To build, operate and sustain an advantaged business model, building a championship culture and team is a critical, non-negotiable pillar. The Amazon leadership principle which directly addresses this requirement is Amazon Leadership Principle #6 – Hire and Develop the Best.
The ability to attract, nurture, and retain top talent has become a defining factor for organizational success. This truth is deeply embedded in Amazon’s sixth leadership principle: “Hire and develop the best.” As companies strive to navigate the complexities of today’s market, understanding and implementing this principle can provide a competitive edge. In this blog post, we will delve into how Amazon’s commitment to “hire and develop the best” has fueled its unprecedented growth and innovation, offering invaluable lessons for leaders across all industries.
Amazon Leadership Principle: 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 seriously their role in coaching others. We work on behalf of our people to invent mechanisms like Career Choice.https://www.amazon.jobs/content/en/our-workplace/leadership-principles
In 2009, Amazon acquired e-commerce footwear company Zappos.com for $807 million in Amazon stock, plus about $40 million in cash and restricted stock.1 While many were shocked by the deal, it made perfect sense to me—though not for the reason given in Jeff Bezos’s official statement, which read, “Zappos is a customer-focused company. We see great opportunities to learn from each other and create even better experiences for our customers.” While that is true, the primary organic connection between the two firms lies in their hiring policies.
Former Zappos CEO and tragically deceased Tony Hsieh has become the latest standard-bearer for a successful CEO-driven company culture. He has been quoted as saying that hiring mistakes had cost his organization $100 million. In response, he implemented a fairly radical policy of paying new hires to quit. It’s a strategy that’s so counterintuitive, yet so transparent in its thinking, that I was immediately reminded of Jeff Bezos.
What’s the thinking behind paying employees to quit? Pretty simple, really. It’s about testing for commitment. If you’re willing to take $2,000 to leave Zappos (which was the offer the last time I checked), then you obviously haven’t bought into what the company is trying to do. I don’t know for sure, but I suspect that Hsieh’s gutsy “all-in” requirement from his employees was a major driver in Jeff’s decision to buy his company.
Jeff didn’t offer me money to leave Amazon at any point during my tenure, but I did endure twenty-three interviews over six weeks before being hired in the first place. I’ve heard others compare the process to the oral exam that a Ph.D. candidate must survive. I don’t have a doctorate, but that sounds about right. The scrutiny is very, very intense. A typical interview day at Amazon can last nine hours. You may find yourself speaking to a group of people who will be working for you if you are hired. You may find yourself sitting in on a strategic meeting with company brass. You may be expected to contribute a solution to a real-time problem. You may even be shown the door before you ever get started. This is a test of commitment that is very comparable to Zappos’s $2,000 exit offer and reflects the same belief in the crucial importance of hiring and retaining only the right people.
From the beginning, Jeff understood how important it was to seed Amazon with people who embodied the culture he wanted to create—that your people are your company. As a result, his standards are shockingly high. As Jeff often says, it’s better to let the perfect person go than to hire the wrong person and have to deal with the ramifications. Why? Because it is a difficult, time-consuming, and expensive process to get rid of a bad hire, and in the meantime, they are dragging down those around them by their failure to help keep the flywheel of continuous growth and improvement humming at full strength.
Raising the Bar on Hiring
In the beginning, Jeff personally approved every hire. After a few years, for obvious reasons, that became impossible to do. Therefore, in order to maintain his own high standards within the rapidly expanding organization, he created what he called the bar raiser.
The bar raiser is an individual appointed to serve as the last line of defense to ensure Jeff’s standards of excellence. The bar raiser has veto power over any potential hire—regardless of the candidate’s pedigree or his popularity among the rest of the hiring group. The bar raiser’s job is to ensure that the next hire should increase the company’s collective IQ, capacity, and capability, not decrease it. He or she also has to gauge how “fungible” the candidate is—that is, how capable of expanding into new roles and new areas of the business. Jeff famously put the philosophy this way, “Five years after an employee is hired,” he said, “that employee should think, I’m glad I got hired when I did because I wouldn’t get hired now.”2
It’s quite an honor to be named an Amazon bar raiser. The selection is based on the success and retention of the hires you’ve already made. Yet, in having a veto over hiring, the role often puts you in direct opposition to the team doing the hiring. As an outside voice, your job is to be an independent force, free from the pressure of work demands that sometimes lead hiring teams to make hasty or shortsighted decisions.
Even if you are not the Amazon bar raiser, your role in the hiring process is vital. Jeff would frequently tell us all that a hiring decision was probably the most important decision we could make as a member of the organization. We all knew that every successful candidate’s career was inextricably linked to our own. And this was, without a doubt, the most effective forcing function for excellence.
Another was our custom recruiting application, which forced every interviewer to provide a lengthy, narrative analysis of the candidate and a yes-or-no recommendation (with no “maybe” option available). Your notes were expected to be detailed enough to justify your answer; the after-interview questioning could almost be as intense and consuming for the interviewer as it had been for the interviewee. The data was then immediately processed and applied to the next round of interviews. The process was so efficient that the next set of interviewers would often adapt their questions to push the candidate in directions suggested by answers they had provided just an hour or two earlier. As an interviewer, I sometimes forgot to listen to the candidate’s answers because I was so busy directing my line of questioning to suit the previous interviewer’s data or scribbling madly to record everything said.
After the interviews were completed, the hiring manager and bar raiser would review the notes and the votes of every interview. If a debrief was required, it was mandatory that everyone attended. And, of course, the bar raiser could veto the hire without question, no matter how the team or hiring manager felt.
It was an absurdly rigorous process, one that would be considered wildly excessive at almost any other company. But if you really believe that your people are your company, why not invest the time and effort required to identify and hire only the very best?
Because standards are so high, hiring can be problematic. What many people don’t realize is that Amazon almost went out of business in 2000, not long before I arrived. There was not enough revenue and way too much cost. The stock price plunged from $100 to $44 to $20 to below $5. The company closed down customer service, and massive layoffs ensued. Over the next few years, it was tremendously difficult to hire the best because we couldn’t pay them what they deserved, and the stock options were far from enticing. There was a lot of risk, and we basically expected people to take a pay cut to join us.
Yet, the incredible commitment to hiring only the best remained unwavering. One colleague of mine wasn’t able to find a suitable hire for over two months, so they axed the position and told him that, if he hadn’t been able to make the hire, then he obviously didn’t need the person in the first place.
Of course, Amazon isn’t above taking advantage of shortcut methods for identifying great talent. In a 2012 CNN Money article, Adam Lashinsky explained how Amazon had gone on a “military hiring spree” because Jeff was impressed with veterans’ logistical know-how and bias for action.3 In fact, Amazon has a dedicated military recruiting website and highly consistent hiring and retention record for ex-military personnel.
This practice of hiring veterans isn’t about expressing gratitude for ex-soldiers’ service to our country. Veterans fit Jeff’s business model. As a result, Amazon has not bothered to launch a huge PR campaign about its military employment program. Jeff simply realized it was good business.
The Passing Grade Is A
The kiss of death at Amazon is being known as a “solid performer.” While this might seem like a perfectly acceptable description at another company, Jeff’s perception was different. As far as he was concerned, everyone at Amazon is fortunate to be there. People who didn’t excel at their jobs were failing to contribute appropriately. In effect, they were freeloading off the rest of us. As leaders, we were expected to work with laggards like these to improve their performance into the A+ category or create an incentive for these people to leave.
As a result, Amazon experienced systematic and significant turnover during my years there. Jeff told us to focus our positive reinforcement on our A+ people; he was comfortable with a high degree of churn below that standard.
This strategy was distinctly underlined by the compensation policy. At Amazon, the vast majority of stock options go to the A+ employees; only the crumbs go to the B and C players. And since the salaries were, relatively speaking, quite low (I think the top salary at the time was $155,000), a vast majority of our compensation came in the form of stock. Therefore, being “a solid B” meant a significant falloff in stock options and promotion opportunities. It was all part of Jeff’s way of instilling a sense of ownership in the company—our financial fortunes were directly tied to the success of the company.
Only seeking out, hiring, and retaining the very best people make it possible to insist upon the highest standards of performance in the everyday activities of your company.
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At the core of Amazon’s success is its unwavering dedication to building a team of exceptional individuals who drive the company forward. “Hire and develop the best” is not just a mantra; it’s a strategic approach that prioritizes excellence and continuous improvement. By setting high hiring standards and investing in its employees’ ongoing development, Amazon ensures that it remains at the forefront of innovation and customer satisfaction. This principle is a testament to the company’s belief that its people are its greatest asset, and it underscores the importance of creating an environment where talent can thrive.
Onward!
John
John Rossman is a keynote speaker, innovation coach, and strategy advisor. He writes a free substack newsletter titled The Digital Leader Newsletter. It is a weekly coaching session focused on customer-centricity, innovation, and strategy. He wrote “the book” about the Amazon Leadership Principles.We deliver practical theory, examples, tools, and techniques to help you build better strategies, plans, and solutions—but most of all, to think and communicate better.
