace was satisfying to them. Stay Interviews have a distinct advantage over the more common “Exit Interviews” as they provide opportunities to “get ahead of the bang,” and make changes that could improve conditions for all employees and reduce attrition. The roll-out of Nostradamus saw a sharp reduction in regrettable losses – to more than 30% in certain business units. There was also a marked uptick in employee engagement – attributed to employees feeling a stronger connection with their manager and the business overall.</p><p style="text-align: justify;"><strong>‘<em>Chatbots</em>’—Answering Tier 1 HR Questions</strong></p><p style="text-align: justify;">With more than 600,000 employees to serve, answering Tier 1 questions represents an impossible level of effort for HR associates at Amazon. Questions like ‘how many days off an employee has’ waste HR teams’ time and pull them away from questions and interactions that require critical thought and a trained perspective. To that end, Amazon added AI-driven employee conversations for Tier 1 support by using chatbots. Highly trained chatbots provide instant, accurate responses to common queries. Meanwhile, with chatbots handling rote, simplistic requests, HR teams were able to engage with employees in more complex, one-on-one issues. In typical Amazon fashion, the results of the experiment were evaluated the initial roll-out of the pilot was not scaled because it didn’t show marked impact on HR efficiency as so much time and effort needed to be invested in quality control of the chatbot support. However, the pilot programs, despite their learning curves, were considered a success and chatbot support was very well received in some areas (such as India) and will be receiving further global deployment.</p><p style="text-align: justify;"><strong>‘<em>Connections</em>’—Daily Employee Sentiment Analysis</strong></p><p style="text-align: justify;">Due to its size, Amazon’s employees represent a city (if not a country) and understanding the morale, direction and desires of all its members is as important to management as elections are to a political entity. Taking advantage of the fact that nearly every single employee is logged on to a digital device at the start of their workday, Amazon instituted Connection or a daily sentiment question for every employee. Every day, a new question gets posed and each employee in a large division (Corporate, Global Operations, etc.) receives the same question. Questions like “Is your manager good at handling stress?” “Do you feel valued in what you’re doing?” “Do you have the necessary resources to complete your tasks?” are designed to elicit straightforward feedback about efficiency, management and corporate lifestyle. Drivers on the road, customer service reps, forklift drivers, software developers, and VPs — all 660,000 employees answer this daily question! This wealth of data and insights are immediately turned into recommendations for managers and are available any time. Normally, this much data would be staggering. But not only does Connection’s parse and process the results, but it also aggregates them and delivers them to relevant stakeholders in real time. Connections enables every manager to be aware of what’s going well with their teams and what opportunities for improvement exist, in real-time.</p><p style="text-align: justify;"><strong>‘<em>Voices of Associates</em>’—Giving the Frontline Employee a Voice </strong></p><p style="text-align: justify;">For management teams throughout Amazon, resolving quality-of-life issues or emergent problems with production can often be a game of catch-up. A long lag time can form between a problem emerging and management knowing about it. This can mean that despite workers knowing about an issue for weeks, it’s not until production slumps, profits dip or morale nose dives that solutions get considered. Voice of Associates (VoA) is a virtual board to which associates can post a question or comment (anonymously if they’d prefer) and receive management’s attention immediately. Other associates can interact with posted questions or comments, voting them up or down making VoA a real-time barometer to indicate which needs are most pressing. Often things that can seem trivial, such as for example the food quality in the canteen for instance or cleanliness of the bathrooms, but these issues are actually top-of-mind for associates. For managers to be able to see, first-hand and immediately, the concerns that are most pressing means understanding problems from the perspective of the employees and having the data to resolve them quickly. Amazon’s implementation of VoA gives associates on the frontline a voice to ask questions of management and provide comments about their (good and bad) work experiences. Creating the forum and making management accountable in a timeframe of days, rather than weeks or quarters, resulted in employees feeling valued as the data supported. Deployment of VoA in work centers resulted in higher engagement and correlated with lower attrition. Combining VoA with Connections gives managers enough data to provide a leading instead of a lagging analysis. Rather than having to wait until emergent problems were causing widespread issues, managers could create word cloud analysis of Connections and VoA responses to get ahead of high-interest topics in the mind of employees.</p><p style="text-align: justify;"><strong>‘<em>Forte</em>’—Finding Your Super Performance Strength </strong></p><p style="text-align: justify;">Performance reviews are a necessary instrument for any company and Amazon is no different. Providing helpful feedback to employees while highlighting a roadmap for success can get mired in paperwork, be stymied by human emotion and reaction, and overlooked or given short shrift. In looking for a way to highlight strengths while also providing useable feedback, Amazon developed Forte. In fencing, the forte of the blade is the part closest to the hilt. This section of the blade is the strongest, and least likely to bend out of the way of an attacker’s thrust, which is why a parry should be taken on the <em>forte</em>. At Amazon, they adopted this figure of speech not just as a way to approach performance reviews, but as a cultural approach: “<em>What’s your super power</em>?” is asked in many different contexts throughout the business. When an employee’s annual review comes due, employees can opt into a “360-degree performance feedback.” This supplements the yearly appraisal with an opportunity for the employee, managers, peers, and other stakeholders to consider the employee’s <em>forte</em>. The system generates simple questions for the review stakeholders: What does this person do particularly well (What is their <em>forte</em>)? What growth opportunities do you see for this person? In addition to self-assessment from the employee and assessments from managers, the Forte system generates a detailed report about their strengths and what aspects of their work they’re best at and can remain committed. This commitment to a growth mindset and utilization of the integrated feedback system means employees get acknowledged for their best work and utilized to their best advantage.</p><p style="text-align: justify;"><strong>‘<em>Hallmark</em>’—Celebrating Milestones</strong></p><p style="text-align: justify;">Good management and good HR is often simply based on thoughtfulness. At a fast-paced company like Amazon, it’s very easy for normally thoughtful and considerate people to overlook important milestones and dates of employees. The Hallmark application is an easy way to be reminded of work anniversaries, birthdays and other important dates. The system pushes notifications to managers and leaders to make sure they have the opportunity to reach out to employees and associates to commemorate and celebrate important milestones in their life and career. Legendary is the symbolism of the changed color of the batch for employee who reach a milestone anniversary with the company. The system also makes sure that wherever the employee may be, the manager can reach out to them, whether they’re on-site, remote or on a . Making sure everyone gets thought of and acknowledged leads to a positive and rewarding employee experience.</p><p style="text-align: justify;">These are just a few of the innovative, progressive technological and data solutions Amazon has deployed. But these are the successes as the failed or aborted projects that didn’t bear fruit are not listed. Amazon is successful at finding progressive and innovative HR solutions not just because of the technology but because of its culture. Even the best technology can’t be implemented if the company doesn’t embrace the idea that ‘things can be done better.’ And that is truly the key to Amazon’s success—its culture of innovation.</p><p style="text-align: justify;"><strong>Amazon’s Culture of Innovation</strong></p><p style="text-align: justify;">Amazon has written and published lengthy internal documentation that explains their company ethos. Unsurprisingly for a company that was start-up sized just 20 years ago, a central tenet is innovation and invention. But it’s not Amazon’s embrace of innovation that sets it apart: it’s their acknowledgment of the risk involved. Trying new approaches is risky to both profits and careers. Introducing a new technology, changing existing processes, developing a new system could all be expensive boondoggles. But in Amazon’s own words, “<em>To invent you have to experiment, and if you know in advance that it's going to work, it's not an experiment</em>.” Key to Amazon’s success is their dedication to innovation and to protecting risk takers. This attitude, fostered in their 14 Leadership Principles, is a rich soil for ideas to take seed in.</p><p style="text-align: justify;"><strong>The 14 Leadership Principles—You Better Live Them!</strong></p><p style="text-align: justify;">Amazon disseminates 14 Leadership Principles to its associates. They are the explicit concepts to guide team members and leaders at all levels. The list starts with “Customer Obsession” and includes “Frugality” and “Have Backbone,” but the one we’ll focus on is #3: “Invent and Simplify.”</p><p style="text-align: justify;">“<em>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</em>.”</p><p style="text-align: justify;">Amazon leads the way in technological solutions to HR problems not because of their unique position as an e-commerce and technology-forward company. They lead the way because there is one, unified message: all members of Amazon’s teams are expected to continually look for new and creative ways to solve problems. A company can purchase all the technology, all the widgets and all the systems they want, if its employees truly don’t feel empowered to innovate and take risks, growth will halt. For Amazon, if it serves the customer and helps the process, you and your team should be empowered to try it out, and – critically – allowed to fail. But there’s more to innovation than just good ideas. Where many companies get held up is in how to propose, initiate and get approval for their ideas. Enter Amazon’s three-part document known as the DOC, press release and frequently asked questions. This three-part document can be written by any Amazon employee (an “Amazonian”) with a big idea to explain the idea, justify its <em>raison d'être</em>, and answer all external and internal questions. Anyone at any level in the company can write one. The documents are simple yet very detailed and highly uniform.</p><p style="text-align: justify;"><strong>Amazon’s DOC Writing—Ban the Powerpoint</strong>™<strong>!</strong></p><p style="text-align: justify;">The DOC is a six-page single-spaced document written out in a long narrative essay-style single-spaced format with complete sentences and paragraphs (no PPT-style bullet points!). It contains all nuances, principles and features of the intervention. The concept is clearly described (conceptualization), the data are provided and measures of success identified (operationalization) and the processes and support needed to make the intervention successful are clearly explained (execution).</p><p style="text-align: justify;"><strong>Press Release (PR)—Dream Big</strong></p><p style="text-align: justify;">The press release (PR) portion is written from the perspective of the hypothetical future, after the proposed product has been released. From small tweaks to Alexa’s functionality one-day delivery for PRIME customers, the PR portion is always short. Invariably, it is at most one-and-a-half pages long and follows a templated format.</p><p style="text-align: justify;"><strong>Frequently Asked Questions (FAQ)—But Focus on the Details</strong></p><p style="text-align: justify;">The frequently asked questions (FAQ) portion is two parts: the first addresses all questions a customer may have about the product, the second all the questions any internal stakeholder may have. Combined with the PR, the document doesn’t merely explain the product, it also helps guide teams once the product gets approved. Engineers, sales, marketing and executive should all be able to use the PRFAQ after its approval as a starting point for their own research and work. One appeal of the PRFAQ is that its simplicity helps restrain scope creep. If all stakeholders don’t get a clear idea of the proposed new product in a page and a half, it’s likely unrestrained, and a bad product. If there are questions a stakeholder might ask in the future that aren’t covered in the FAQ portion, it’s likely not well-considered enough to begin work.</p><p style="text-align: justify;">If a DOC and PRFAQ get approved and funded, a team is created to champion the project. At Amazon, such a team has an ideal size and is dubbed “a two-pizza team.” These follow the Agile project management methodology and don’t actually have anything to do with pizza, except that their size should roughly be no bigger than what could be fed by two pizzas. Any smaller and they may not have the time and bandwidth to bring the product to market. Too large, and the team will get dragged down by its own weight. The entire PRFAQ process helps to restrain random, arbitrary changes while encouraging customer-focused, profitable proposals that get finished rapidly.</p><p style="text-align: justify;"><strong>Progressive Companies Find Clever Solutions</strong></p><p style="text-align: justify;">As should be obvious by now, Amazon has taken very seriously the challenge of finding innovative solutions to common HR problems. Some of these changes are simply by necessity: finding and hiring 60,000 employees every year would require an unsustainably large HR pool. But most of the changes are by design and aimed at creating a culture that ensures every employee is heard, guarantees each work center is optimized, and getting people with the right talents doing what they are best at. All these improvements are made possible thanks to a culture of innovative improvement in HR.</p><p style="text-align: justify;">In their book, <em>#ZigZagHR: Why the Best HR is No Longer HR </em>(2019), Lisbeth Claus and Lesley Arens wrote that “<em>HR needs a dose of chutzpa: the arrogance, guts and impudence to rock the boat</em>.” Keeping up with ever-changing technologies and finding ways to integrate them into HR practices takes hard work and ambition! Not every company is going to have the problems that face Amazon, and very few are going to have the resources. Yet the lessons Amazon can provide about good governance and forward-thinking solutions are crucial to any and all HR professionals. The world will soon be split between companies who embrace traditional HR practices and those companies who embrace progressive, high-technology solutions and systems. Big data, AI, machine-learning, automation, these are all tools that companies will need to take advantage of if they seek to win the talent war.</p><p style="text-align: justify;"> </p><p style="text-align: justify;"> </p>
KR Expert - Peter Vermeulen
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