Amazon staff have announced strike action over pay next month, hitting Black Friday, one of the busiest shopping days of the year. The GMB Union said the walkouts by its Coventry members would potentially see more than 1,000 workers take part. For its part, Amazon said it was proud to offer its “talented” staff competitive wages.
Interestingly, this looming conflict was predicted in one of our recent articles. In it we said, ‘Since its inception, Amazon has focused relentlessly on its brand purpose “to be the earth’s most customer-centric company”, creating tremendous value for customers, rather than focusing on the return for shareholders or even its employee experience. Providing Amazon addresses some of the poor employee practices it has been criticised for it will be able to sustain its success. So, balance is vital.’
This balance now has a serious wobble. But why has this issue come to a head now after Amazon’s success over so many years?
The answer is that employee expectations are changing. We have just conducted our annual survey ‘What Matters Most’ where we survey employees in the UK to find out what drives their satisfaction and retention. The findings are similar to last year’s but some trends are accelerating. For example, over 80% of employees feel that their work is simply a way to make money and that their family and social life are what drives them, so competitive pay is considered the most important factor by 71% of employees. Flexible working was selected by 62%, but this has increased from 58%, moving from fifth to third place since last year’s survey, and so is becoming increasingly important. Working for an employer that takes care of its people was selected by 78% of respondents as their number one expectation of an employer and this, in turn, drives retention. 32% of respondents fell into the ‘detractor’ category meaning that they are highly critical, likely to leave, or dissuade others from joining their organisation. In a tight labour market this matters.
In our work with clients, we use the ‘Service-Profit Chain’ model which suggests that profitability is a result of a great customer experience which, in turn, is a result of a great employee experience. And this is borne out by our research. Our analysis found a very high correlation (0.69) between brands who were perceived to provide a great customer and a great employee experience. We found a similarly high correlation (0.70) between the employee experience and the statement ‘Senior leaders act in a way that is consistent with our purpose and values’. So, the research shows that brand purpose, the customer experience, the employee experience, and the behaviour of leaders are all connected and drive retention. So, what does this mean for Amazon?
The cause of Amazon’s troubles: A deeper dive
The strikes planned by Amazon’s workforce in the UK offer a rare insight into the dissatisfaction bubbling beneath the surface of its sleek, customer-friendly facade. Employees cite grievances related to wages, poor working conditions, and the overarching ethos of the company towards its workers. Amazon’s slick delivery, low prices and clear customer promises, the cornerstone of its business model, have ostensibly been met at the expense of its employees’, creating a paradox that is not easy to resolve.
As the company wrestles with these internal tensions, external pressures are escalating. Customers, once primarily concerned with product quality, price and delivery times, are becoming progressively ethical in their consumption, valuing brands that champion social responsibility. The strikes not only disrupt the finely tuned machine of Amazon’s operations but also tarnish its image amongst a demography that is increasingly conscious of worker rights and corporate responsibility potentially denting its appeal among younger consumers.
Re-balancing the Commercial, Customer, and Social Dimensions
Navigating through these turbulent waters necessitates a balanced approach that harmonises commercial ambitions with an acute awareness and adherence to social and customer-oriented principles.
- Commercial Objectives:
Amazon’s prime commercial objective is customer satisfaction through slick operational processes. This has created a heavily industrialised model that treats employees as ‘cogs in a wheel’. However, sacrificing employee welfare at the altar of operational efficiency is not only ethically questionable but also unsustainable in the long term in the light of our survey findings. A striking workforce means a poor customer experience and a spanner in the well-oiled machine that is Amazon’s hallmark.
- Customer Expectations:
While customers are drawn to the company’s cost-effectiveness and efficient customer experience, their allegiance is becoming heavily influenced by ethical considerations. Consumers expect a great customer experience but not at the cost of a poor employee experience. Remember, most consumers are employees too, and they are increasingly projecting their values onto the brands they purchase from. Satisfying customer expectations in 2023 demands a balancing of purposes to ensure that ethics and efficiency are not mutually exclusive.
- Social Obligations:
As a global entity, Amazon is inherently woven into the social and economic fabric of the markets in which it operates. The strikes spotlight the need for Amazon to revisit its social obligations, ensuring that its practices are not merely lawful but also ethically and socially responsible. This means paying taxes in the jurisdictions in which it operates and crafting an employee experience that fosters worker satisfaction and conforms to the norms in the labour market it operates within.
What should Amazon do next?
So, what would we advise Amazon, or indeed any of our clients, to do to resolve this dilemma?
- Empathise with Employees:
The resolution of the forthcoming strikes and prevention of future dissent hinges on Amazon’s ability to recognise that employee and customer expectations are changing and that it must adapt its business model and employee experience accordingly. It needs to engage with its workforce, understand their grievances, and implement meaningful changes. This involves creating a safe, motivating working environment, offering competitive remuneration, but most importantly, ensuring that employees feel cared for.
- Transparent Communication:
Whenever there is dissent, trust is destroyed. Establishing channels of transparent and authentic communication with employees can help bridge the trust gap. Amazon must be open about its practices, the steps it’s taking to rectify issues, and the measures in place to safeguard the welfare of not only its own employees but ultimately even the suppliers it partners with.
An exemplar in this area is the US fashion retailer Everlane. It offers complete transparency of pricing and sourcing. The brand calls it ‘Radical Transparency.’ It says this on their web site:
We spend months finding the best factories around the world—the same ones that produce your favourite designer labels. We visit them often and build strong personal relationships with the owners. Each factory is given a compliance audit to evaluate factors like fair wages, reasonable hours, and environment. Our goal? A score of 90 or above for every factory. https://www.everlane.com/about
- Telling the Brand Story:
Educating customers about the steps being taken to improve the employee experience adopt ethical practices can shape consumer perception. Telling the story in this way further helps to strengthen brand loyalty. Patagonia, the environmentally friendly leisure wear brand, is masterful at this, weaving together the values of the brand, the customers, and the employees in a rich tapestry of shared experience.
In conclusion, Amazon built its brand through unmatched product availability and reinforced its position through world-class customer experience. It now needs to sustain it through a best-in-class employee experience.
Written by Shaun Smith.
Interested in learning more about ‘What Matters Most’ to employees? In partnership with data, market research and advisory company, Savanta, Caffeine have surveyed over 1000 UK employees to find out, ‘What Matters Most’ – what do employees want and need from the companies they work for and what happens when they don’t get it?
Join us for our webinar on Wednesday 1st November, 12.30-1.30pm to hear the results and learn more.
Click here to register: https://lnkd.in/eGShh8WG