August 19, 2015

The Amazon Controversy: Exploring Workplace Justice

SMITH BRAIN TRUST -- In a much-discussed piece in The New York Times, which drew on interviews with more than 100 people, Amazon comes off as a rough place to work. Emails from bosses arrive after midnight, followed by texts demanding answers. Employees are encouraged "to rip into colleagues' ideas with feedback that can be blunt to the point of painful." Every year, the lowest-performing workers are culled, the piece said — and even those who get promoted might get blistering evaluations. "Nearly every person I worked with, I saw cry at their desk," one ex-employee memorably remarked.

The piece, which focused on white-collar workers, also described cases where employees were pushed out when they had to cut back hours because of parenthood or family health problems. Jeff Bezos, Amazon's CEO, responded that he didn't recognize the company that was described and said he would not tolerate any "callous management practices."

Employees and ex-employees immediately began arguing whether the article's anecdotes were representative. But speaking about the culture of unusually frank feedback, Debra L. Shapiro, Clarice Smith Professor of Management at the Robert H. Smith School, at the University of Maryland, and President of the Academy of Management, said she wasn't surprised that employees would have divided reactions. This dovetails with the research on the subject: "Whether criticism is perceived as 'abusive' versus 'performance-demanding' depends on a variety of situational variables," Shapiro says. "Negative feedback gets interpreted differently depending on how much you trust the person who is communicating this. People tend to more positively interpret actions of those they trust and to more sinisterly interpret actions of those they don’t trust."

"Moreover, how much people trust others is socially influenced, for example, by whether they have heard good or bad things said about the person delivering negative feedback," Shapiro says. When employees feel abused, they may reach high levels of performance for a short time, as they try to improve their standing. "But in the long term they will suffer burnout and low self-esteem," she says.

High employee performance tends to occur when employees perceive that their corporate culture is fair, a judgment that is guided by three aspects, Shapiro explains. Employees see rewards going to people who deserve it (there is distributive justice). Employees see reward-allocations as being guided by reasonable and transparent criteria (there is procedural justice). And employees see communications conducted in ways that enhance feelings of respect and dignity (there is interpersonal justice).

Both in the Times article and in the subsequent reactions online, some Amazon employees rejected the portrayal of their workplace as cutthroat, so Shapiro says she's unable to say whether interpersonal justice is lacking in that workplace. "But employees in the piece seemed to be saying, more uniformly, that if you worked hard you would be rewarded," she says. This suggests to her that Amazon employees do perceive procedural and distributive justice.

What's more, Amazon recruiters appear to be up-front about how demanding their company's culture can be. "The fact they give realistic job previews also explains why employees at least temporarily thrive there," Shapiro says. "They select in. Employees know what they are choosing."

Of course, bosses punishing people for taking care of ill family members is a different story. Such behavior could be seen as violating universally shared sacred norms, which would certainly create feelings of unfairness and damage morale. Amazon has pushed back hard against suggestions that such acts are prevalent.

"I admit I read this article with a little bit of skepticism," Shapiro says. "If Amazon is reaching a high level of performance, and maintaining a high level of performance over a long period of time — and they have been — then many of its employees must perceive the work environment as fair, albeit demanding. Otherwise, that level of performance would not be sustainable."

Subrahmaniam Tangirala, an associate professor of management at the Smith School, found Amazon's commitment to stack ranking, aka the "rank and yank" system, noteworthy. That method of employee evaluation and workforce management has become less popular in recent years.  Its most famous practitioner, GE, has since moved away from it. Under such a regime, managers often fire a certain proportion of the lowest performing workers. Tangirala says: "If you are basing it on the right criteria, there is research that suggests it can increase the quality of the workforce, and potentially the performance of that workforce — especially in the early years, because you are able to get rid of deadwood." However, he adds, "the payoff decreases over time."

On the other hand, he says, "research has also identified drawbacks. Studies have found it reduces comradery and teamwork in your company. And it makes employees uncomfortable, compared to traditional evaluations. Most of us feel we should be evaluated against objective standards rather than against each other."

Shapiro adds that the presence of objective performance standards is one way employers can bolster perceptions of fairness.


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About the University of Maryland's Robert H. Smith School of Business

The Robert H. Smith School of Business is an internationally recognized leader in management education and research. One of 12 colleges and schools at the University of Maryland, College Park, the Smith School offers undergraduate, full-time and flex MBA, executive MBA, online MBA, business master’s, PhD and executive education programs, as well as outreach services to the corporate community. The school offers its degree, custom and certification programs in learning locations in North America and Asia.

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