Amazon's Latest Wrong Move

Cost vultures kill off company's signature leadership program

Amazon continues to ritualistically extract and discard the bones of its culture and past success. It seems the intent is to annihilate all traces of its previous self, forming instead into a cash-slurping, amoebic blob capable of seeping into any profit crevasse it might encounter.

Joyless, bleak, nihilistic. But at least Amazon only employs 1.5 million people.

Less than a week after ambush-firing an entire level of its customer service operation, the company announced (internally and opaquely, of course) the slaying of its 17-year-old Pathways leadership development program.

Of course, it didn’t acknowledge it was killing the program, just as it doesn’t use the term “firing” to describe the fates of those cancelled in its endless spasms of downsizing.

But make no mistake, the changes announced make the program so hollow and useless that it will die soon enough, likely from lack of participation.

Pathways participants were invited last week onto a call with several executives. Once settled in, they were informed by VP John Tagawa, legendary in the UK ops network for his peerless toxicity and garden slug charm, that the deal they signed up for was being altered.

Instead of a 5-year program developing and progressing them to Level 8 roles as Directors and General Managers, they will now get a 3-year program terminating when they reach Level 7. One promotion above where they are hired.

Then again, Tagawa did reassure everyone that they still exist, and that Amazon would continue to acknowledge their existence. Here’s a clip where he seems to say nothing is changing with this change.

Never one to forego a bit of sporting cruelty, Tagawa even joked that this was “good news” for those already at Level 7. Because this means they have instantly “graduated” and have access to the “alumni network.”

Sure, they already had access to that network. And sure, cheapening the idea of graduation retroactively diminishes whatever they’ve done to work toward it. But let’s not let any of that get in the way of his amusement.

No one was beguiled. They all understand exactly what this is about. Amazon is merging the fast track they were promised with the normal traffic flow of career progression. We’ll come back to why this obvious misrepresentation and some other things make it the wrong move. But first, a little context is probably useful.

Pathways Background

For most of the past two decades, Amazon has targeted MBA campuses and retired military officers for recruitment into Pathways, which it has touted as a best-of-its-kind leadership program.

You can watch a former senior executive crow about it in a 2015 video to understand how proud Amazon has previously been of this program. It has always had a selectively-manned recruitment staff chaired by a senior Amazonian. It has always had a dedicated program team to track and support each of its participants throughout their journey.

It has always enjoyed the sponsorship and commitment of executives, particularly those who graduated from the program themselves. Talent reviews have always reviewed Pathways separately, ensuring leaders remained attuned to their duty to develop and progress high-potential talent.

Less clear is whether the juice has been worth the squeeze. Amazon doesn’t publish data on success of its Pathways recruits. No one beyond a small Seattle circle knows the hit/miss rate, or even what yardstick the company uses to measure it.

What we do know is that for 17 years, Amazon has been satisfied and even celebratory about the program. It has paid Pathways managers more compensation than peers at the same level. Pathways have been given more opportunities and permitted to progress faster. They’ve enjoyed unlimited access to Amazon’s executives and learning resources, and have been pushed to the front of the line for developmental opportunities.

Pathways status has always been a key tie-breaker. If two people are delivering at basically the same proficiency, the one with the Pathways tag will get promoted first.

And this all sorta makes sense. Because it was Amazon’s sole proactive vehicle to bolster the intellectual depth and deliberate development of leaders it intended to grow into Directors and VPs.

A Mixed Bag

It didn’t always work, and sometimes it was a disaster.

I joined Amazon via Pathways myself and line managed many participants along my journey.

The main method of development I experienced was being shoved through as many roles as possible as quickly as possible. There wasn’t really much else to the program. I took an interest in rounding out my Pathways by exposing them to broader leader development. Most didn’t.

So when we say “program” … we commit a sin of mislabelling. Basically, Amazon hired people with strong potential, paid them a margin of extra compensation, and expected them to work like rented mules to develop themselves via compressed experience and hard knocks. It also expected them to be geographically flexible, moving on short notice to wherever opportunities were. This expectation was not uncommonly abused as exploitative leverage to fill labor gaps. I watched that coercion drive some of the best out of the program.

More worrying for me in the early going was that none of my non-Pathways peers understood what the program was. To the extent they did understand it, they were resentful that someone else was making more money and getting promoted faster. There was residual animus that I had to overcome to reach fruitful relationships with essential teammates. The company was aloof to this dynamic, which caused some of its recruits to become isolated and ultimately unsuccessful.

And then there was the problem of bad promotions.

Pathways as a tie-breaker was always controversial. But sometimes, it was more than a tie-breaker. When combined with other asterisks and overrides such as visible diversity criteria, high-level sponsorship, high-visibility project involvement, and other assessment curveballs, it allowed some individuals to outrun their radar coverage.

I saw a handful of really bad Pathways promotions in my part of the network. One individual who had failed miserably as a senior manager and basically could not get along with anyone was laterally transplanted, stayed in the program, was promoted into a directorship, and became active as an influencer in the alumni community. Another notorious bully with sloping shoulders sailed through to GM a couple years early despite an allergy to the dirty work of hands-on people management. No one could believe it when the promotion was announced.

And the problem with making someone into a Level 8 in Amazon is that it becomes difficult for them to fail. They had sponsorship to get there. If they are terrible, the company must not know what it’s doing, so they can’t be terrible. They are given insight and access that could damage the company if wrongly appropriated, and become less disposable as a result. So when they struggle, they get support. They get top cover. They get chances to remediate that the people reporting to them would never get.

And so they survive. If they survive long enough, they become executives. Which, if they are poor leaders, makes them a good fit in the current culture. But it also allows them to inflict whatever toxicity and ineptitude they have dragged with them on a much larger scale.

There are a few highly-placed Amazonians who are true shockers in their total lack of emotional intelligence, leadership ability, and paucity of critical thinking. Too often, when you dig into how they got where they are, the Pathways stamp of approval is there.

Don’t get me wrong. There are some superb Pathways graduates at Amazon. But I’ve never been persuaded having an MBA or being a military officer gives someone fast-track leadership potential by default. Amazon’s recruitment into the program has lacked the right level of sophistication, and sometimes the pressure to hit quotas has led to frogs getting smooched.

Still the Wrong Move

So if the program is such a jumble, why do I argue Amazon is making a mistake?

There are five reasons. Actually six when you accept that any decision made by the current executive team should be considered presumptively wrong until it proves otherwise.

1. If not Pathways, then what? In the 16 minutes of video I was able to acquire and review, four different executives and one program manager spoke. None of them mentioned what Amazon will be doing to develop leaders instead of this program. As wafer thin and blunt a tool as it has been, the idea of having no structured program to locate and develop senior leaders for a company of 1.5 million people is insane. Amazon runs warehouses. Hundreds or thousands of people work in them. Safety, quality, customer experience, productivity, cost control … everything the company depends upon for its operational success requires strong engagement of its frontline employees. With no purposeful development of people to do that role, it will atrophy over time.

2. Bait and Switch. People recruited into a 5-year program with L8 graduation should be getting what they agreed to and bargained for. The new version of the program should be offered to new recruits, with everyone else grandfathered. Why does Amazon feel so comfortable doing something obviously alienating and unethical? Why does John Tagawa feel safe poking fun about it? Easy. The company has entered the Jack Welch phase of its journey, with perpetual downsizing now a core executive commitment. If this alienates some people and they choose to quit, it will just reduce the cost, PR exposure, and hassle of future layoffs.

3. Tail Wagging the Dog. Later in the video, VP Stefano Perego explains that the Pathways program was previously expanded because the business needed to produce more Level 8s to contend with expansion. What he’s saying implicitly is that now growth has slowed, there is reduced need for Level 8s and therefore a need to reduce Pathways. I don’t just abhor this take because it reduces talent management to a commodity exchange, developing leaders not for the sake of doing so, but to fill slots. What’s more concerning is that the company is letting the peaks and troughs of growth impart radical change into its culture. Cycles of business activity will come and go. Commitment to hiring and developing the best should not. It is an old and well-worn mistake of companies to surrender their growth mindset and long-term commitments to rake in short-term profits, only to find they are not able to scale again.

4. Dishonesty. Ending Pathways at Level 7 means a loss of opportunity for those in the program. Instead of confronting this head-on, executives choose to deliver a word salad, pretending that nothing is changing. Well, if nothing was changing, there would be no reason for the change. So they should just talk straight. Eliminating two years and a promotion level from the program dissolves a barge load of differential compensation. Amazon has already been reducing recruitment and program management headcount ahead of this announcement. So the motive, quite clearly, is cost reduction and short-term cash. Misrepresenting that to a bunch of MBAs doesn’t fool them. It just layers dishonesty atop an unpopular change, compounding the negativity and loss of trust.

5. Autocracy. Here we encounter yet another major decision delivered from the high tower in Seattle with no debate, no dialogue, and no appreciation for the impact. I retain relationships with many senior HR and operations leaders in the North America and UK networks. I don’t know a single one who was consulted about this or even had advance knowledge it was coming. It is another left-field surprise which has made liars out of line managers, nullified development plans, and damaged morale in the network.

It’s possible to make a right decision or neutral decision, but to go about it so badly that it becomes the wrong decision along the way. Amazon is unintentionally proving that how you decide matters more than what you decide.

Shock pay freezes, ambush-style layoffs, profit gluttony absent employee recognition, and now a slain people tradition without a credible decision process. It’s genuinely shocking for me as a former Amazonian to see how swiftly and totally the company is running away from its value system and embracing the slime-addled routines of vulture capitalism.

But I reckon this is just the beginning. I’ve sold my Amazon shares, because I don’t believe the business model can be sound if a company this profitable still doesn’t believe it can pay, recognize, and develop people appropriately. Whatever is lurking underneath all this, I want nothing to do with it.

Increasingly, I’m not the only one, if my grapevine is to be believed.

The people left cleaning up this mess are getting tired of the current routine. They are losing trust and confidence in Amazon’s executives. Many have lost their sense of pride in the brand and are uninspired if not outright alienated by the chicanery of the past two years.

We may yet find out if Andy Jassy and his crew are capable of running the operation themselves. They are tempting a massive brain drain which could leave them much more adrift than they seem to recognize.

Then again, in this case they seem to be removing the drain plug themselves.

TC is an independent writer and expert in organizational leadership.