Compare their results to all others, and you too will call Amazon… A Giant Recruiting Machine.
Note this case study is designed for quick scanning.
Yes, Amazon recruiting is in a class by themselves because they relentlessly hire when others cry for applicants. Of course, I don’t loosely use the phrase “A giant among children.” However, after doing numerous corporate case studies over the years covering other recruiting powerhouses (including Google, Apple, and Facebook). I quickly found that their record recruiting volumes across a broad range of jobs and locations could only be labeled as breathtaking. And just by chance, if you think that I’m not giving enough credit to most other corporate recruiting functions (even Google pales in comparison). You should realize that only a mere 18% of HR professionals even describe their own recruiting function as “top-notch” or “advanced.”
|In a snapshot – Why Amazon is a recruiting giant – during our severe labor shortage in 2021. Amazon hired a record-breaking 500,000 employees worldwide, actually doubling the previous year’s hiring total (the previous recruiting leader Google hired a mere 20,000.) In addition, literally, everyone wants to work there. Because LinkedIn named Amazon as the #1 place for US workers in 2021. They are so popular that they received an astonishing 30 million job applications (that’s not a typo) for their open jobs, 10 times the previous 3 million record at Google. Last year Amazon even received a record 1 million applications during a single week!|
The Six Pillars Of Recruiting Excellence At Amazon
This Amazon case study reveals the many factors that cause Amazon’s recruiting function to be so far ahead of the competition. They are truly a giant because they excel in each of the six pillars of excellence in recruiting. The six pillars that make Amazon so successful are:
- Their recruiting impacts business results
- Their proven capability of handling huge recruiting volumes across a wide range
- Their fanatical insistence on quality hires
- A scientific data-driven recruiting approach is the foundation of their success
- They utilize a one-size-fits-one agile hiring process
- Their targeted recruiting sub-programs are second to none
Let’s jump immediately to the first and most important strategic pillar – Amazon’s record-breaking strategic business and recruiting results.
Pillar #1. Amazon’s Recruiting Impacts Business Results
Amazon recruiting is aiming to go beyond simply producing recruiting results. And to also directly impact their corporation’s business results. Those results include:
- Hiring is the single most important element in Amazon’s business success – Jeff Bezos made it clear. “Setting the bar high in our approach to hiring has been, and will continue to be, the single most important element of Amazon.com’s success” (that’s not just the most important HR function, but the most important business function). Jeff began making this recruiting priority clear in the company’s very first annual shareholder letter in 1998. Most other corporations don’t admit this reality. But, it’s simply not possible for a large corporation to innovate and grow rapidly without fully funded exceptional recruiting.
- Yet with all this emphasis, recruiting remains their primary challenge – The CFO recently publicly revealed that even with its current high priority, recruiting maintains a primary challenge. When he noted, for example, in the package movement area, “The availability of workers is Amazon’s primary challenge.” Rather than resting on their laurels, they realize that they continuously need to get much better is a primary reason they continue to improve in recruiting.
- Amazon’s size and growth are made possible by its excellence in recruiting – the prime limiting factor that restricts the company from maintaining its quantum growth rate is the ability to successfully recruit a huge volume of employees each year. And because Amazon employs about 1.4 million people globally, they have already done a high recruiting volume. The employee headcount makes them the US’s second-largest private employer (after Walmart). I predict that they will soon surpass Walmart for the #1 spot as the largest employer in the US. I would also note that Amazon has helped to reduce unemployment. Because of the 400,000 people they hired for their U.S. operations network, 45% were previously unemployed. Their new CEO, Andy Jassy, reinforced the importance of continuous growth through recruiting by announcing that he was planning to hire 55,000 people for corporate and technology roles globally during his first months. That’s close to all of Facebook’s current headcount and nearly 1/3 of Google’s headcount.
- Amazon’s multi-industry innovativeness is made possible by their recruiting approach – although the BCG rated Amazon as #3 in innovation, I find that it deserves the top ranking. Unlike other top innovation firms, Amazon has led innovation and disrupted 12 completely unrelated industries. Since the beginning, their CEO has insisted on raising the bar for new hire performance. Along with his insistence on acting like it is still “Day 1.” He has made it clear to everyone that mavericks are “not always the easiest to get along with.” He expects everyone to hire people who are “a little bit radical or a bit of a rebel because they often spark innovative ideas.” Assessing applicants on their leadership principles and giving them “real problems to solve” during interviews” are two ways Amazon identifies innovators.
- Recruiting has made a major contribution to its stock value – businesswise, their recruiting and operational excellence have directly contributed to the corporation’s incredibly high stock valuation. Currently, Amazon is the fifth most valuable global company in market cap valuation, nearly 1.65 Trillion dollars.
- Recruiting has made a major contribution toward having an extremely productive workforce – the average revenue generated by each employee last year was $353,000, which is an amazing ROI. HR helped maintain that productivity by increasing management prerogatives by remaining a 100% union-free workforce.
|This would never happen where you work. Amazon disrupted their business for a hiring initiative – Amazon demonstrated how important recruiting was to its business in July 2012. They replaced the normal consumer-focused primary website front page and populated it with only a Jeff Bezos signed recruiting letter addressed to its customers. That letter announced to all of Amazon’s customers that it was hiring and instituting a new jobs initiative (its Career Choice Program).|
Pillar #2. A proven capability for handling a huge volume of recruiting across a broad range of positions and locations
Amazon recruiting has proven over the years that it has the capability of recruiting a huge number of new hires across many different job families and locations.
- Recruiting volume and capability are second to none – the fact that during 2021 Amazon’s recruiting increased headcount by a whopping 63% in a single year. The largest percentage increase in headcount ever accomplished by any large employer during peacetime! This is but one startling indication of recruiting’s agility and capability to ramp up their recruiting capability dramatically. Amazon, of course, must have an exceptional recruiting capability because it is America’s second-largest employer (and I predict that it will soon surpass Walmart). The workload handled by their recruiting function is unparalleled because it has as many as 30,000 openings at a single time.
- Powerful Employer Brand means that everyone considers them – it is clear that because of its HR work, Amazon is recognized as an excellent place to work. And its rankings, notoriety, and exposure are major contributors to its recruiting success. Some of their notable recognitions include:
- This year, LinkedIn’s top US employer ranking – Amazon ranked by the prestigious professional network LinkedIn as the #1 company where Americans want to work and develop their careers.
- A global best employer also – this year and a ranking of global employers, Amazon was ranked #2 on the “World’s Best Employers” list by Forbes.
- Fortune’s world’s most admired companies – this year, Amazon was ranked #2 on Fortune’s prestigious “World’s Most Admired Companies” list for the fifth year in a row. (After Apple).
- BCG’s most innovative firms – this year, the Boston Consulting Group rated Amazon #3 on their “most innovative firms” list (after Apple and Alphabet).
- Amazon is the best at attracting a record-breaking volume of applicants – as previously noted. In 2020 Amazon received a record-shattering 30 million applications, an all-time record. But it is especially impressive because it occurred when almost every major corporation and business struggled to get even a few applications for each job. The attractiveness of Amazon is illustrated by the fact that they received a breathtaking “1 Million Job Applications (in 1 day)” as part of their 2021 annual Career Day event.
- Amazon has the capability of recruiting over an amazing range of jobs – companies like Google and Facebook have an easy recruiting job because they recruit mostly engineers. In comparison, Amazon must have the capability of recruiting everything from AI experts, pilots, book specialists, entertainment specialists, and cloud experts down to package handlers. In fact, Amazon can recruit across five extremely diverse business units (Amazon.com, AWS, Alexa, Whole Foods Market, and Amazon Prime) and 32 distinct technical groups. Their new Project Kuiper will even require them to hire rocket scientists as they attempt to launch satellites into orbit to widen their broadband access. In my view, their recruiting leaders deserve major kudos for developing their recruiting capability in so many completely different skill areas. And because they are a technology company, they rely heavily on technology throughout their recruiting function.
- Amazon’s recruiting capability is truly global – because it is a worldwide e-commerce company, Amazon operates and recruits in 13 countries. In the US alone, it operates more than 930 facilities (including two headquarters locations). And last year, it received job applications from 170 different countries.
Pillar # 3. Fanatical Insistence On Quality Hires
Their third and most important pillar of recruiting excellence is their fanatical insistence on only hiring quality candidates. In comparison, few corporations spend the time defining and measuring the quality of hire (i.e., top-performing new hire). And only 36% even attempt to measure the quality of hire. Amazon ensures that they will get those quality hires using seven unique recruiting approaches. They include:
- Their goal is to be the “Earth’s Best Employer” – yes, Jeff Bezos’ stated, and only a little bit outrageous, goal is to make Amazon “the world’s best employer. However, in my experience, it is a goal that they have already met. Executives, managers, HR professionals, and recruiters work together to reach it. In their words, they reach that goal because “Their leaders work every day to create a safer, more productive, higher-performing, more diverse, and more just work environment. They lead with empathy, have fun at work, and make it easy for others to have fun. Leaders ask themselves: “Are my fellow employees growing?” “Are they empowered?” “Are they ready for what’s next?” “Leaders have a vision for and commitment to their employees’ personal success, whether that be at Amazon or elsewhere.”
- The Bezos approach to hiring is laser-focused on quality – their hiring managers and the recruiting function’s insistence on quality has remained solid throughout the years. I find that this fanatical insistence on quality is in direct contrast to the approach taken by most hiring managers at other corporations. During this candidate shortage, managers have been allowed in desperation “to fill butts in chairs.”
Amazon’s #1 advocate of hiring only quality employees is Jeff Bezos. He has shown his expectations in many often-repeated quotes, statements, and expectations. Including:
- “It would be impossible to produce results in an environment as dynamic as the Internet without extraordinary people… Setting the bar high in our approach to hiring has been and will continue to be the single most important element of Amazon.com’s success.”
- “If you can’t hire quality, don’t hire at all.” “I’d rather interview 50 people and not hire anyone than hire the wrong person.”
- “Don’t “settle for second best” when hiring. Instead, “Do what it takes to find the best people available.”
- “Every time we hire someone, he or she should raise the bar for the next hire so that the overall talent pool was always improving.” Bezos “doesn’t care about an efficient hiring process.” “And he certainly “Doesn’t believe in making a hire, simply for the sake of filling an open role.”
- At Amazon, raising the bar means answering three questions for each candidate. First, “Will this person raise the average level of effectiveness of the group they’re entering?” Next, it asks, “Will you admire this person?” And last, it asks, “In what important area might this person be a superstar?” (In cases where they should be placed in a different job than they applied for).
- Amazon utilizes “bar raisers” as its primary way to ensure quality – a key Amazon expectation for leaders – “Is to raise the Amazon’s use of “bar raisers.” They get that name because their sole role is to ensure that each new hire will “raise the bar over the last incumbent” in each open job. The work during the interview process is to provide outside and neutral candidate assessments. To prevent a candidate from focusing on these individuals, they are anonymous to the candidate. These quality control individuals are from outside the team that is doing the hiring. And as a result, they are more likely to be critical because they don’t face the same “pressures to immediately fill the job” that hiring managers and teammates do. With this volunteer role, they accept the responsibility to literally “veto” any candidate they feel will not be a good fit for Amazon. Amazon’s new hires are quality employees because Amazon promoted more than 68,000 employees globally during 2020.
- Hiring is a unanimous team decision – a second method for ensuring that they only hire a quality candidate requires a unanimous team decision. One prominent former Amazon executive noted that Bezos “ Believes hiring should not only be a team effort. It should be a team decision.” So in most cases, “After final interviews, each member of the hiring team meets in a room to share their opinions on each candidate. And after a discussion, a vote takes place, and the results have to be unanimous for the person to be hired.” A single “no” vote would mean that the team will have to go back and search again for the ideal employee.
- Amazon’s “unregretted turnover metric” helps fix hiring errors – Amazon assigns an “unregretted turnover metric” to its managers. It serves as an imperfect post-hire check on weak performing employees that somehow made it through their hiring process. This after-hiring double-check mirrors the approach that General Electric had under Jack Welch. Under this “regrettable turnover metric,” Managers at Amazon have a target rate for annual employee turnover. This means they are expected to lose a specified number of employees that they “wouldn’t regret losing” (i.e., below-average performing employees). Although this practice may appear harsh on the surface, it forces hiring managers to reassess each new hire periodically.
- Paying employees to quit – this “Pay Employees to Quit” approach is a second post-hiring check on quality under this program (borrowed from Zappos). Amazon proactively offers incentives to unhappy recent hires during their first five years. The goal is to force unhappy recent hires to take a minute once each year to decide if they “really want to stay.” Based on the premise that keeping workers unsure of their commitment to Amazon will harm both the customers and the team. So if a worker decides that they don’t want to be here, they can get between $1000 and $5000 for walking away.
- Finally, improve new-hire quality by assessing candidates on Amazon’s leadership principles – one of the primary ways Amazon maintains quality hiring and fit. By assessing every candidate on Amazon’s published “leadership principles.” So each candidate at Amazon is expected to know and commit to following them (these principles are posted on their jobs website). As a result, everyone involved in hiring is expected to assess every candidate’s knowledge and commitment to these principles. At least 3 of these 15 principles relate directly to recruiting. Those three principles are below:
- Hire and develop the best – leaders raise the performance bar with every hire and promotion. They recognize exceptional talent and willingly move them throughout the organization. Leaders develop leaders and take their role in coaching others seriously. We work on behalf of our people to invent mechanisms for development like Career Choice.
- Insist on the highest standards – leaders have relentlessly high standards. Many people may think these standards are unreasonably high. Leaders continually raise the bar and drive their teams to deliver high-quality products, services, and processes. Leaders ensure that defects do not get sent down the line and that problems are fixed, so they stay fixed.
- Deliver results – leaders focus on the key inputs for their business and deliver them with the right quality and timely fashion. Despite setbacks, they rise to the occasion and never settle.
If you’re interested in the 12 remaining leadership principles, click here. The remainder mostly focuses on key workforce capabilities, including customer obsession, innovation, learning, and ownership of problems.
Pillar #4. A scientific data-driven approach is the foundation for their success
During my assessment, I found that a primary reason why Amazon recruiting excels in so many different areas is that it operates under the umbrella of one of the most strategic HR functions. Their HR function is guided by 7 HR tenets, which are the guidelines that every HR function follows to “Maintain a Culture of Builders and Innovators. In my experience, shifting to a data-driven approach is required to maintain a culture in a large organization. Fortunately, Amazon is one of only a handful of HR functions (along with Google, Sodexo, and Nestlé Purina) that already makes decisions based on data and results metrics. Find that HR tenet in the box below.
|A foundation goal is to be scientific and data-driven – We seek to “be the most scientific HR organization in the world.” We form hypotheses about the best talent acquisition, talent retention, and talent development techniques.And then set out to prove or disprove them with experiments and careful data collection.”|
Every strategic recruiting function should know and follow three additional Amazon HR and leadership tenets. They are:
- Recruiting must focus on directly impacting business results – because BCG research revealed that “recruiting has the highest impact on business results.” Therefore, it makes sense to follow and adhere to their HR tenet “We manage HR as a business.” Acting like a business starts with, rather than simply “aligning with business goals,” recruiting leaders purposely set recruiting goals and manage recruiting actions and resources to produce the maximum direct and measurable impact on business results. The next step is to reduce recruiting approaches that can’t demonstrate their business impact. And the final step is to convert recruiting problems and results into their dollar impact on corporate revenue (e.g., our recruiting efforts on sales jobs allowed us to maintain $232.5 million in sales revenue). Reporting recruiting results in dollars of revenue impact allow executives to quickly compare your dollar impacts to those from other HR and business functions.
- You must assume continuous obsolescence along with rapid learning – you should also follow another of Amazon’s HR tenets. Which is “Learn and Be Curious.” Because in an unpredictable world, you simply can’t prepare for most things. The secret to thriving is rapid continuous learning immediately as new problems and opportunities arrive. So the first step in a recruiting world where everything changes should be operating under the assumption that every current thing in recruiting will soon become obsolete. And, of course, you won’t be able to detect that obsolescence without collecting and applying performance data. Next, you must also continually be looking for a replacement for every current recruiting approach and tool. And that can only be accomplished by continuously learning about evolving business and recruiting approaches at other advanced companies. To identify the ones that might be applied to your recruiting situation. And finally, you won’t be able to determine if your new solutions are superior without following the tenet hypothesis testing covered in the next bullet point.
- The utilization of hypothesis testing and experimentation – perhaps the most prominent difference between traditional and scientific recruiting is an insistence on hypothesis testing to discover what works and what doesn’t. The HR tenet is “We form hypotheses about the best talent acquisition, talent retention, and talent development techniques and then set out to prove or disprove them with experiments and careful data collection.” For example, a split-sample experiment could prove or disprove the hypothesis that “Diverse interviewers select more diverse candidates” (They don’t). Google HR has also long been a supporter of hypothesis testing. An outrageous example of Amazon’s hypothesis testing occurred when their AWS group experimented by placing a job ad on the Tinder dating site.
|An experiment on hiring transitioning military personnel – AWS recruiting found that transitioning military had its needed skill set, and they matched their culture. However, AWS found that they didn’t quite have the needed technical expertise. So they ran an experiment and created an apprenticeship program for them. They first ran a pilot with 15. And after experiencing great success, the number of apprentices eventually exceeds 1000.|
End of Part 1 of this Amazon recruiting case study
The second part of this 2-part series will be published on 1/24/22. And after that date, it can be found at www.drjohnsullivan.com. Part 2 covers a description of Amazon’s agile “one-size-fits-one” hiring process and the 10 simply amazing, targeted recruiting subprograms that Amazon offers.
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