Amazon Updates Pay Structure to Reward Consistent High Performers More Generously

Amazon is revamping its compensation structure to more clearly reward consistently high-performing employees while reducing payouts for those with lower performance ratings. This change, detailed in internal guidelines obtained by Business Insider, aims to better recognize and compensate long-term top performers. Under the new model, employees who achieve a "Top Tier" performance rating for four consecutive years will now receive 110% of their pay range, surpassing the usual cap. Conversely, new recipients of the Top Tier rating will receive 70% of their pay band, down from 80% in the previous year. According to the internal guidelines, this adjustment ensures a more steady compensation progression. "The updated model better distinguishes those with consistent excellence," an Amazon spokesperson told Business Insider. "As always, employees' contributions drive the outcome of their annual compensation review, but this year, our approach to compensation changes now better differentiates between newer high performers and those who have consistently exceeded expectations." These changes align Amazon with other major tech companies, such as Google, Microsoft, and Meta, which have recently streamlined their employee reward systems and tightened overall costs. Google has reduced bonuses and equity for underperformers, Microsoft has introduced stricter performance reviews, and Meta is actively downsizing its lowest-rated employees. Amazon's corporate employee pay cycle typically spans 12 months, starting in April. Most rank-and-file employees receive their pay updates in late March or early April. Individual performance ratings, internally termed "Overall Value," play a crucial role in determining compensation. These ratings are divided into five tiers: Top Tier (TT), Highly Valued 3 (HV3), Highly Valued 2 (HV2), Highly Valued 1 (HV1), and Least Effective (LE). The internal guidelines emphasize that performance directly influences compensation, with Overall Value ratings used to generate pay recommendations for each employee. More weight is being placed on an employee's rating history this year. For instance, consistent top performers will see a higher percentage of their pay range compared to newer high performers. The company's pay structure has long been a source of internal frustration, primarily due to its opaque nature and the competitive aspect of employee rankings. Managers are instructed not to share individual Overall Value ratings with employees, leading to staff having to infer their performance based on changes in their compensation. This year, Amazon will continue a pilot program allowing employees to take 25% of their new stock awards in cash. Traditionally, stock compensation has made up a significant portion of Amazon's total pay package, but it has become less appealing to employees seeking more immediate financial returns. Despite these recalibrations, Amazon asserts that most employees who demonstrated improvement still saw their pay increase this year. The company offers multiple channels for employees to voice concerns about pay adjustments, the spokesperson added. If you have any tips or insights, you can contact the reporter via email at ekim@businessinsider.com or through secure messaging platforms like Signal, Telegram, or WhatsApp at 650-942-3061. Use a personal email and a nonwork device for secure communication. Here’s a guide on how to share information safely.