Amazon’s Total Rewards Program

Amazon is an online sales company that was founded in 1995 by Jeff Bezos for the purpose of selling books. It achieved increased growth reaching 180,000 customers by December 1996 and by 1997 it had reached 1,000,000 customers (Shaughnessy, 2012). Since 2000, it has diversified its operations to the sale of other products in other countries. The purpose of this paper is to illustrate the Total Rewards Program implemented at Amazon in rewarding employees for performance to a level that is satisfactory according to the objectives and values of the organization, the segmentation framework used to categorize employees of the company depending on their characteristics, the current requisite characteristics of employees in terms of competence and skills, the recommendations of the strategy for a change in the total rewards program, risks of failure to implement the program, metrics for evaluating the effectiveness of the total reward program, and an explanation of the timeline for the implementation of the program.

Description of Amazon

            The major capabilities of Amazon are its effective organizational structure that ensures it remains competitive irrespective of the rise in number of companies experiencing bankruptcy (Gregersen, 2015). It has been able to diversify into the provision of other products and services such as drugs, clothing products, electronics, home appliances, and there is the possibility of diversifying its products to include banking services and restaurants.

            The key goals of Amazon are: to expand into other countries and increase the number of customers served, to achieve competitiveness in online sales, increase the number of employees in order to address the problem of unemployment, to increase employee satisfaction through effective compensation and reward programs, and to act as an organization that promotes personal development of employees (Krebs, 2013). The objectives of Amazon are: achieve an increase in market share by 1.1% in 2019 and overtake its competitors such as Wall-Mart, to contribute towards clean energy production by investing in wind energy, to create additional 3500 jobs in different areas of its operations by 2019, and to increase its revenues by ₤30,000 in 2019.  The core values of Amazon are: a focus on customer satisfaction, think big in methods of improving online business, promote high standards in the provision of products, promote innovation, and deliver results that lead to high customer satisfaction. The core competencies for success at Amazon are: building new business platforms, effective management of its supply chain ecosystem, promoting leadership strategies that enables it to retain talented employees and make effective use of its resources, and making contractual agreement on conditions of promoting its performance.

Current Total Reward Model used at Amazon

The current rewards philosophy of Amazon is that an employee will always be rewarded depending on his or her performance rather than position in the organization, or diverse characteristics such as age, gender, or cultural characteristics.

The following are the three forms of reward programs provided to employees at Amazon.

Monetary Rewards

This is the most common form of reward for all employees and is provided for the specific positions within the organization. Various pay strategies are used to reward employees depending on their contribution. A common form of reward is the fixed pay that is determined by the organization’s pay structure (Bernardin, 2003). The variable pay is provided to employees depending on their level of improvement in performance. It is usually a one-time payment in the form of a bonus that is re-earned on condition that the employee performs above standard performance requirements. A short-term incentive pay is another form of variable pay which is given after certain duration of time such as a year. Retirement savings is a monetary reward given to employees when they reach the retirement age while performance feedback benefits are monetary rewards provided when customers express satisfaction with the nature of a particular employee’s services. Other performance-based non-monetary rewards to employees of Amazon are: spot awards, organization-wide employee recognition awards, luncheons and outings, and cost savings awards.

Non-monetary Rewards

Non-monetary rewards are provided to employees at Amazon because of the fact that they contribute to employee job satisfaction. According to Brown (2004), a significant number of non-monetary benefits are aimed at protecting the employees from incurring the cost of medications; protect them from the implications of disability, and enable them to achieve a better personal and family well-being (Shaughnessy, 2012). The most common non-monetary benefits awarded to employees of Amazon are: Vision and Dental Care Services, Disability benefits, Life Insurance rewards, medical Insurance programs, the freedom to work from home, paid Time off Duty, sick leave, paid vacations, and wellness insurance coverage. Other forms of non-monetary rewards provided to employees of Amazon are daycare services programs and tuition programs for the employees’ children.

Work Experience Reward

These are rewards to employees to enable them develop their careers and achieve qualifications in working in higher positions such as managerial roles and the ability to improve their skills. Some of the commonly provided work experience rewards are: leadership training programs, internship programs, international assignment programs, tuition for the employees, participation in corporate mentoring programs, succession induction programs, and online learning webinars (Christofferson and King, 2006). Some forms of work experience rewards to employees of Amazon are awarded for the employees’ duration of dedicated service to the organizations. They include: promotion, accomplishment reward programs, training and development programs.

Segmentation of the Workforce depending on their drivers

            Employees of Amazon can be categorized depending on their motivating factors to perform their roles in the organization. The flexible schedule employees are those who prefer to work at varied time period which is not the regular working hours of the organization. For instance, some employees will be permitted to work from 9am to 6pm instead of working from 8am to 5 pm (Shaughnessy, 2012). The act of addressing the needs of this category of employees motivates them because they are able to address their family obligations as well as life responsibilities with convenience. It is also advantageous in enabling the employee’s control over work schedule and reduces the implication being held in traffic. These employees should be motivated by the use of flexible working programs or the freedom to work remotely.

            Growth potential employees are those who are motivated by the existence of opportunities for professional development such as increasing their career growth. They can be motivated by enabling them to take part in tuition programs, career development programs, training to acquire specific skills associated with their careers, and mentoring programs (Erickson and Gratton, 2007). employees who have the interests of demonstrating particular skills should be rewarded by being allowed to attend events and programs where they learn new techniques of improving their skills and enabling them to work in positions where they can utilize the acquired skills. Employees of low obligation and easy income status are those who do not like being held accountable for their roles in the organization but prefer to be rewarded for their effort. Such employees should be employed on contractual basis such as when the company needs their services in activities such as marketing, product distribution, or when there is a service that needs to be provided that matches their skills. High income and high obligation employees are those who prefer to be employed in positions where they have responsibility in decision making while the corresponding income is high (Shaughnessy, 2012). This category of employees can be motivated by ensuring they are assigned to senior managerial positions or supervisory positions where they can be held accountable for their roles.

Current Requisite Capabilities of the Organization and Competencies

o Knowledge of employees

The knowledge that employees of Amazon are expected to have is the ability to manage customers of different characteristics and retain them, the ability to establish focus by aligning personal goals with the strategic direction that the business intends to achieve, the knowledge of the organization’s mission statement, and the ability to fulfill the mission and objectives of the organization (Erickson and Gratton, 2007). Employees who need to be eligible for reward programs must also have the knowledge of internal processes and operations within the company so that they can use their insights to determine the actions they can perform to be of value to the organization.

o Skills of employees

            The skills that employees should have in order to work effectively at Amazon are: the ability to work as a team and hold the values of the organization with high regards, the ability to apply technical skills in the use of technologies such as internet marketing and customer relationships management, project management skills, the skills of negotiating contracts with clients and reach an agreement, and the skills of undertaking accounting procedures in accordance with the regulations in accounting practice.

o Abilities  of employees

            The abilities that are expected of employees of Amazon are: the ability to listen to directions of their supervisors, the ability to remain humble and not developing the perception of being the smartest in the room, the ability to communicate effectively with other employees and promote the practice of supportiveness, and the persuasive skills which are necessary in communication with clients as a strategy of promoting competitiveness of the company (Shaughnessy, 2012).

o My opinion whether there will be a change in the current issues

            The provision of Total Reward Program will play a role in achieving the objective of expansion of the workforce because the existing employees will be retained while more people will be attracted to work for the organization. The provision of the Total Reward Program will play a role in making changes in products and services because employees will be motivated to perform better in the provision of the new set of products and services in order to benefit from the Total Reward program.

Recommendations of a Change in the Total Reward Program

            There are other changes that need to be made to the Total Reward Program of Amazon in order to make it more effective in addressing the needs of employees. One of the changes is to include the aspect of reward for accountability and transparency in management of the affairs of the company (Krebs, 2013). Another change that needs to be incorporated in the Total Reward program is to allow the employees to get paid time off-duty if they achieve particular measure of performance in three consecutive weeks. The changes can be communicated to the employees using email communication, internal memos, and departmental meetings. The recommendations are suitable for employees of Amazon is that it is an organization that operates using online business strategy and is vulnerable to cybercrimes and other risks such as unauthorized access to digital records that can be of disastrous impact (Gregersen, 2015). Employees who act with loyalty and accountability in these departments need to be rewarded through the Total Reward Program. There are also many employees who are eligible for days off duty; therefore, the program will suit the reward needs of most of the employees at Amazon.

Risks of Not Implementing the Program

            The risks of not implementing the Total Rewards Program are many and can result into decreased employees morale, low output and high turnover rates. The risk of low employee morale is more likely to be experienced when employees do not expect any benefit irrespective of contributing to the organizational objectives of the organization. This risk was selected because many organizations that do not reward employees who have performed exceptionally well tend to experience low employee output, reduced motivation, and overall reduction in productivity (Gregersen, 2015). The risk of high turnover rates is the situation where competent employees seek employment elsewhere when they are not rewarded adequately for their contribution to the objectives of a company. This risk is common because the absence of performance-based compensation framework leads to lack of workforce motivation, negative relationship with company managers, and unwillingness to provide high quality products and services (Bernardin, 2003). The risk of disloyalty and tendency to defraud the company is another area of concern that Amazon might face if it fails to implement the recommended Total Reward Program. Employees tend to be less loyal and their chances of making use of opportunities and vulnerabilities to defraud the organization increases. 

Metrics for Evaluating the Total Reward Program

            The effectiveness of the Total Rewards Program will be measured in terms of the following metrics:

Percentage productivity per employee: The productivity of employees will be assessed by determining whether they are able to perform better to achieve the desired outcomes after the implementation of the Total Reward program. The assessment of productivity will be achieved by collecting data of their performance from the respective work stations and comparing with the monthly performances in the previous months (Brown, 2004). A positive change will be an indication that employees have performed better due to the reward program.

Innovativeness in Thinking: Innovativeness in thinking and the ability to come up with ideas of how to solve workplace problems will be used to assess the effectiveness of employees after the implementation of the Total Reward program (Kaye, Scheef and Thielfoldt, 2003). The employees’ ability to formulate solutions to the difficulties at their work station will be an example of a metric of innovativeness.

Absence Rates: Absence rate as can be used to determine the effectiveness of the Total Reward Program by establishing whether the employees tend to report to work on regular basis and have low rates of absenteeism (Martocchio, 2006). The workplace attendance records will be reviewed on monthly basis to compare the number of times the employees have been absent and comparing it with the previous months to arrive at a conclusion whether they have been able to improve their work attendance after the Total Reward Program was implemented.

Timeline for the Implementation of the Program

            The implementation of the Total Reward Program will begin by introducing the employees to the changes in the reward program such as rewards that have been introduced and those that are no longer applicable. The implementation team will explain the rewards that apply to employees of specific characteristics and the employees will be educated about what they need to achieve to benefit from the programs. The implementation team will state the terms and conditions of the program such as whether the employees are entitled to the rewards or the organization has the discretion to reward them or not. The Total Reward program will be put into use all the employees who meet the conditions for reward will be rewarded.

Conclusion and a Summary of the Knowledge Gained

            This paper examines the Total Reward Program that is currently used to reward employees at Amazon. As an established online retail company, the Total Reward program has been identified as a means of ensuring employees whose performances are satisfactory need to be rewarded and motivated to continue with the same spirit. Failure to implement a Total Reward Program is associated with implications such as the tendency of the employees to decrease their output, low employee morale, reduced loyalty to managers, and increased employees’ turnover. Another lesson from the analysis is that the implementation of the Total Reward program is likely to result into reduced absentee among employees, increased innovativeness, and improved employee productivity.

References

Bernardin, H.J. (2003). Human resource management: An experiential approach. New York:               McGraw-Hill.

Brown, D. (2004). “Total Rewards: Adding up the non-monetary side.” Canadian HR Reporter.

Christofferson, J.; and King, B. (2006). ”The ’IT’ factor: A new total rewards model leads the          way.” Workspan, http://www.worldatwork.org

Kaye, B.; Scheef, D.; and Thielfoldt, D. (2003.) Human Resources in the 21st Century. Chapter        4: Engaging the generations. M. Effron; R. Gandassy; and M. Goldsmith. New Jersey:         John Wiley & Sons.

Martocchio, J.J. (2006). Employee benefits: A primer for human resource professionals.             McGraw-Hill Irwin.

Erickson, T.J.; and Gratton, L. (March, 2007). ”What it means to work here.” Harvard Business          Review.

Shaughnessy, H., (2012, April). Why Amazon Succeeds. Forbes Article. [Online]. Available at:   https://www.forbes.com/sites/haydnshaughnessy/2012/04/29/why-amazon-succeeds/#77a8d5b7385a . Accessed on December 16, 2018.

Krebs, P., (2013, December). Global Total Rewards: Establishing a Framework. Benefits &       Compensation Resources. [Online]. Available at: http://www.benefitsandcompensationresources.com/global-total-rewards-establishing-a-framework . Accessed on December 16, 2018.

Gregersen, H., (2015, September). The one skill that made Amazon’s CEO wildly successful.       Fortune Article. [Online]. Available at: http://fortune.com/2015/09/17/amazon-founder-ceo-jeff-bezos-skills/ . Accessed on December 16, 2018.