Two Ways Amazon Misjudged Its Workforce Pipeline

Amazon has made crucial missteps in understanding its employees' future, from the distribution floor to the C-suite.

Two Ways Amazon Misjudged Its Workforce Pipeline

Amazon has made crucial missteps in understanding its employees' future, from the distribution floor to the C-suite.

Two Amazon stories this week caught my attention (and maybe yours too!). Both have to do with Amazon's workforce — rarely major news unless there's something straightforwardly political happening, like a union election or a hearing about workplace injuries — and both involve a crucial misjudgment by Amazon in assuming that the company's successes can save it from its own shortcomings. (This is a kind of hubris that's far from unique to Amazon, but let's say it's not uncommon at the company either.)

Here's the first thing: Jason Del Ray at Vox/Recode obtained a year-old Amazon internal memo warning that the company could run out of workers to hire for its US-based warehouse locations as soon as 2024.

In certain areas, like metropolitan Phoenix and southern California's Inland Empire, the situation was even more acute, with a projected hiring pinch coming as soon as this year.

To mitigate this forthcoming labor crunch, Amazon seems to have increased hiring bonuses and wages, relaxed some of its stricter workplace rules in certain locations to avoid shedding needed workers, and more broadly worked to retain a workforce it was once explicit policy to quickly churn through.

Some of this is a result of Amazon's competitors offering better wages for comparable jobs. Some of it is the result of the COVID-19 outbreak and the subsequent labor market changing workers' employment preferences. Some, surely, is a product of Amazon's own difficult working conditions becoming more notorious. And again, it was Amazon's own policy to offer buyouts, seasonal pay, and other enticements to keep its workforce at an "as-needed" level, cycling employees into and out of the company.

But some of it, too, has to be laid at the longstanding belief that many if not most of Amazon's warehouse and fulfillment center jobs could and would eventually be automated, and that the American workforce would remain reasonably plentiful and pliant until that moment was reached. In short, whether it misjudged the technology or the evolving American blue-collar workforce, Amazon misjudged the future. That's not something the company's executives can do frequently without consequence.

However, at a different level of the company, Amazon is facing the consequences of a different kind of misjudgment. Dave Clark, head of the company's consumer business and warehouse division — the very same division that may not have enough applicants to select for its US workforce within a few years — has left the company to take a position as CEO of a logistics startup called Flexport. Clark's departure was unusually hasty for a longtime top employee, as he left without a succession plan in place. His departure also followed announcements that the company would be withdrawing from the aggressive expansion plan he helped lead, as well as renewed Congressional interest in the company's labor safety record and anti-union activities.

This week, Clark's replacement was announced, with a slight restructuring of the roles involved: Doug Herrington will be the new CEO of Worldwide Amazon Stores, and John Felton will be promoted to run operations, reporting to Herrington. Both men are Amazon veterans. However, as often happens when one executive has left the company and others are promoted, two of Amazon's most noteworthy executives are leaving the company: Alicia Boler Davis (SVP of fulfillment) and David Bozeman (VP of trucking). Boler Davis and Bozeman are both Black. Amazon is now back to where it was in 2019, with zero Black executives on its senior leadership team.

At that time, before being hired by Amazon, Boler Davis was on track to possibly become CEO of General Motors. She was promoted to join Amazon's "S-team" in 2020. Regardless of whether she was seen internally as a successor to Clark, and by whom, it is unlikely her tenure at Amazon would have been so brief if the succession transition had played out differently. Ditto Bozeman, one of a small number of Black vice presidents at the company.

70 percent of Amazon’s U.S. work force

(Without numbers, these percentages don't mean much. Did the company go from five Black directors/VPs to ten, and then to seventeen? That's kind of what it sounds like.)

Alicia Boler Davis; Image via LinkedIn

Am I crazy, or are these two slightly different versions of the same problem? In both cass, Amazon's assumed that labor attrition couldn't hurt it, that (for lack of a better phrase), there are always more workers/executives where those came from. The trouble is that even more so than America's blue-collar workforce, America's pool of experienced top-level Black executives is exceedingly finite. You can't churn through that group and expect everything to be fine. Neither the optics nor the substance are good here.

And listen: maybe neither of these are in the top ten problems Amazon is facing right now, even re: its labor force. Unionization and the political and legal scrutiny that come with it, plus the company's still fresh transition from Bezos, Clark, and Wilke to Jassy and the new crew running the show might be running second place to the company's cratering stock price and the aggressive headwinds facing the tech and retail sectors at the moment. But they are real and substantive problems, and below the S-team, they are well-known.

In the case of its long-term warehouse staffing problems, we know at least that Amazon knows it has a problem. Is the company as aware as it should be that its reputation as a home for Black executives is likewise cratering? Is it clear that there is no automation solution for the C-suite, or for that matter, the warehouse floor, making it overwhelmingly likely that the disparity between the top executives' race and the company's workers will continue?