Wednesday, May 22, 2019

Competition in Amazon Warehouses

Amazon is using the economic theory of tournaments in its warehouses!   That theory bases compensation on the relative productivity ranking of firm's workers. The "tournament" name tells us that competition between workers is actively encouraged, and how much someone ends up earning depends on how many other workers they can beat.  The winner, ideally, gets quite a bit more than all those losers.

I was taught that the tournaments model might be used for compensation when it's expensive to measure the actual output of individual workers but easy to rank them according to some related measure. Among the problematic aspects of this form of compensation is that someone can win by not only outperforming others but also by sabotaging the ability of others to perform well.*

But Amazon doesn't justify its new gaming environment in such a manner.  Rather, playing a game is supposed to make boring work more interesting:

But they aren’t whiling the time away playing Fortnite and Minecraft. Rather, they’re racing to fill customer orders, their progress reflected in a video game format that is part of an experiment by the e-commerce giant to help reduce the tedium of its physically demanding jobs. And if it helps improve the efficiency of work like plucking items from or stowing products on shelves for 10 hours a day or more, all the better.

Developed by Amazon, the games are displayed on small screens at employees’ workstations. As robots wheel giant shelves up to each workstation, lights or screens indicate which item the worker needs to pluck to put into a bin. The games simultaneously register the completion of the task, which is tracked by scanning devices, and can pit individuals, teams or entire floors against one another to be fastest, simply by picking or stowing real Lego sets, cellphone cases or dish soap. Game-playing employees are rewarded with points, virtual badges and other goodies throughout a shift.
Think Tetris, but with real boxes.
Participating in the games is voluntary, we are told, and the nonparticipants are supposedly not punished for choosing not to game.

So one way of looking at what Amazon is doing is that it's alleviating boredom and making routine work more exciting.  Another way of looking at the same thing is to note that it's trying to squeeze more productivity out of a given number of workers, and at least so far the rewards for that extra productivity (and thus its costs to the firm) are very minor:

Amazon’s experiment is part of a broader industry push to gamify low-skill work, particularly as historically low unemployment has driven up wages and attrition. Gamification generally refers to software programs that simulate video games by offering rewards, badges or bragging rights among colleagues.

And things can get even better for the firm if it quietly keeps modifying the targets in the game, as Gabe Zicherman, an expert on gamification in firms notes:
But, he said, gamification can be used to mask higher productivity goals, because the games’ algorithm is typically kept secret. In customer service jobs, for instance, gold stars awarded for resolving 20 customer concerns may over time require 22 or 25. “When [employers] want to generate more output, they can ratchet those levers,” he said. “It’s like boiling a frog. It may be imperceptible to the user.”
* An example of this from a somewhat different context could be a graduate student who messes with the work of other students in the lab so as to guarantee that they won't graduate early enough to be able to apply for postdoctoral grants or jobs at the same time as the saboteur.