Amazon CEO Jeff Bezos has spent nearly half of his life inventing and revolutionizing e-commerce, and now it’s said that he is the world’s richest man (that is excluding Chinese Billionaires) and today is believed to worth somewhere around 150 Billion.
He once believed and wrote that a Company should:
Make employees think like owners.
He is certainly not the first person who has this as a Company value and I have come across many other businesses that have attempted to adopt or drive this very same value. In fact, I have written on this very same subject in my book :
But how can an employee really think like a business owner when an owner has a financial stake and many times in the early years of the business, may have loaned on his or her equity including the family home to start and fund the business. An employee on the other hand, has no equity stake, no funding risk and ensures an immediate weekly pay for performing a week’s work.
But merit due, Bezos did take it a step further by offering employees a financial stake in the business by offering to weight employee’s compensation to stock options. When Amazon had around 600 employees, Bezos identified one key component of Amazons past successful talent sourcing and hiring approach and Amazon has since been using this successful remuneration practice in hiring. Bezos wrote in the 1997 Amazon annual letter:
“We will continue to focus on hiring and retaining versatile and talented employees, and continue to weight their compensation to stock options rather than cash,” “We know our success will be largely affected by our ability to attract and retain a motivated employee base, each of whom must think like, and therefore must actually be, an owner.”
Moral: Whether it’s stock, bonuses or profit sharing, give workers a stake in the success of the company.
So what just happened?
Last week, Dave Clark, Amazon’s senior vice president in charge of operations, stood on a ladder in a warehouse near Los Angeles and announced to employees that Amazon raising pay for it blue-collar work force.
As soon as he delivered the news that Amazon minimum wage in the US was increasing to $15 an hour, Mr. Clark was drowned out by loud cheers, applause and celebrations.
Unbelievably, Mr. Clark also posted a video of the meeting on Twitter.
I am not sure why but probably to somehow appear popular in the moment. After all, everyone likes to be the bearer of good news especially managers but – was it good news?
Many long term and dedicated workers at Amazon warehouses across the USA are fuming that based on the information they have received so far – they may end up trading out their compensation weighted to stock options and bonuses to gain an extra dollar an hour and overall, be losing thousands of dollars a year – in total annual remuneration. Yes, Amazon is increasing the hourly wage for base remunerations but will this benefit employees?
The rumours coming from current employees is it will no longer give out new stock grants and monthly bonuses. Many current workers believe that their total compensation will reduce.
Alerted by such workers, this move is being closely watched in Washington by a Mr. Sanders (an independent from Vermont). Mr. Sanders is believed to have sent a letter to Jay Carney, who runs Amazon’s public policy, asking Amazon to confirm how the total compensation of employees who would have received remunerations weighted to stock options (open to employees who have been with the company for two or more years and rewarding commitment) will be affected because of these recently announced changes.
Facebook groups popular with employee’s feature 100s of negative posts based on the possibility of trading out current incentive remunerations for and extra dollar an hour.
But surely these rumors could not be true. I mean, how could a Company such as Amazon with such a long historical underlying value of attempting to make “employees think like owners” and through offering employee compensations weighted to stock options – renege with current long-term and committed employees.
Why would a manager announce Company remuneration increases on public media when other remunerations such as bonuses and equity stakes are being ceased – resulting in workers being worse off overall and mainly hitting the long term and committed employees.
This would be a super quick way to erode underlying trust that has taken years to build within your workforce.
3 Tips:
1. It may not be beneficial announcing Company remuneration increases on public media and then directing employees not to discuss the announcement on public media. Perhaps best not to announce Company remuneration practices on public media.
2. Of course, a Company could retract such an incentive but only by allowing a long-term employee to agree to the remuneration/agreement amendment. For employees who do not want to agree to the change then – honor what you promised.
3. New recruited employees would just be offered the new remuneration package and the increased hourly rate with no equity stakes and – business as usual.
This development is in early days so – we will have to wait and see how this plays out.
Paul Marshall
Partner | HR Chief | FCPHR
With decades of Business and HR experience a HR Pro, corporate trainer, author and a welcomed and trusted business partner with commercial awareness and expertise in people, performance and HR capabilities .
Author of:
103 Golden Tips to Turbo Charge your Employees Skyrocket Productivity and Get More Output
103 Golden Tips to Turbo Charge your Business make More Money and Get Rich
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