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Why are our fastest growing companies the worst places to work?

“Inside Amazon: Wrestling Big Ideas in a Bruising Workplace” by Jodi Kantor and David Streitfeld (New York Times) and

“At Netflix, Radical Transparency and Blunt Firings Unsettle the Ranks” by Shalini Ramachandran and Joe Flint (Wall Street Journal)

 

One of the mainstays of work life at Enron was an all-staff meeting called the Performance Review Committee. In the meeting, employees were ranked. The lowest-ranked individuals were routinely fired. The PRC caused rampant political maneuvering. Managers sacrificed good but expendable employees to save more valuable members on their team. They ganged up on other factions. This process is colloquially referred to as a “rank and yank” process. At the time, it was celebrated by management consultants like McKinsey and Company and by business schools like Harvard. The PRC was instituted by Jeff Skilling, the head of Enron, a graduate of Harvard Business School and one of the youngest people to make partner at McKinsey and Company. But during the final days of Enron, a external auditor found a toxic work environment, and stratospheric levels of unhappiness. Some suggest it was what brought the company down: employees were more than ready to rat out their colleagues to the Feds.

 

“Rank and yank” is one of the foundational elements of Amazon’s workplace, as revealed by and exposed in the New York Times. Amazon’s office seethes with the same Machiavellian intrigue as Enron. Most employees work 80 hours a week, take no sick days, work nights and weekends, and are granted no maternity leave. Confrontation is encouraged, especially in meetings. Compromise is weakness; it’s a pox that leads to mediocre ideas. There’s a backchannel process in the phone directory in which Amazonians can send secret messages to managers about their directs. Even advertisements for hiring emphasize that you either fit in at Amazon, or you don’t.

 

Why do people at Amazon work so hard? Because they love innovation? Maybe. Working at a growing company like Amazon gives people the chance to dream up big ideas and then implement them quickly. But surely new ideas can arise (and have) in less adversarial circumstances. So why all the pressure? Well, debt is extremely cheap for Amazon and if they don’t take the cheap capital, their competitors will.

 

So what is going on at Amazon? Amazon’s owners are filling up a pool with water. Employees do any number of things with the water. They sell it, make it into ice, and send it to the moon. If the owners stop filling the reservoir, someone else will use the water. So they are now filling the pool and it is getting really full and people are now very into all of Amazon’s various water products and are giving them tons of water. Employees must dig the pool deeper and wider, to find even more new things to do with all this water. Owners have really opened up the spigot now. So everyone better work as much as possible, as much as humanly possible to do something about all this goddamn water coming it. Better come in on the weekend to find a way to use this water! If you don’t use it, it evaporates away. Working like mad is effective, and the more water that gets used, the more water lenders are inspired to give to Amazon. Now it is a big cultural spectacle, these water works, that no one can stop talking about.

 

When capital is rushing in, you best find a way to spend it before it disappears.

 

Netflix is essentially the same workplace. In the WSJ article, workers recall not wanting to comfort a fired, weeping colleague for fear that they would look weak. And anyone can be fired at any moment; management encourages this fear with what they call the ‘keeper test.’ Would you fight to keep your employee on your team? If not, you should fire them. From the WSJ article:

 

“Mr. Hastings’ [the CEO] ring of top executives take the keeper test seriously. At a meeting in late spring of Netflix public-relations executives, one said every day he comes to work he fears he is going to get fired. Karen Barragan, the vice president of publicity for original series, asked how many other people felt that way. A number of hands went up.

“Good, because fear drives you,” Ms. Barragan said, according to people familiar with the meeting.

 

Is Netflix a crazy, anxious workplace because that is the only way to drive growth? Or is Netflix being dosed by a firehose spray of capital? In America, we had tremendous growth in the 1950s and 1960s without a tragicomic shark tank workplace. In fact, job security was expected.

 

Here’s an excerpt from Netflix’s crazy HR manifesto, which is an ode to vague, aspirational language that could be interpreted in any possible way:

 

“Are you courageous? Are you humble? Are you curious and passionate and ask thoughtful questions about the business? Are you able to and open to providing and receiving feedback to be better? Are you scrappy, have grit and willing to roll up your sleeves regardless of your title? Are you a team player? Are you inclusive and self aware?”

 

Why isn’t there an HR Powerpoint that just asks the real questions: Are you willing to work every weekend? Return to work after a week of maternity leave? Alert your bosses to your underperforming coworkers? Rarely see you children? Be glued to your phone?