Amazon's Attrition Costs $8 Billion Annually - Leaked Documents (engadget.com) 84
Amazon churns through workers at an astonishing rate, well above industry averages. From a report: According to a tranche of documents marked "Amazon Confidential" provided to Engadget and not previously reported on, that staggering attrition now has an associated cost. "[Worldwide] Consumer Field Operations is experiencing high levels of attrition (regretted and unregretted) across all levels, totaling an estimated $8 billion annually for Amazon and its shareholders," one of the documents, authored earlier this year, states. For a sense of scale, the company's net profit for its 2021 fiscal year was $33.36 billion.
The documents, which include several internal research papers, slide decks and spreadsheets, paint a bleak picture of Amazon's ability to retain employees, and how the current strategy may be financially harmful to the organization as a whole. They also broadly condemn Amazon for not adequately using or tracking data in its efforts to train and promote employees, an ironic shortcoming for a company which has a reputation for obsessively harvesting consumer information. These documents were provided to Engadget by a source who believes these gaps in accounting represent a lack of internal controls. "Regretted attrition" -- that is, workers choosing to leave the company -- "occurs twice as often as unregretted attrition" -- people being laid off or fired -- "across all levels and businesses," according to this research. The paper, published in January of 2022, states that the prior year's data "indicates regretted attrition [represents] a low of 69.5% to a high of 81.3% across all levels (Tier 1 through Level 10 employees) suggesting a distinct retention issue." By way of explanation, Tier 1 would include entry-level roles like the company's thousands of warehouse associates, while a vice president would be positioned at Level 10. It also notes that "only one out of three new hires in 2021" stay with the company for 90 or more days.
The documents, which include several internal research papers, slide decks and spreadsheets, paint a bleak picture of Amazon's ability to retain employees, and how the current strategy may be financially harmful to the organization as a whole. They also broadly condemn Amazon for not adequately using or tracking data in its efforts to train and promote employees, an ironic shortcoming for a company which has a reputation for obsessively harvesting consumer information. These documents were provided to Engadget by a source who believes these gaps in accounting represent a lack of internal controls. "Regretted attrition" -- that is, workers choosing to leave the company -- "occurs twice as often as unregretted attrition" -- people being laid off or fired -- "across all levels and businesses," according to this research. The paper, published in January of 2022, states that the prior year's data "indicates regretted attrition [represents] a low of 69.5% to a high of 81.3% across all levels (Tier 1 through Level 10 employees) suggesting a distinct retention issue." By way of explanation, Tier 1 would include entry-level roles like the company's thousands of warehouse associates, while a vice president would be positioned at Level 10. It also notes that "only one out of three new hires in 2021" stay with the company for 90 or more days.
Stock Price - Nothing Else Matters (Score:4, Insightful)
This applies to all companies today, not just Amazon.
Re:Stock Price - Nothing Else Matters (Score:4)
Hmm, never mind. I plead temporary insanity.
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Perhaps at some point some really smart bean counter will decide to add two and two together and figure out that it is actually cheaper overall to pay better and improve working conditions.
But that's the problem. It has already been been proven that a company can treat its employees like shit and continue to make huge profits. (Amazon, Wal-Mart, etc., etc...) There is absolutely no reason for them to change. It sucks, but it is true.
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Any company, including Amazon, who believed that treating their employees "better" would increase profits in the short and long term and not sacrifice future growth would do so if they could figure out how to do so.
If Amazon could make another $2B profit by not "treating employees like shit", why wouldn't they do so? Claiming there is "absolutely no reason for them to change" is absurd.
Perhaps they are not convinced that treating employees "better" would increase profits or believe that doing so could hinde
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You're assuming rational behaviour from irrational beings.
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For a company run by irrational beings, Amazon has done amazingly well. Which company run by rational beings is doing better?
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There aren't any. People are basically irrational beings with an intellect to use to rationalize the irrational.
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Pay better? The average Amazonian makes $101,000/year.
https://www.payscale.com/resea... [payscale.com]
Contractors of course generally make less, but when compared to similar jobs at the competition (Walmart, Target, Kroger, etc.) pay and working conditions tend to be considerably better. The most famous are the warehouse workers of course, I've done warehouse work at Target and have worked with former Amazon FC workers. Warehouse work sucks, but what they described at the FCs sucked a lot less than what I did and they
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I wonder if it is cheaper to be a better employer. Amazon relies on low overheads and fast fulfilment, which mean working people ragged all the time. It gives them a competitive edge that is probably worth more than $8bn.
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The cost of worker turnover is a little less than 2% of revenue, which is part of a larger cost of worker acquisition. In competitive fields, obviously, the motivated employee is going to be moving to higher pay, always looking to short term profit. There is nothing a honest firm can do about this. Pay is not an infinite resource
Re:Must unionize to survive (Score:5, Informative)
The only way to save Amazon is to unionize it. If it does not unionize it will have too much turnover because no one will want to work there. Then it will go out of business. Proof is in the results: Amazon has declining revenue and profits and is at danger of going out of business. Unionize now!
Although I am very strongly pro-union, the claim that Amazon is in danger of going out of business, with or without unionization, is just silly.
Despite the fact that they treat people like shit and have very high turnover of employees, Amazon had $33.36 Billion Net Profit last year.
John Q. Public doesn't care that Amazon employees are treated badly. He just wants to buy lots of cheap shit.
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But they're running out of labor pool that hasn't already been burned and churned.
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What people don't realize is that a **LOT** of employees that leave come back again later. I worked there for 9 years in the physical security, and during that time had to review literally tens of thousands of cardholder records. It's extremely common for people to work there for a time, leave for a couple of years, and then come back. If you're at all good at what you do the pay is great, the projects are challenging, and you get to work with some of the smartest people you've ever met (I just retired l
Re: Must unionize to survive (Score:2)
By your own logic then it's the Republicans who are defending Amazon and the other major corps.
Also I am fairly sure if you took the revenues of every union in the country you wouldn't get anywhere close to just Amazons market cap.
Union membership in the US has been at historic lows in the 2000s, they're not the bogeyman conservatives have been making them out to be for some time. They're made out to be a scapegoat to keep workers feeling they have no choice but accept shit conditions.
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So you've never worked there and don't really know much about the company. They have good health (and other) benefits which start they day you begin working. Even the warehouse contractors start accumulating vacation time their first day, and they get all the official holidays of the country where they're working. The only reason why the Democrats are talking about a $15/hr minimum wage is that when they were proposing raising the minimum to $10 Amazon made all their contractors pay $15/hr or more.
Face it (Score:2)
Re:Face it (Score:5, Insightful)
Re:Face it (Score:4, Interesting)
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I almost never have this experience. Amazon is almost always the lowest when factoring in shipping. I've even seen multiple occasions where a manufacturer sells items on Amazon for cheaper than they do on their own websites! In truth I'd prefer to give all my money directly to the manufacturer but if they disincentivize me from doing so...
The only exceptions I've seen to this are with groceries, where Amazon's prices are often higher than the local supermarket, and with home hardware, where Amazon's prices
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It's not costing Amazon and its shareholders, it's costing the consumer - no way in hell they're not passing this on to John Q. Public
Of course it's costing Amazon - and thus it's shareholders. At least it does if the amount given is net and not offset: "attrition cost us 8 billion, but the reasons for that saved us 10 billion". The prices are set to what the market is willing to give, so increased costs means lower profit.
Unfamiliar terms (Score:3)
I'd never heard of "regretted" or "unregretted" attrition before. However they seem to mean what you'd guess they mean.
What is regretted attrition [eletive.com]
Definition of unregretted attrition [jargonism.com].
Apparently "non-regretted" is used more than "unregretted".
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Unnecessary Algorithmic attrition
Urinary continence attrition
Unregretted injury attrition
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How about "malevolent attrition"?
Yes and it probably suits them just fine (Score:5, Insightful)
They use employees like rags: when the rag is worn off, it's discarded and they use a fresh rag.
For amazon, it's probably cheaper to use multiple cheap rags than one good one. In other words, they'd rather earn $33.38 billion and lose $8 billion in retraining than earn only $25 billion and lose $2 billion due to higher wages and better benefits.
This math of course only works when the company and its leadership are psychopathic, completely disregard decency and compassion in employment and only considers the staff as an investment in tooling with a finite use time and a depreciation rate, and the problem of optimizing the rate of depreciation vs the work produced.
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They use employees like rags: when the rag is worn off, it's discarded and they use a fresh rag.
For amazon, it's probably cheaper to use multiple cheap rags than one good one. In other words, they'd rather earn $33.38 billion and lose $8 billion in retraining than earn only $25 billion and lose $2 billion due to higher wages and better benefits.
This math of course only works when the company and its leadership are psychopathic, completely disregard decency and compassion in employment and only considers the staff as an investment in tooling with a finite use time and a depreciation rate, and the problem of optimizing the rate of depreciation vs the work produced.
That philosophy is what being an MBA is all about. We in the states are killing our population this way, because we've let the infection carry itself into every corner of business, to the point where the only real escape is not working for a big business. Which gets more difficult by the day as smaller businesses focused on keeping their humans healthy can't make enough to compete against the "people are an easily replaced commodity" crowd.
I'm in a business that started in 1999 as a small place, and is now
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You might try actually earning an MBA from a reputable school. What they teach is nothing like what trolls on Slashdot like to describe.
In fact, given how “diverse” (as compared to the general population) the Slashdot population is, we really ought to not be labeling large groups of highly-educated folks simply because a number of well-known and financially successful members of that population have shown sociopathic tendencies.
But here I go trying to apply logic on Slashdot again.
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https://www.linkedin.com/pulse... [linkedin.com]
This question alone says it all.
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Maybe try watching what MBAs do before jumping down my throat for pointing out the obvious? It's not just a few of them that are that way. As you say, in the beginning it may have been a few "successful" MBAs that were ethically void, but as us humans always tend to do, the morally bankrupt but financially successful became the template from which the newcomers were trained, and ethics and moral went straight down the toilet in the name of supporting the almighty profit! MBAs aren't solely to blame for the
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You're assuming that treating employees like they matter will cost them more than they lose to attrition. That sounds more like right-wing nonsense than it does a realistic analysis.
This math of course only works when
You haven't done any math.
when the company and its leadership are psychopathic
That's the standard, not the exception.
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I agree that this requires some actual analysis, not just spitballing. Amazon needs to consider how much they could improve employee retention (and thus reduce training costs) by improving pay, benefits, and/or working conditions (thus costing money). In theory it isn't a hard comparison, but it does require actually looking at evidence rather than just making up some numbers. It's possible that some team of accountants at Amazon has actually crunched the numbers and decided that money spent on improving
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When you hire >100,000 temporary workers for the Christmas rush every year only to lay them off a few months later (which they know about coming in) your turnover numbers of course are going to be above the norm. Most people don't realize that, and even fewer know that a LOT of those people keep coming back year after year for Christmas. When I had to review ~8000 cardholder records, because of the issue most were warehouse staff, I was surprised to see number of people who had worked Christmas for fiv
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Something not mentioned but will probably become an important factor for Azazon: A nieve (newbie) employee may be easy to find and burn them out in 90 days. But they are not likely to come back ever. At some point Amazon will have burned through that available pool, only to find the ones that were burned won't even bother applying ever again. That could be a long term serious issue.
Or it might not be. 5 million new children turn 18 every year, giving a steady stream of new workers. That is five times the total number of Amazon employees entering the workforce every year. The average Amazon warehouse worker is making about $15-20 per hour, which is very good money for low skilled work. When I was 18 in the 90's I was making $11-12 per hour in 2022 dollars working in fast food. I probably would have spent some time working at Amazon too until I got burned out to make nearly 50% more. I
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They're running into a shortage of warehouse workers primarily because 1) warehouse work sucks, 2) they've expanded their warehouse operations far beyond the number or people willing to do that job. Walmart, Target, and the rest are also having trouble finding warehouse workers because Amazon (with its better pay, benefits and working conditions) have absorbed so much of that work force.
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Amazon's item internal research suggests they'll have burned through the pool and hit shortages in 2 years with their current practices.
https://www.theguardian.com/te... [theguardian.com]
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That's what work visas are for. When malicious companies run out of labor to abuse, they hire new labor from places that have no idea how bad the company really is.
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And they get a new rag, at a full charge every time. They just exploit it and spit it out.
Re: Yes and it probably suits them just fine (Score:2)
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Funny thing, if they offered 6Billion extra in salary / benefits to the groups that has the most turnover, they will probably end up saving a bunch in the long run (at least a billion or so, even if some people still leave).
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They use employees like rags: when the rag is worn off, it's discarded and they use a fresh rag.
Horseshit. If you were talking about Walmart you might have a point, but having retired last year after 9 years with the company I can honestly say it's the best job that I ever had. Most of the supposed churn is temporary workers in the Fulfillment Centers, they hire well over 50,000 people every year for a 3-5 month period.
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The math works because Amazon (or any corporation) claims the world owes them employees. Politicians universally agree and blame the working-class for not working for Amazon (or other sweat-shops).
Missing from the analysis (Score:3)
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...but instead cities are offering Amazon tax INCENTIVES to come to town? Insane.
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staggering attrition (Score:2)
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People forget that happy employees are also productive employees.
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People forget that happy employees are also productive employees.
People have not forgotten. They literally don't care.
It has already been repeatedly proven that companies can treat their employees like shit and it has ZERO impact on profits, and ZERO impact on the ability to hire more people (to replace the ones who quit).
That's why managers at nearly all large companies are under pressure to fire a certain number of people every year. If a manger doesn't meet his goal -- if he doesn't fire enough people -- it can seriously impact his performance review.
That i
Weird terminology (Score:3, Informative)
"Regretted attrition" -- that is, workers choosing to leave the company
I doubt anybody choosing to leave Amazon regrets doing so. They do it do find a better job elsewhere or to escape the hamster wheel. Nobody leaves Amazon and says "You know what? I wish I could go back to work at the fulfillment center and bust my back lifting boxes for hours on end, because at least we had screens giving us mitigating back exercises! I miss that!"
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Yeah but the terminology is still weird, because "regretted" and "unregretted" implies that Amazon or the management at Amazon has feelings - and they don't. Employees leaving or let go is just factored in the balance sheet.
I guess "employee-driven attrition" and "employer-driven attrition" would more accurately describe what's happening.
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Of course they regret it: they have to find and train new employees.
What they really want is for employers to work for peanuts under awful contributions and never leave. Anything else is regrettable.
raise the wages then (Score:2)
So amazon can increase wages by $5000/year/person and keep them instead?
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They could give them piss breaks, coffee breaks and revamp the algorithms so they can move 5% slower, preserving their bodies. Maybe 10% slower with a slight wage cut would result in happier employees who stick around.
Let the workers use the elevators (Score:1)
Self-inflicted wounds? (Score:5, Informative)
Maybe they're shooting themselves in the foot by being too aggressive with employee reviews and cut-throat management. From April 2021: Leaked Amazon memo shows how it forces out employees to hit targets [hcamag.com]
Amazon has a goal to cut a certain number of employees each year, according to a leaked internal memo.
The memo highlights Amazon’s strategy for forcing employees out, according to a Business Insider report. It directs Amazon Web Services managers to place twice as many employees as the company wants to eliminate into a performance-coaching program called Focus. The program is the first step in a process that could lead to an employee’s termination.
Amazon employees are first enrolled in Focus, a coaching program for underperformers. If their performance does not improve, they can be put in Pivot, a program in which employees can choose between starting a performance-improvement plan or leaving the company with severance.
According to the memo, employees who receive the lowest rating in annual performance reviews were automatically placed in Focus. The memo said once employees were enrolled in the Focus program, a vice president had to approve their removal from it.
The memo also said that if AWS teams failed to meet their targets for employee departures in 2020, they would have to make up the difference in 2021.
The article also notes that Amazon denies this, but also won't specify any inaccuracies:
“This story is based on a false and incorrect source and the details included here do not reflect company policy,” an Amazon spokesperson told Business Insider. However, the spokesperson did not specify any inaccuracies in the memo and did not respond to a question about whether the measures were practices anywhere in the company, the publication reported.
And about that “unregretted attrition rate” ... :
Amazon employees receive a performance grade during reviews – top tier, highly valued, or least effective. According to Business Insider, managers across the company are given quotas for each ranking – they are reportedly expected to rank 20% of employees at the top level, 75% in the middle tier (which includes three sub-levels), and 5% at the bottom level.
The company also has a metric called “unregretted attrition rate” (URA), which represents the percentage of employees it would like to see leave the company – voluntarily or otherwise – in a given year. That goal appears to be 6%, according to leaked documents. If AWS teams fell short of the URA goal in 2020, the memo said they would have to make up the difference this year.
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I think Americans in general are bad at capitalism. We keep sliding back in mercantilism.
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The memo also said that if AWS teams failed to meet their targets for employee departures in 2020, they would have to make up the difference in 2021.
Is it just me, or is it nuts to have a goal for a number or percentage of employees to get rid of every year?
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The memo also said that if AWS teams failed to meet their targets for employee departures in 2020, they would have to make up the difference in 2021.
Is it just me, or is it nuts to have a goal for a number or percentage of employees to get rid of every year?
It's not you. Seems wasteful to spend time/money onboarding people knowing you're going to cut a specific number of them for no good reason. It also breeds an unhealthy work atmosphere; another article noted workers sabotaging co-workers to keep themselves from being in the bottom tier.
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Good point, when you're being compared to coworkers, it may be easier to undermine their performance rather than improving your own.
Fortune cookie at the bottom of the article... (Score:1)
"How many teamsters does it take to screw in a light bulb?" "FIFTEEN!! YOU'z GOT A PROBLEM WITH THAT?"
Amazon will have two choices... increase wages/benefits or have to deal with unions. If I were Amazon I'd rather pay a little more for a lot more control of the situation.
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You missed an important point: working conditions. Bad working conditions have driven unionization at least as much as low wages and poor benefits, and Amazon has a history of terrible working conditions. There is plenty of documentation of Amazon denying workers bathroom breaks and refusing to air condition their warehouses, so employees collapse from heat stroke during the summer. Solving those kinds of unpleasant and/o
so stop buying from amazon (Score:4, Insightful)
Running out of people to hire (Score:3)
According to one of their own leaked internal memos apparently amazon is slowly running out of employees to hire in a lot of their regions due exactly to this insane rate of turnover https://www.vox.com/recode/231... [vox.com].
“If we continue business as usual, Amazon will deplete the available labor supply in the US network by 2024,” the research, which hasn’t previously been reported, says."
From what this leaked memo makes it sound like pretty soon they're either going to have to massively ramp up automation or actually treat their employees well.
Personally I hope this does bite them in the ass a bit as I have zero use for employers who treat their employees as disposable.
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Automation; the only solution. (Score:4, Interesting)
They failed because they didn't leverage their suppliers to use standardized robot handleable packaging instead of loose retail packaging. It means they are forced to use humans to pick items from bins.
Re:Automation; the only solution. (Score:4, Interesting)
Doesn't surprise me (Score:2)
That's just the IT / office workers. The warehouse staff are treated like shit. Kind of amazes me they won't unionize, that the company is able to get away with scaring these people sufficiently that
Huh (Score:2)
And here this story from last year [businessinsider.com] was saying Amazon executives were afraid of running out of employees because their turnover was so high.
Looks like no one bothered to do anything more than wring their hands.
Amazon = Death (Score:2)
I have had not 1 not 2 not 3, but 6 friends develop mental health problems working at Amazon. And we're not talking as drivers or warehouse workers. We're talking about people who work in their 'think tanks' and AWS for six figure salaries. People who they wanted to retain. Two of them committed suicide, both of them stating in their final communications that the workplace sucked all the joy from their lives. The other four are so badly damaged from working there that they are "wards of the state" living on
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So six people that you know have either committed suicide or become disabled and now live on welfare. I may have to decline that hunting trip invitation you sent me...
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Obviously Amazon isn't screening properly for mental illness (and are probably unable to due to medical privacy and employment laws) as a sane person working in a "think tank" or AWS for six figures and who is qualified to do so would just change jobs instead of waiting until the Amazon job had "sucked all the joy from their lives" to the point they elected to commit suicide.
It's not like the mom-and-pop stores that Amazon may have pushed out of business over the last 25 years had "think tanks" or needed to
The most ridiculous job interview (Score:1)
The most ridiculous job interview I had was with Amazon.
I applied for a senior software engineering position and I get interviewed by an infrastructure engineer who got hired 3 weeks earlier.
This is one of the occasions where I terminated the conversation as it was an utter waste of my time.
Recent history could be misleading (Score:2)
I don't doubt that Amazon does suffer from low employee retention.
However, to look at 2021 (which the summary suggests) is hardly representative. Amazon had to hire a lot of people in 2020 and 2021 due to the surge in online ordering as people in 2020 and part of 2021 were avoiding "in person" shopping, equipping their home offices, etc.
Likely much of the available labor pool had previously been furloughed due to the pandemic having previously worked in such such fields as hospitality (restaurants, hotels,
This is new? (Score:2)
Back in the mid-nineties, the WSJ (before Murdoch bought it) had a story about CEOs "downsizing" companies as long as Wall St. rewarded their stock option value. They destroyed a lot of companies, because they undersized them... but who cares, ROI was created for the CEOs and other large holders of the stock, who then sold before the collapse came.