How Amazon learned to love veteransMay 7, 2012: 5:00 AM ET
Won over by their logistical know-how and "bias for action," the online retailer is on a military hiring spree.
FORTUNE -- In a world where the typical preparation for becoming a junior executive at a Fortune 500 company is to go to college, sign on to some big corporation's management-training program, and perhaps pick up an MBA, Dennis Clancey stands out. The fresh-faced 29-year-old is an operations manager at an Amazon.com warehouse in Phoenix, one of the 34 Amazon runs across the U.S. He oversees scores of workers who make sure products are accurately picked, packaged, and routed for delivery to Amazon's millions of customers.
Clancey's training, however, didn't involve earning a degree in the business of logistics management. Instead, the West Point graduate served as an infantry platoon leader in Iraq and then as an operations officer with the U.S. Army Space and Missile Defense Command in Colorado Springs. There he scanned the digital horizon for incoming intercontinental ballistic missiles aimed at the United States. (If he'd detected one, he would have had less than 30 minutes to advise the lieutenant colonel whose job it was to initiate the missile defense system to try to save the world as we know it.)
Why would someone who'd been trained to protect America against incoming missiles want to work at a company whose more pedestrian mission is to relentlessly drive down retail prices on goods large and small? "I was attracted to peak season," says Clancey, referring to the chaotic, all-hands-on-deck period at Amazon that merchandising civilians would call the pre-Christmas shopping rush. Having joined Amazon in September 2010, just before "peak" began, Clancey says he needed to "train up" in a short period of time, military-speak not quite having exited his system. "That excited me to come here," he says. "I stayed because of the leadership and the relationships we have with associates."
"Associates" are Amazon's hourly workers, the workaday world's equivalent of the military's enlisted personnel. If Clancey's aw-shucks fealty to his employer and his subordinates seems a little too good to be true, well, that's just one of the many benefits a company like Amazon (No. 56 on the Fortune 500) gets for placing its talent bets on those who cut their teeth in uniform.
In fact, Amazon is one of a growing number of U.S. companies that is taking advantage of a bumper crop of well-trained officers and enlisted people transitioning out of the services. These corporations are filling a need too, in part because the Pentagon typically excels more at fighting wars than helping its personnel find civilian jobs. In 2011, unemployment among the 2.4 million veterans who have served since the 9/11 attacks -- a cohort the U.S. Department of Labor categorizes as "Gulf War-era II veterans" -- was 12.1%, compared with a rate of 8.7% for all nonveterans in the U.S. Male veterans ages 18 to 24 were out of work at a rate of 29.1%, compared with 17.6% for male nonveterans of the same age.
Few, if any, Fortune 500 companies have embraced veterans more enthusiastically than Amazon. In 2011, 25% of new salaried employees hired by the online retailer at its fulfillment centers were ex-military. That appetite for vets landed Amazon in the No. 1 position for 2012 in the annual ranking of the top 100 military-friendly employers compiled by G.I. Jobs magazine. It's somewhat counterintuitive to think of the technology industry picking up the hiring slack for soldiers, sailors, and the like. But Amazon is really a logistics company as much as a tech company.
"We actively seek leaders who can invent, think big, have a bias for action, and deliver results on behalf of our customers," says Amazon CEO Jeff Bezos, alluding to some of the company's oft-repeated leadership precepts. "These principles look very familiar to men and women who have served our country in the armed forces, and we find that their experience leading people is invaluable in our fast-paced work environment."
At Amazon (AMZN) the ex-military men and women have formed something of a clique, at least in the fulfillment-center operations. Philip Dana, the company's talent acquisition manager for North America, served in the Navy, both as an enlisted man and an officer. (He persuaded Clancey to join Amazon.) Clancey's boss, Dan Fay, is another West Point grad. Josh Teeter, general manager of one of Amazon's pair of 1-million-square-foot facilities in Phoenix, was an Arabic linguist in the Army before joining Amazon.
It's easy to see what hiring managers see in veterans, particularly the young former junior officers who literally are battle-tested in addition to being well educated. "They have a standard of leadership that is different from someone right out of college," says Teeter, 37, who rejected a position as a contractor with the Central Intelligence Agency in favor of the Amazon assignment of boosting the intelligence of e-commerce. "They understand that it's not about them. They have a huge running start. They're smart. And they've already met a certain bar."
As for what the vets see in Amazon, they profess a higher -- albeit safer -- calling, just as they did when they joined up to become warriors. "The sense of purpose is similar," says Teeter, referring to Amazon's service-oriented mentality. Plus, he adds, "once a year you get to deliver Christmas."
The sizable ex-military force within Amazon emerged organically rather than as some kind of grand patriotic plan. Without consciously targeting them, Amazon found in its early days in the mid- to late 1990s that it had hired multiple former officers to run its warehouses, where logistics skills readily translated. The distribution organization became a magnet for vets. They included leaders like David Niekerk, a West Point graduate and early Amazon executive who today is vice president of human resources for global customer fulfillment. Every time Amazon added a new warehouse in a state like Delaware, Kansas, or Virginia, it needed a general manager for the building. Each GM, some of whom were veterans themselves, needed responsible people to man their new installations. Says Niekerk: "They were specifically asking for junior military officers to staff up their buildings."
Over time it dawned on the corporate brass that the military hiring was no coincidence. By 2010 there was sufficient critical mass that the company decided to formalize its military-hiring program. In true Amazon cut-out-the-middleman fashion, this also was an opportunity to conduct its own military recruiting rather than rely on the services of a handful of agencies that maintain networks of exiting service people.
Amazon so thoroughly ramped up its military hiring that it came to the attention of G.I. Jobs, which for 10 years has been ranking the most military-friendly employers in the U.S. with at least $500 million in annual sales. Among the criteria for judging military friendliness are various measures that show that a company tries to make veterans feel welcome, such as having a dedicated military recruiting website, as Amazon does, and the percentage of new hires from service members in transition, as well as the track record in retaining them. "What put Amazon on top was consistency," says Sean Collins, an executive with G.I. Jobs, whose parent company, Victory Media, was founded by veterans. "Amazon wasn't No. 1 in any one category. They are just consistent on every measure."
Emblematic of Amazon's recent hires is Kathleen Carroll, a former Marine Corps logistics officer -- she helped operate an airport in Iraq for a spell -- who now helps run the military-relations program. The 35-year-old Carroll says she abandoned a cushy suburban Chicago existence for the Marines because she thought it would be interesting. Her job effectively is to be a liaison between the corporate and military worlds, and she echoes Bezos in saying that Amazon's 14 leadership principles mesh with those of the services. "Military leaders are comfortable with ambiguity," says Carroll, likening a nonspecific order to "take the hill" or "build a bridge" to an imperative to fix a glitch on the pick-and-sort line in the chaos of the Christmas rush. "We always start with the customer and work backwards," says Niekerk, the top ex-military man in the operations wing of the company. "That rings so true with many of these former military officers in terms of starting with the mission and figuring out how to accomplish it. It resonates very well."
By capitalizing on what arguably is a good fit anyway -- airlines similarly have long hired ex-military pilots -- Amazon is leading where equally well-meaning companies have trouble following. "Most HR professionals simply don't know how to read a military résumé," says Mary Santiago, director of veteran employment services for the U.S. Department of Veterans Affairs. Her office is developing a series of best practices to share with employers.
With ex-military men and women in a disproportionate number of leadership positions in Amazon's fulfillment centers, the tone is unapologetically martial. Conference rooms at one fulfillment center in Phoenix have names like Mess Hall and Bunker. Amazon has minted a "service coin" similar to the medallions military commanders hand out as tokens of appreciation for jobs well done. The Amazon coin has the logos of all five U.S. services on one side and the Amazon logo on the other.
But military hiring isn't just about former officers. David Ogle, a machinist's mate -- an enlisted position -- on a submarine in the 1990s, is a facilities manager in Phoenix. ("If it's not breathing, a computer, or a product, I'm responsible for it," says Ogle, who is 39.) He joined Amazon in 2010 after working in a similar role for a semiconductor manufacturer, and he manages 60 people, half of whom are veterans.
While proud of the areas of overlap, Amazon's veterans generally don't overdo the military-to-Amazon comparisons. "Delivering Christmas," after all, simply isn't the same as taking the hill. If anything, the vets seem joyfully aware of how much cushier corporate life can be than life on the firing line: no months-long deployments in harsh conditions, a glass of wine at home with a spouse after work rather than an MRE in the field, and so on. Mistakes, while to be avoided, mean a loss of money -- Amazon estimates that each misdirected item in the picking process costs the company $10 -- not the difference between life and death.
Life at Amazon isn't without its stresses, especially for its hourly workers. Not unlike the military, Amazon is known as a demanding employer. Last year the company settled a federal lawsuit in Pennsylvania tied to a worker's allegation that he had been instructed to lie about the nature of a workplace injury. Intense heat and unforgiving hours have been other criticisms about the conditions in its fulfillment centers lodged against Amazon, whose federal safety record nonetheless is equal to or better than other warehouse operators.
While its fulfillment centers are meticulous -- conveyor belts whiz packages from shelves to shrink-wrap machines to the loading dock -- the look and feel is anything but military. Casual dress is the norm for line workers and managers alike. Kaizen suggestion boxes, referring to the Japanese term for continual improvement, dot the walls of Amazon's facilities. Amazon, you see, values the input of its lowest-level employees, whereas Army brass isn't known for soliciting opinions from grunts. Amazon has less hierarchy than the military too.
Indeed, corporate existence requires a whole different vocabulary from the military. Joe Velasquez, a 33-year-old operations manager in Phoenix, had been an infantry officer in Iraq and joined Amazon in 2007 after returning to his native Arizona. "It was a culture shock," says Velasquez. "I could speak to enlisted people more directly [in the Army]. Here you stress teamwork. You need to take time to explain."
In multiple discussions with Amazon's management and "front line" leaders, not one mentioned the company's military employment program as a function of corporate patriotism or even as good PR -- though Amazon surely appreciates the side benefits of being recognized for assisting vets.
The company has plans to do even more military-related hiring. It is duplicating its U.S. efforts in the U.K., where Amazon has a large presence, by targeting British veterans. It also has launched a program to hire spouses of active-duty personnel as "virtual" customer-service representatives and is considering a similar effort built around disabled veterans.
Military spouses in particular are prized employees. Once trained, the fact that they move frequently won't diminish their value to Amazon, and their need for unconventional hours lines up with customer-service work. Shannon Wilson, for example, joined Amazon late last year, shortly after giving birth to her daughter. (Her husband, Rob, is deployed on the nuclear submarine USS Pennsylvania.)
There is also an added bonus with military spouses: They're natural Amazon customers. "I personally use Amazon for all kinds of things," says Wilson, in an e-mail exchange from Bremerton, Wash., where her family is currently based. "Since the military has brought us to places farther away from our family, it's great for birthday and Christmas gifts because I can have them sent directly to family and friends instead of having to go to the post office." Seems like Amazon has this one figured out: It is winning hearts, minds -- and pocketbooks.
Reporter associate: Caitlin Keating
This story is from the May 21, 2012 issue of Fortune.