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One expert explains why Amazon's management style should be emulated

Anjalee Khemlani
Senior Reporter


Despite its obsession with data and analytics — and well-publicized work culture issues — Amazon (AMZN) is still a company with a management system that should be emulated, an author said on Tuesday.

According to Ram Charan, a co-author of a book that praises Amazon’s management system, said that despite those problems, the company is still envy-worthy.

How Amazon treats its workers “is a very major issue, for every company. The key thing you should know [is] that no company is perfect,” Charan told Yahoo Finance.

FILE - This Monday, July 8, 2019 file photo shows the Amazon Fulfillment warehouse in Shakopee, Minn. Amazon is on the hunt for workers. The online shopping giant is looking to fill more than 30,000 vacant jobs by early next year, and is holding job fairs across the country next week to find candidates. The job fairs will take place Sept. 17, 2019 in six U.S. cities: Arlington, Virginia; Boston; Chicago; Dallas, Texas; Nashville, Tennessee; and Seattle. (AP Photo/Jim Mone, File)

Amazon has spent the past 25 years disrupting retail and setting the bar for e-commerce, and that explosive growth has come with growing pains of labor concerns both in warehouses.

The rush to ensure one-day shipping orders are filled, and third-party delivery drivers who claim the job provides little time to take breaks, has lower-level fulfillment workers feeling the pressure.

But the management style of Amazon in the corporate offices is enviable, Charan maintained, and will probably be emulated by other companies in the future.

Charan’s book focuses on the obsession with metrics at corporate, quick decision-making and a focus on long-term gains rather than quarter-by-quarter views based on Wall Street’s expectations.

This, Charan said, is how businesses who hope to thrive today should operate — especially in a retail sector that’s being battered by fierce competition, and the shift to online purchases.

The author noted that for companies, the secret is they don’t need large volumes.

“You do consumption of cash, and then you manage it, and it has a principle of increasing returns,” Charan said. “So if you look at Amazon, from 20% gross margin, to 40%, and it has been increasing compared to the traditional retailers.”

Anjalee Khemlani is a reporter at Yahoo Finance. Follow her on Twitter: @AnjKhem

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