scorecardAmazon's new management principles are a sign of the times for corporates
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Amazon's new management principles are a sign of the times for corporates

Stephen Jones   

Amazon's new management principles are a sign of the times for corporates
Tech3 min read
  • Amazon has added two new leadership principles to its longstanding management code.
  • Following public criticism, Amazon pledged to be a better employer and to ensure responsibility.
  • The changes are a sign of corporates publicly adopting progressive values.

Amazon appears to be reappraising its purpose. In an update on its website , Amazon explained two new statements would be added to its 14-point list of longstanding management principles - to Strive To Be The Earth's Best Employer; and Success And Scale Bring Broad Responsibility.

The exact reason and choice of timing - just a few days before founder and CEO Jeff Bezos hands over the reins to Amazon Web Services boss Andy Jassy - behind the change is unclear, but echoes commitments made by Bezos in his final shareholder letter to make the company a more inclusive and better employer.

The changes follow widespread criticism over Amazon's treatment of in-house staff, and its impact on the environment. Amazon staff have also been calling for the addition of a management principle that directly addresses inclusion for some months.

While Amazon's critics will no doubt continue to feel the company should do more, the update to its core principles reflects a wider trend.

No company, even one as dominant as Amazon, can continue to ignore the interests of both its consumers and employees, many of whom value purpose and ethics when thinking about how they make and where they spend their money.

Amazon knows employees are influenced by ethics

"Increasingly, employees want to invest their time, energy and skills in an organization that is actively engaged on topics that directly impact their lives and align with their beliefs," said Joe Wiggins, director of communications, at employer reference firm Glassdoor.

"Today's candidates, especially younger job seekers, want to work at companies that take a stand and take action," Wiggins added.

Consumers also increasingly care about purpose and values.

According to research by McKinsey, 40% of US consumers said seeking brands that matched their values mattered to them, while 34% claim they have switched brands for purpose-driven reasons during the coronavirus pandemic. Some 9% of these more directly because of perceptions over how a company treated its staff.

A separate poll by Edelman in 2020, of 22,000 global respondents showed that whether they trusted a brand was the second-highest priority. 52% of US consumers believed that companies actively owe it to their employees to speak out against systemic racism.

"In this day and age, anything that leaves a slightly sour taste in your mouth, and that can come from lots of different responsibility issues, is just a reason for people not to use you," said Giles Gibbons, CEO and cofounder of Good Business, a consultancy.

The extent to which consumers say they'll do versus their actions is hard to say - value and convenience are still ranked as the most likely reason behind why a consumer said they're likely to switch products in both studies.

Nevertheless, companies have a desire to project a clean image.

Well-loved companies are expected to influence for the good

Amazon's decision is more likely a reaction to what it will believe is a perceived poor reputation in terms of employee welfare rather than simply just a convenient time of transition, says Gibbons. "The role of a principle is to set the direction of travel and then over time review against it. An organization like Amazon wouldn't be saying it if it didn't genuinely mean it."

It is in every organization's long-term self interest to care for its stakeholders, said Alex Edmans, professor of finance at London Business School and author of "Grow the Pie: How Great Companies Deliver Both Purpose And Profit."

"We often think that social issues should be addressed by governments through minimum wages, health and safety legislation, taxes etc - but global corporations can be more powerful than some countries, and this is the case for Amazon," Edmans told Insider.

Amazon declined to comment further.