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Application of Management Theories to Amazon

Paper Type: Free Essay Subject: Management
Wordcount: 5130 words Published: 8th Feb 2020

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Table of Contents

I. Introduction

Amazon introduction

II. Body

Taylor’s scientific management

Taylorism & Amazon warehouses and shop floor practices

Critics of Taylorism and its irrelevance in Amazon

Other theories

McGregor – Theory X and Y

Mayo’s Hawthorne Works Experiment

Amazon’s culture

III. Conclusion


  1. Introduction

For such a long time, management concept is generally defined as managing the work of people until Frederick Winslow Taylor initially called it as “science” in his book “The Principles of Scientific Management”, which was published in 1911. After his introduction of the new theory, it created a strong influence in America and Europe’s factory system in the early of the twentieth century because Taylor invented a new process to maximise output and productivity by examining human behaviour and setting formal rules in the operation of factories (Udin & Hossain, 2015). He also believed that scientific management (or Taylorism) is “one best way” in designing and performing any works on the shop-floor practices (Taylor, 1911). Looking from the point of views of previous papers, the relevance of Taylor’s principle to the practices of factory shop-floor is a controversial question in the modern world until Vijai et.al (2016) conducted a benchmark work study by using an interdisciplinary approach. Vijai and his co-workers used the sample size of 15 observations in the repetitive manual element and Computer Numerical Control (CNC) – machine factor from the shop-floor of a heavy electrical company in Hyderabad, India. From their findings, there is evidence of Taylorism in the modern shop-floor practices in manufacturing organisations when the standard process of operation was established and executed for each element of the worker’s jobs. Although this study provided empirical proof for the high relevance of Taylor’s theory, it excluded the sector of service and retail industry that also plays an important role in the modern business. This limitation was covered by Jaikuma (1986) and Jeacle (2004), who attempted to convince that new principles in scientific management were witnessed in the modern retail shop-floor. In another research, Gronroos (1994) focused on finding the existence of scientific management in the modern industry that mainly concentrated on service-oriented companies. Nevertheless, the study appears to show that old management principles as Taylorism become less appropriate and effective when there are different trends affecting the changes of service management, for example, the development of new technology, the increase of educational level and living standard of the workforce (Gronroos, 1994). These trends have drawn the attention of this paper to re-examine the relevance and suitability of Taylor’s principle in the service and retail sector under the research of management practices in a typical company: Amazon.com, Inc. – one of top three most valuable brands in the world with a brand value of $101 billion (Monaghan, 2018), especially in the context of the emergence of modern management theories.

Amazon introduction

The company was established in 1994 and located the headquarter in Seattle, Washington, USA. According to 2017 Annual Report, the company is providing services to customers through its retail websites and physical stores with hundreds of million products (electronic devices, books, clothing, sports equipment, healthcare and beauty products, home appliances) which are sold by Amazon and other third parties. Amazon also supports Amazon Web Services (AWS) for developers and enterprises with a set of storage, database and other services (Amazon, 2017). At present, the company has organised the operation into three segments, North America, International and Amazon Web Services (AWS). Among them, North America and International are two main segments, which contributed more than 90% of total net sales ($178 billion) in 2017, increased 31% compared to the previous year. In these two segments, the company has a huge network of fulfilment centres, warehouses, shop-floors and delivery systems to provide digital delivery and physical stores for customers to purchase products. Operating a complicated system of warehouses and fulfilment centres is not an easy task to generate a huge profit, especially Amazon’s management practice is one of the biggest concerns when “the giant” needs to manage the total number of employees of 566,000 (including full-time and part-time) as of December 31, 2017. 

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Therefore, in the interest of Taylorism and Amazon case, this paper will investigate the management practices of Amazon, particularly in its warehouses and shop-floors – the main generated profit segment of the company on purpose of examining the appropriation of Taylorism. This research also provides some critical points to find out aspects that Taylorism cannot fully explain in the case of Amazon and uses other theories to further discuss its management and shop-floor practices. The paper is structured into three main parts. Firstly, it will explore the management and shop floor practices in Amazon using Taylorism. Secondly, the next section will provide the discussion about the irrelevance of using Taylorism to analyse the sophisticated management practices in Amazon. Finally, the last one will use other theories in terms of motivation, culture, and leadership to fully explain Amazon management practices.

  1. Body

Taylor’s scientific management

Taylorism was introduced in the context of the Industrial Revolution, which started in the eighteenth century in Great Britain and steadily spread to a larger scale. This revolution generated the idea of improving productivity in factories with the transformation of the machine to gradually replace the human workforce (Kiechel, 2012). Taylor, in his point of view, realised that to enhance productivity, it needs to eliminate the waste of national resources and materials (Taylor, 1911). He also viewed that human labour can be analogous to the machine if they are “engineered” to work more efficiently (Koumparoulis & Vlachopoulioti, 2012). By such way, Taylor generalised the rule of thumb and transformed it into “time and motion study” through splitting tasks into different and smaller steps, scientifically observing the behaviour of workers, and measuring the precise time for them to complete each step. Each motion of work is designed to utilise the maximum capacity of workers through training to generate high profit for organisations (Udin & Hossain, 2015). Taylor also introduced “piece rate”, which is a new wage system to pay a fixed salary per unit of production based on the performance of jobs in order to motivate workers to work harder. Another core principle in Taylorism is the idea of specialisation between planning and executing. Specifically, management must focus on setting up systems to plan, control and supervise employees while workers must concentrate on manual labour in accordance with the plan of managers. The idea of Taylor is analogous to Adam Smith in his book “The Wealth of Nations” published in 1776. Adam Smith approached the specialisation of labour on a broader scale – a nation to convince that “Division of labour has caused a greater increase in production than any other factors” (Smith, 1776). It is also an explanation for the reason why some countries are wealthier than others and the necessity of free trade among nations to get benefits when concentrating its resources and labour to manufacture products that it has a competitive advantage. To sum up, scientific management pioneered by Taylor has four philosophy:

  1. The management develops the science of work for workers to replace the old rule of thumb method.
  2. Managers scientifically select, teach and train the labour workforce to develop their own capacity of performing tasks.
  3. The management cooperates to workmen to make sure the jobs done aligned with principles of science that were developed.
  4. There is an equal responsibility between management and execution, then conflicts will be eliminated when managers and workers are specialised in their tasks. 

With these principles, Taylor has a strong belief that scientific management is particularly designed for shop floor tasks, which is partially illustrated in the case of Amazon.

Taylorism & Amazon warehouses and shop floor practices

From the evidence collected in the secondary source of data, mainly from the journals, it seems to appear that there probably exists the presence of Taylorism in Amazon warehouses and shop-floor practices with the use of advanced technology. In the warehouses, employees are monitored by a sophisticated electronic system to control and manage the number of target boxes that they need to pack every hour (Kantor & Streitfeld, 2015). Meanwhile, in the office for management, the company uses a complicated set of management, data and psychological tools to set the target for white-collar workers to perform jobs in warehouses. It means that there is a specialisation of labour in Amazon when managers focus on the task of planning, setting targets for workers and the workmen to concentrate on the jobs of packing boxes in accordance with their goals proposed by the management.

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 One of the similarities between Taylorism and Amazon management and shop-floor practices in warehouses may be the way “time and motion study” is applied to assess employee’s performance. Every motion of workers is under the control when in huge warehouses, workers have hand-held computers to record their movements (Spicer, 2018). He also mentioned that Amazon has a wristband, which received a patent but did not put into use, to control the hand movements of workers via “haptic feedback”. Currently, stock pickers in warehouses are reported to be under the observation rigidly of cameras that strictly controlled their behaviours (Spicer, 2018). Based on a study of motion and observations at the workplace, the performance of employees is continuously measured by the algorithm, which is running as a tool to measure and enhance the performance of white-collar employees over time (Kantor & Streitfeld, 2015). Workers at the warehouses, therefore, receive the salary in accordance with their performance assessment. For example, at Florence warehouse, the wage system or “piece rate” is calculated by 50 cents per hour that can be raised every 6 months together with a monthly bonus after taking into consideration of personal attendance, outperformance to exceed production goals of pushing out 600,000 items per day (Rittenhouse, 2017).

To sum up, most of principles and terminologies in Taylorism appear in the management and shop-floor practices of Amazon when there is evidence for the division of labour, time and motion study, and “piece rate” salary system according to the performance evaluation.

Critics of Taylorism and its irrelevance in Amazon

Despite the fact that most of the key points can be clarified by Taylorism but actual management practices in Amazon is more complicated and Taylorism fails to explain to them as it under-looked some important aspects.

Firstly, there is no equal right between managers and employees in practices when employees at warehouses are treated as a machine or robot, not human. It is also one of the limitations of Taylorism when he implied that human labour might work effectively as the machine provided that they are “engineered” to do so (Koumparoulis & Vlachopoulioti, 2012). The ideal workers or effective workers in Amazon are assumed to be Amabot – human-robot of Amazon (Kantor & Streitfeld, 2015) without the time of breaks. They even do not have time to go to the bathroom as a fear of missing productivity targets. They spend most of their lunch breaks waiting in line for onerous security screenings and feel pressured with under-report warehouse injuries (Sainato, 2018). Although Amazon uses robots in fulfilment centres (Florence warehouses), the work done is not relieved but turns workers into robots without any time for relaxing.   

Secondly, the resistance in the behaviours of most managers to pay the piece rate or remuneration to workers makes it difficult to satisfy Taylorism principles. Clegg et.al (2016) views that few managers accept to pay for productivity in Taylor’s system. They want to adopt piecemeal and efficiency from time measurement but not rewards in form of bonus using piece rate. In the case of Amazon, although workers at warehouses have to work under the poor conditions, for example, ambulances were called 600 times in three years at British warehouse due to work abuse to employees (Sainato, 2018), or workers at an eastern Pennsylvania warehouse fell down under 100-degree heat when the workplace was not installed with air-conditioning (Kantor & Streitfeld, 2015), employees cannot get appropriate compensation and bonus. Some local warehouses try to reduce wages, for instance, Lexington County, South Carolina (decrease over 30%), Chesterfield, Virginia (17%) and Tracy, California (16%) (Sainato, 2018). Additionally, Amazon also claimed that employees can receive a promotion with the title of an ambassador but, this position does not offer any additional payment (Rittenhouse, 2017). This can be partially understood by a decline of the traditional retail industry of America and a fierce competition among other competitors internationally (Alibaba, eBay, JD) which force Amazon to exploit employees (Sainato, 2018).

To sum up, these two reasons are partly caused the sceptics of Taylorism in analysing the management and shop floor practices. More importantly, there might be the possibility that the principle or assumption of Taylorism does not hold in the case of Amazon. It is because of the contradiction between the reality of Amazon and Principle 4 of Taylorism, which states that managers and workers must collaborate closely, then conflict is eliminated (Clegg et.al, 2016). However, the conflict happened when thousands of Amazon warehouse workers across Europe took actions to object harsh working conditions on the biggest sales day of the year – Black Friday in Germany, Spain, Italy, Poland, France, and UK distribution centres on 24 November 2018 (World Socialist Web Site, 2018). The strikes partially reflect the assumption of Taylorism that may not true in the case of Amazon. Notably, workers seem to view that going on strikes is the primary way to fight for the unfair treatment from the company as historically, in Italy, after strikes, Amazon agreed to end unfair treatment on scheduling practices (Sainato, 2018).

Hence, Taylorism can partly explain the artefacts of Amazon such as how managers use techniques to manage warehouse workers, and how employees are paid based on their performance. Nevertheless, it is not the whole picture when there are some doubts showing that Taylorism might not be fully appropriate to explain management and shop floor practices in Amazon such as motivation, culture and leadership.

Other theories

The first thing that Taylorism fails to explain in the case study of Amazon is the worker’s motivation, which is a part of management practices. Taylor in his book implied that money is the only motivation for workers “what the workmen want from employers beyond anything else is higher wages, what employers want from workmen most of all is low labour costs in manufacture” (Taylor, 1911). However, it is not really true when there are more important and specific factors to determine the motivation of employees, which linked to individuals or jobs themselves. If the assumption of Taylorism holds to be true, then, in Amazon warehouses, where is described as standardized jobs (packing, stock picking), poor working conditions, employees may still feel motivated when they are paid money for the jobs. In fact, employees do not feel so, even for new employees. Over through tough recruitment to become the best candidates for the job, the newcomers often feel “dazzled, flattered and intimidated” by responsibility on their shoulders (Kantor & Streitfeld, 2015).

McGregor – Theory X and Y

From previous literature, motivation can be viewed in the employer’s perspectives – McGregor theory’s assumption of employers (McGregor, 1960). He introduced two theories X and Y. At the beginning of a few decades in the twentieth century, Theory X is conquered in business after the mechanical system of Taylorism (Mohamed & Nor, 2013). Hindle (2003) views that Theory X is the autocratic style, emphasizing on “productivity, on a concept of a fair day’s work, on the evils of featherbedding and restriction of output, on rewards for performance”. Theory X is a negative way that employers see their staff, who are reluctant to do the jobs and try to find ways to reduce work output or do the jobs with little effort (McGregor, 1960). In another word, managers have the responsibility to identify second-class workers, who are naturally lazy, and “soldier” them into first-class by urging them to work and monitoring their behaviours rigidly to prevent the situation of doing less. However, the conflict potentially arises when managers use penalties or punishment towards employees to eliminate the cases of avoiding the work, which may not help to improve the relationship at workplace between them.

On the other hand, Theory Y states that employees will become productive if employers see employees positively and delegate more trust and responsibilities to them. McGregor (1960) also believes that Theory X is simply the satisfaction of low-level physical needs, which cannot expect to be productive. Thus, in the case of Amazon warehouse, strict rules and punishment to force employees to attain productivity goals, for example, employees are not allowed to sit on the company time, workers will be reduced 10 hours from vacation if not taking enough mandatory overtime shift (Rittenhouse, 2017), invisibly cause the fear for workers of missing targets. They just try to complete the job in time bounce without any thoughts that they really want to do so “It’s a job, it’s not a career” (Rittenhouse, 2017). Productivity and trust are truly created when employers change their negative views about the employees.

Mayo’s Hawthorne Works Experiment

Besides the employer’s perspectives and motivator factors, employees also need human relation and organisational culture that can be built through management practices. These points were emphasized in the study of Mayo with Hawthorne Works Experiment. Although the initial purpose of Mayo study is to develop Taylor’s scientific management, the finding is strikingly contradictory to Taylor’s beliefs. Mayo also implicitly agreed that monetary reward is not the determining factor of work satisfaction, which should be created by working conditions, attitudes, communications, and positive management response (Mayo, 1946). For such standardized and simple jobs such as “standing, walking, lifting and bending” (Rittenhouse, 2017), Clegg et.al (2016) argue that specialization of jobs with a high degree of centralization apply best for simple and repetitive tasks, however, this may be no longer true especially the business environment changes significantly. Workers of standardised and repetitive tasks in the modern world still have the rights to require motivation factors like other jobs. Mayo also emphasized the importance of the informal group in the workplace that subsequently causes the sub-cultures in the organisation. He believed that group dynamics and social makeup can create greater participation of workers, and openness in the workplace as well as groups (Onday, 2016). Particularly, in Amazon, informal groups play a substantial role in asking for benefits from the company. They are grouped together to go for strikes, recently in Europe, to fight against unfair treatment of Amazon in its warehouses on Black Friday. Each geographical group conducted the strikes in their countries to ask about the rights of workers in terms of wages, appropriate management, and break time (World Socialist Web Site, 2018). Importantly, they are linked together to form a larger group in the world, which forces Amazon to modify their rules and conditions. Although Clegg et.al (2016) viewed that Taylorism does not explicitly refer to culture, Parker (2000) still argues that the organisational culture in Taylorism is “single utilitarian to minimise employee resistance and maximise productivity”.

Amazon’s culture

The culture in Amazon, more precisely, warehouses, might be not integrated when the norms and beliefs of the company and employees are not analogous, which results in the conflict between them. Mayo (1946) also refers that there would be cultures in the informal organisations and the way of management causes the cultural effect by the collection of worker recognition. To be more specific to Amazon case, its culture focuses on “Leadership Principles”, which is clearly stated on its website and probably applied in every function in its company. Briefly, these principles are privileged for leaders, accordingly, leaders are owners and they are always right a lot because they have strong business judgement and good instincts (Amazon n.d).

It appears that the culture in Amazon in general and Amazon’s warehouses in specific is kind of bureaucratic. In this culture, action can be taken by formal rules from managers or supervisors with a high hierarchy in the organisation (Weber, 1976). For example, management work is to set up goals and employees need to follow the goals rigidly. Otherwise, they cannot receive an additional bonus. Or they need to conduct mandatory overtime shift unless they want to cut 10 hours from vacation time to work instead. Owing to the strict rules, which may be not flexible in some occasions, for example, World Socialist Web Site (2018) cited the case of a pregnant woman, who still needed to work hard to ensure the productivity while she felt depressed with a lot of work, it is partially caused the different cultural effects on employees. This may be one of the reasons for the differentiation in culture of Amazon, causing the conflict of interests between managers and workers.   

  1. Conclusion

In conclusion, the paper provides arguments and evidence in the case study of Amazon in order to analyse the management and practices at its warehouses by re-examining the relevance of scientific management in shop-floors. From the investigation and research earlier, it is drawn a conclusion that scientific management can partly explain the management of Amazon warehouses in terms of the way that the company conducts the specialization of labour, performance measurement and salary based on the level of productivity. Due to the sophisticated management practices in Amazon, scientific management appears to not fully reflect the real situations of the company, especially in the aspects of motivation and organisational culture. The paper also points out the weaknesses of scientific management such as the unequal right between managers and workers, the resistance of managers to pay bonus for employees in form of piece rate, the wrong assumption of Taylorism in factors of motivation, and proposes other theories in order to clarify the matter of concern namely McGregor’s Theory X and Y, Mayo’s Hawthorne Works Experiment for culture effects and Weber Bureaucracy. Limited by the time frame, the paper reveals some drawbacks that cannot be covered in the discussion such as a small scale of the paper, which is only focusing on the management practices in warehouses of Amazon, not the whole company. Further research is also suggested in the case study of Amazon such as Amazon management practices under the view of different management theories.


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