Is Your Workplace a Country Club or a Sweat Shop?

Two weeks back, the New York Times carried an expose on the culture at Amazon. It included anecdotal evidence from disgruntled ex-employees of Amazon, painting an image of a cruel and backstabbing workplace. It also included company sanctioned information about some of the company’s cultural practices, painting a picture of a demanding employer, attracting eager employees and paying them handsomely with cash and valuable stock options. The article clearly struck a nerve with Jeff Bezos, CEO of Amazon, who was prompted to write a rebuttal in the form of an internal memo to his employees. While it’s hard to know how much credence to associate with the anecdotal evidence, it seems clear that Amazon is maniacal about customer experience and demands a lot from its employees to constantly measure, improve and innovate. It also seems clear that working at Amazon is a stressful job; best described by a quote attributed to Bezos, “You have to work long, hard and smart. Two out of three is not enough.”

The article brought to mind two questions. Is it fair and acceptable for an employer to create such a stressful environment that it burns people out? Does a company have to be so incessantly demanding for it to be able to excel? We reflect on these two questions in this issue of Food for Thought.

First, some personal background. My career started in high-tech during its boom years in the 80s. At the time there were two fast-growing industries: high-tech and (investment) banking. I participated in one and was closely associated with the other. In both industries people worked very hard. A year was a long time. Companies were formed and folded in a matter of years. Most nights I would come home for dinner, only to return to work (Technology didn’t permit us to work from home). Often I would work through the night. It was not just me. Most up-and-comers kept similar lifestyles. Work-life balance was in total harmony because life was work. Most of us in that rat race were there to win: win competitively (beat the competition), win intellectually (prove our idea/concept/product successful), win personally (succeed based on our own values) and win economically (make a lot of money).

Doubtless, many burned out. The environment in both industries (high-tech and banking) was competitive. Important projects always had multiple teams working on Phase 1, with one of those two teams selected to advance to Phase 2. Being smart was simply passport to entry. Working hard and working long distinguished you. “Rack and stack” was the order of the day, and companies routinely culled bottom performers. The assumption was: there are a lot of smart people, and if you don’t want to work this hard, we’ll find someone else. We were paid very well and we were awash with stock options. There was a direct connection between our success and the company’s success. So I can relate to the environment at Amazon.

But is that fair? Does not an employer have a responsibility to create a healthy environment at work? Should not an employer feel accountable if the employees feel a sustained high-level of pressure and stress at work? Doesn’t the employer have a social responsibility to provide employees with a reasonable work-life balance? Can an employer simply ignore a high burnout and turnover rate? Is that sustainable?

“Why not?” asks the contrarian. Why is the job-market judged through such different lens than product-market competition, where charging whatever the market will bear (within laws) is not simply justified but expected? Why should an employer be blamed if they pay high enough to attract talent that is willing to work long and hard? What is wrong with a stressful and demanding culture if it engenders performance and rewards its employees in a manner that attracts a steady flow of applicants? The contrarian argues that this is sustainable as long as the demanding environment relentlessly excels in performance, which the company shares with employees.

Amazon is not the only company with a demanding culture. Huffington Post, regarded as successfully challenging traditional media through a singular focus on attracting traffic, is a stressful place to work. Even companies like Google, Twitter, Apple and Berkshire Hathaway – all very successful companies – are no country clubs. According to a survey done by Payscale in 2013, the average tenure at Amazon, Google, Berkshire Hathaway and Apple was 1.0, 1.1, 1.5 and 2.0 years, respectively. The tech companies also pay extremely well, with median pay running in or near six figures. And though you hear a lot about the stressful atmosphere at Amazon and Huffington Post, you seldom hear the same level of grievances from employees of equally successful and stressful companies like Google and Apple. Why is that?

I posit that it has to do with how they make their money. Google and Apple produce great products that people want to use. They create an environment within the company to innovate new products. Those companies still have to be very demanding in order to excel, or they will be surpassed by competition. Innovation in product leadership has such large opportunities for profit creation that the stress is wrapped in an abundance of comfort. That was the environment in high-tech and banking in the 80s. In contrast, Amazon and Huffington Post make their money being operationally efficient. They operate in more traditional industries (of retail and media). They seek innovation in processes. Process efficiency and operational excellence requires watching every penny. Amazon measures everything. Huffington Post measures time by seconds not minutes. Both companies are constantly innovating to improve. But neither has the luxury of wrapping the stress they place on their employees in material comfort. However successful, a burnt out employee leaves with a more bitter taste.

Success cooks faster in a pressure cooker. Both types of companies have the pressure cooker environment of a demanding workplace. One of them is made of aluminum and the other is made of silver. But there is a difference between a healthy demanding workplace and an unhealthy cruel workplace. I doubt that anybody advocates the latter. Whether the New York Times report on Amazon was just or not, I suspect Bezos wishes to create a highly demanding but healthy workplace. It is true that some of us might not want to run a demanding company that achieves its excellence at the cost of its employees. But for those of you looking to excel in your market, take note. If you want to excel as a company, do you have to be that demanding? I posit that you do. If you want to excel – where being good is not good enough – you must be relentlessly demanding. And, yes, you will burn some people out. You must also compensate them adequately.

Why don’t more companies do it? Because it is not easy. First, you have to have the guts to pay more than the next guy to attract talented people. Remember: there is never a dearth of talented people, only a dearth of employers willing to pay adequately for talented people. Furthermore, if you are going to have a demanding work environment, you have to pay even more, indexed to performance. Second, you have to demand performance. You have to set the tone and pace yourself. You have to be equally demanding of yourself. You have to hold others accountable. That is hard.

So why don’t most companies do it? Because we are too cheap and too scared to do it.

Food for Thought is our way of sharing interesting concepts on corporate leadership and management with others who might find it useful. The thoughts offered are intended to be controversial and thought-provoking. They are intended to help our readers intentionally realize their potential, what we call Potentionality.