Amazon’s Performance Management Needs It’s Own Name: Bezoism
The e-commerce giant has supercharged systems of management.
The e-commerce giant has supercharged systems of management.
For Austin Morreale, working as a stower in an Amazon warehouse was tough to the point of being physically unsustainable, but nonetheless rewarding. The hours were long and the work gruelling. The night shift he took at Amazon on top of his day job as a case manager for a nonprofit group was plainly unsustainable, but he only planned to do it for a summer, anyway. He needed the money, the immediate access to health insurance, and the change of pace. He lasted six weeks.
Mr. Morreale, 50 years old, worked at the LGA9 fulfilment centre in Edison, N.J., and says that while many people he trained alongside quit within their first two weeks on the job, he “actually had a good experience there.” But it was hard work—which in some ways reminded him of his days as a high-school athlete. “It was 10 hours of pretty much mind-numbingly boring work, pretty much standing in the same position for the whole shift,” he said. “But at the end of the shift, I was drenched in sweat and aching like I hadn’t ached since I was playing competitive soccer.”
Mr. Morreale was slow, he says, and kept messing up the patterns for efficiently putting items on robotic shelves—known as stowing—that he had been taught. He couldn’t “make rate”: Amazonese for keeping up with the pace of work. But, he adds, his managers were generous and “super-invested” in helping everyone on his team improve.
On the job, no one ever stood behind Mr. Morreale and barked at him to work faster. They didn’t have to. Twice a day at a stand-up meeting, his shift managers told the group how everyone was doing. They knew because Amazon’s software, and an assortment of sensors in the warehouse, tracked workers’ every move. “Those numbers are always in the back of your head somewhere,” he says.
Mr. Morreale’s story represented pretty much the median experience of the Amazon fulfilment centre workers I’ve interviewed. On one end of the spectrum, there were those who found the work intolerable, and lasted less than two weeks. At the other end were those with an appetite for the work and a tolerance for the long hours of isolation and repetitive motion it entailed.
More than a century ago, Frederick Winslow Taylor and Henry Ford pioneered systems for speeding up work that we take for granted today. What Mr. Morreale experienced was Amazon’s 21st-century, algorithm-driven successor to Taylorism and Fordism. It’s a mix of surveillance, measurement, psychological tricks, targets, incentives, sloganeering, Jeff Bezos’ trademark hard-charging attitude toward work, and an ever-growing array of clever and often proprietary technologies. Taken as a whole, this system is novel enough in the history of work that it deserves its own name: Bezosism.
At this very moment, Bezosism is diffusing through the world of work, rewriting the source code of the global industrial machine. If it proves as popular and durable as the systems of the organization on which it builds—from Fordism to the Toyota Production System—it could be, along with the e-commerce and space companies he built, Mr. Bezos’ most important legacy.
Depending on how the company practicing Bezosism wields its power, this system of technologically supercharged management can be benevolent, or sinister, or both.
Take, for example, Amazon’s well-known metric for evaluating worker performance—the “rate” that Mr. Morreale was unable to hit.
In Amazon’s fulfilment centres, human productivity is measured by an overall pick or stow rate calculated for each worker at a robot-fed pick-and-stow station.
Imagine the delight of Taylor, who conceived “scientific management” in the early 20th century, or Ford, if they could know, to the millisecond, how long it took every worker to complete a task, every day, in every facility they owned. Imagine what early time-and-motion experts Frank and Lillian Gilbreth could have accomplished had they been able to discard their film cameras and replace them with millions of hours of video captured from the digital cameras that watch every station at Amazon’s fulfilment centres. Imagine how much additional just-in-time efficiency in inventory levels, capital allocation, and automated reordering Taiichi Ohno and Eiji Toyoda, creators of the Toyota Production System in postwar Japan, would be able to extract from a system that knew the precise moment a worker plucked an item from a shelf and sent it on its way.
That Amazon has all this data—and can manage its workers, evolve its automated systems, and innovate new robots based on it—is one of the reasons it’s the most valuable retailer on earth.
The overall rate at which workers must complete a task in an Amazon warehouse, whether it’s putting items on shelves, taking them off, or putting them in boxes, is calculated based on the aggregate performance of everyone doing that task in a given facility, says an Amazon spokeswoman. This floating rate, Amazon argues, shows that none of its employees is being pushed beyond what’s reasonable, because that rate is something like an average of what everyone in a warehouse is already doing.
“We don’t set unreasonable performance goals,” Mr. Bezos, now Amazon’s chairman, wrote in an April letter to shareholders.
But this is not how many Amazon workers, even those who regularly exceed the rate at their facility, see things. Anyone can have a bad week—maybe they’re sick, or exhausted from taking care of a child or relative, or maybe they’re developing one of the repetitive stress injuries that are not uncommon when people have to perform the same task for an entire 10-hour shift, with only a half-hour for lunch and two 15-minute rest breaks.
On Wednesday, California legislators advanced a bill to regulate companies like Amazon that employ quotas and other algorithm-driven work practices at their warehouses.
Knowing that if you don’t make rate you’ll get a warning, triggered by an algorithm, and if it happens often enough your job is in danger, can be a powerful psychological spur to work harder, and possibly to exceed your physical limits, as Mr. Morreale discovered.
One day at the fulfillment center, he pushed himself too hard. Lightheaded and clammy, he sank to his knees, a no-no that Amazon’s performance algorithm treats as “time off task.” Associates aren’t allowed to sit down while on the job, unless it’s lunchtime or one of their 15-minute breaks.
“I don’t know if it was overexertion or what it was,” Mr. Morreale says. “My supervisors never themselves made me feel pressure. I put that pressure on myself: ‘Oh, I’ve gotta hit those numbers. Oh, I’m doing terribly.’”
In his six weeks at Amazon, he developed carpal tunnel syndrome, which abated only after he quit the job, Mr. Morreale says.
A floating rate also pits all workers at a facility against one another, says Tyler Hamilton, a worker at an Amazon fulfilment center in Shakopee, Minn., who was 22 years old when I first interviewed him in 2019.
“If there are people who cut corners, if there are people who take tons of coffee and tons of energy drinks to go faster, that raises the cumulative rate,” says Mr. Hamilton. “Meaning, if you want to keep up with the average, then you have to cut corners and drink coffee and energy drinks at every break.”
Cutting corners and getting juiced on caffeine isn’t just something people do when it’s Prime Day or peak season. For many, it’s what they do all the time. “I mean, the coffee is free out of the machines,” adds Mr. Hamilton. Another thing that is free at Amazon warehouses is aspirin, available from no-cost vending machines scattered throughout the warehouse.
It’s difficult to quantify the impact of Bezosism on workers, but some have tried. In 2019, the last year for which data are available, Amazon reported 5.6 injuries per 100 workers. The average rate for warehouses in the U.S. that same year was 4.8 per 100, according to company and federal workplace data.
Amazon has argued that its injury rates only look high because the company’s safety culture means that it obsessively documents incidents in a way that its competitors do not.
Amazon has introduced a number of initiatives to reduce worker injuries in recent months. Those include its Working Well program, which has now been rolled out to 1,000 of Amazon’s approximately 2,000 facilities world-wide, says Heather MacDougall, vice president of workplace health and safety. (Amazon has more than 750,000 employees in positions that involve physical labour or management of people in those positions.) The company also added “strive to be the earth’s best employer” to its list of leadership principles and announced a partnership with the not-for-profit National Safety Council to find new ways to reduce the incidence of musculoskeletal disorders, which are the most common type of injury in warehousing and logistics. (These include, for example, repetitive stress injuries.) The company has also pledged to spend $300 million in 2021 to increase safety.
While it might seem as if the technology Amazon is using inevitably leads to a speedup in the pace and demands of work in its warehouses, former Amazon executives who designed these systems in the first place told me that their effects on workers are entirely up to the company’s leaders.
Kiva Systems, the robotics company Amazon acquired in 2012 and refashioned into Amazon Robotics, and which developed the robotic drive units that move shelves in Amazon’s fulfilment centres, used to serve customers other than Amazon. When Kiva’s engineers and managers first started rolling out their robots in warehouses belonging to companies like Walgreens, employees loved them, says Kiva founder Mick Mountz, who became an Amazon executive after the acquisition, and left the company in 2015. And why wouldn’t they? Employees went from walking 10 or more miles a day to retrieve items for delivery to walking almost none, because the inventory came to them, atop robots.
But imagining that a new technology that can make someone more productive will ultimately mean they have to do less work is a classic mistake. History shows that every time we automate a task, we tend to use more of the product or service requiring that task, in combination with others, to accomplish some other, more complicated or difficult end.
As Amazon itself puts it in public statements, “The fulfilment centres that have robots often have higher employment numbers because inventory is moved at a faster pace, which requires extra associates.”
A worker using the Kiva system in its early incarnations would typically triple their output, say from an average of 100 picks an hour to 300, says Mr. Mountz. But it wasn’t as if the Kiva-using companies then reduced all their warehouse employees’ hours to a third of what they once were while paying them the same wage. Instead, Staples and Walgreens, both early customers of Kiva, used their workers’ increased productivity to increase the output capacity of their warehouses; store and ship a wider range of products; shorten the amount of time required to fulfil an order, and ultimately either lower the cost of their services, increase their profits, or both. All reasons Amazon, a customer of Kiva, decided to acquire it.
At Amazon, the “rate” is the purest expression of the company’s goals. Amazon’s leaders and spokespeople like to talk about how automation makes the job of an associate easier. But, until very recently, they seemed unable or unwilling to imagine that the increased demands of that automation on the associates could be grinding them down both physically and psychologically.
“We develop these [rate] targets across an extended period of time using actual employee performance,” says Ms. MacDougall, the health and safety executive. “We take into account a variety of factors, and everything is with the safety and well-being of employees front and centre.”
I asked Mr. Mountz to comment on the injury rate at facilities with robots he and his engineers designed at Kiva. In the original design of the Kiva system, he answered, “We always pointed out the human is in control of the machine, not the other way around. We’d say, this is not the Lucille Ball episode where she’s on the chocolate line.”
In other words, in Amazon’s system the pace at which a worker picks, stows or packs goods is up to them, so the automation flexes to accommodate their pace. “Whether a customer, be that Amazon or Walgreens, says you have to pick 800 items an hour or 300 an hour, that’s a function of the type of inventory you’re handling, and management philosophy,” adds Mr. Mountz.
Current and former Amazon executives described its management philosophy to me as performance-driven and hard-charging, built on the idea that everyone should be pushed to their limits and underperformers should be cut. Amazon clearly wants the world to believe that that is changing. Whether or not those changes will have a meaningful impact on the lives of hundreds of thousands of its entry-level associates, whose work lives are ruled by sensors and algorithms, who do the physically demanding labour on which Amazon’s e-commerce empire depends, and for whom the pace and tenor of their work is a function of decisions made by company leaders, as much as technology, remains to be seen.
Reprinted by permission of The Wall Street Journal, Copyright 2021 Dow Jones & Company. Inc. All Rights Reserved Worldwide. Original date of publication: September 11, 2021.
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
As geopolitical tensions rise, Taiwan is shifting its economy to rely more on the U.S. and other countries but at a cost
TAIPEI—For years, Beijing hoped to win control of Taiwan by convincing its people their economic futures were inextricably tied to China.
Instead, more Taiwanese businesses are pivoting to the U.S. and other markets, reducing the island democracy’s dependence on China and angering Beijing as it sees its economic leverage over Taiwan ebb.
In one sign of the shift, the U.S. replaced mainland China as the top buyer of Taiwanese agricultural products for the first time last year.
Electronics firms such as chip maker Taiwan Semiconductor Manufacturing Co. are also selling more goods to American and other non-Chinese buyers, thanks in part to Washington’s chip restrictions and Apple’s bets on Taiwanese chips.
Overall, Taiwanese exports to the U.S. in the first 10 months of 2023 were more than 80% higher than in the same period of 2018, Taiwanese government data shows. Taiwanese exports to the mainland were 1% lower—a major change from a decade or so ago when China’s and Taiwan’s economies were rapidly integrating.
Taiwan’s outbound investment has also shifted. After flowing mostly to mainland China in the early 2000s, it has now moved decisively toward other destinations, including Southeast Asia, India and the U.S.
Taiwanese electronics giant Foxconn, which assembles iPhones in mainland China, is expanding in India and Vietnam after Apple began pushing its suppliers to diversify.
Chinese state media recently reported that China had opened tax and land-use probes into Foxconn. Though Taiwanese officials and analysts interpreted the probes as a sign that China wants Foxconn founder Terry Gou to drop plans to run in Taiwan’s presidential election in January, some have said Beijing may also be trying to pressure Foxconn into resisting decoupling with China.
“Any attempt to ‘talk down’ the mainland’s economy or to seek ‘decoupling’ is driven by ulterior motives and will be futile,” said a spokeswoman for Beijing’s Taiwan Affairs Office in September. “The mainland is always the best choice for Taiwanese compatriots and businesses.”
Fully decoupling from mainland China’s economy likely isn’t possible, and would be disastrous for Taiwan, not to mention China, even if it were.
Foxconn and other major Taiwanese companies depend heavily on China for parts, testing and buyers. Some 25% of Taiwan’s electronic-parts imports still come from the mainland.
If China’s weakened economy returns to strong growth, it could shift the calculus back in favor of the mainland, where the Communist Party claims Taiwan despite never having ruled it. About 21% of Taiwan’s total goods trade this year has been with mainland China, versus 14% for the U.S., though the U.S. share has risen from 11% in 2018.
“My hunch is that the large manufacturing sectors will try to stay in the Chinese market, even with harsh conditions,” said Alexander Huang, director of the international affairs department of the opposition Kuomintang Party, whose supporters include business people with mainland ties. “If you talk to those business owners, they say, ‘Nah, no way will I give it to my competitors.’”
Even so, many forces are pushing Taiwan to rewire its economic relationship with China.
Trump-era tariffs and Biden administration export controls have raised the cost of sourcing from China, and in some cases prohibited it. U.S. firms are pushing their Taiwanese suppliers to diversify sourcing, and rising wages in China have made it less attractive than before.
Long-running shifts in Taiwanese sentiment toward China—and China’s own efforts to punish the island using its economic leverage—are also factors. China has banned Taiwanese agricultural products such as pineapple and, in 2022, grouper fish, and restricted outbound tourism to Taiwan.
Those restrictions to some degree have backfired, pushing Taiwanese businesses to look elsewhere.
Chang Chia-sheng, who runs a fish farming operation in Taiwan, said his main export target a decade ago was mainland China. But as geopolitical tensions climbed, he looked elsewhere. Sales to Americans have jumped fivefold since 2018, he said. “In the U.S., things just seem to work out more easily,” Chang said.
The U.S. and Taiwan reached an agreement in May on a number of trade and investment measures to deepen ties, though the deal stopped short of reducing tariffs.
In the June quarter of 2023, 63% of revenue at TSMC, which makes most of the world’s most cutting-edge logic chips, came from the U.S., up from 54% in the same period in 2018, according to S&P Global data. Just 12% of TSMC’s revenue now comes from Chinese buyers, down from 22% in the second quarter of 2018.
Taiwan’s government is also encouraging closer economic links with Southeast Asia, South Asia, Australia and New Zealand. Its “New Southbound Policy,” rolled out in 2016, has been the subject of fierce debate in Taiwan, with the Kuomintang Party saying steps to boost relations—like handing out scholarships—aren’t worth the cost.
Exports to “New Southbound” partners have risen, however, to $66 billion in the first nine months of 2023, about 50% higher than the same period in 2016.
“Frankly speaking, we’re responding reactively” to the need for more diverse trading partners, Taiwan’s Economic Minister Wang Mei-hua said. “Taiwan needs to manage the risks on its own, but we also need our allies to join us more in mitigating these risks.”
Together, the U.S. and the six largest Southeast Asian economies accounted for 36% of Taiwanese exports in the third quarter of 2023, according to data from CEIC, surpassing the percentage sent to mainland China and Hong Kong on a quarterly basis for the first time since 2002.
In September, Taiwan sent less than 21% of its exports to the mainland, the lowest percentage since the global financial crisis.
Taiwanese foreign investment into mainland China, steady at around $10 billion a year for most of the early 2010s, plummeted in late 2018 and has since been running at about half that level, according to Taiwanese government data. In 2023 so far, just 13% of Taiwan’s investment went to mainland China; 25% went to other Asian locations, and nearly half went to the U.S.
A survey of Taiwanese businesses conducted last year on behalf of the Center for Strategic and International Studies, a Washington think tank, found that nearly 60% had moved or were considering moving some production or sourcing out of China—a significantly higher rate than European or American firms.
Jay Yen, chief executive of Yen and Brothers, a Taiwanese frozen-food processing company, said his firm received a government subsidy of around $75,000 to market his products to American consumers. China now only accounts for about 3% of its revenue, he said.
That said, “if you really have to consider the risks of a war between the U.S. and China and its potential impact on Taiwan, you might want to place your bets on a third country—neither China nor the U.S.,” Yen added.
After China began to open up its economy in the late 1970s, Taiwanese businesses were among the first investors.
By the 2000s, China seemed to be succeeding in its strategy of integrating the two economies, with more than 28% of Taiwan’s exports going to the mainland in 2010, from less than 4% a decade earlier.
Direct flights between the two sides were normalised for the first time in decades. Mainland tourists were allowed to visit Taiwan on their own.
By 2014, the tide was turning as more Taiwanese grew worried about over dependence on China. Student demonstrators protested against a trade pact, later abandoned, that would have deepened ties with China. President Tsai Ing-wen, who took office in 2016, has pushed to diversify Taiwan’s economy.
China has responded by moving trade issues more into the spotlight.
In April, it opened an investigation into Taiwanese trade restrictions that it says limit exports of more than 2,400 items from the mainland to the island in violation of World Trade Organization rules. In October, China’s Ministry of Commerce announced the probe would be extended until Jan. 12—the day before Taiwan’s coming election.
Taiwan’s government has called the probe politically motivated.
Chinese officials have implied that Beijing could suspend preferential tariff rates for some Taiwanese goods in China under a 2010 deal signed when Kuomintang’s Ma Ying-jeou was president. Beijing has also reacted angrily to Taiwan’s recent trade agreement with the U.S.
For Taiwanese companies, building and operating new factories in places other than China isn’t cheap or easy. Protests have at times disrupted operations at Indian plants operated by Foxconn and Wistron, another Apple supplier. In September, a fire halted production at a Taiwanese facility in Tamil Nadu.
Still, some Taiwanese businesspeople have clearly soured on China.
“The electronics industry has already become a Chinese empire, not a Taiwanese one,” says Leo Chiu, who worked in mainland China in quality control for an electronics manufacturer for 14 years before concluding he couldn’t move up further there and returning to Taiwan in 2019. Many of his old colleagues have left, he said.
“If Xi Jinping steps down, there’s still a chance it could change,” says Chiu. “But I think it’s very hard.”
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’