Leaked Amazon documents detail a controversial system that insiders say forces managers to give bad reviews to good employees

  • Amazon ranks employees in five tiers, and expects managers to rank a certain number into each.
  • Insiders say that’s evidence of stack ranking, a controversial review system that uses a curve.
  • Read Insider’s deep dive on Amazon’s opaque employee review system.
  • See more stories on Insider’s business page.

Internal Amazon documents reveal the company has a five-tiered ranking system for employee performance reviews, and expects managers to rank 20% of employees at the top level, 75% at the middle tiers, and 5% in the bottom tier.

More than half a dozen employees who spoke to Insider say the tier system is evidence of stack ranking, a controversial performance review system in which employees are evaluated on a curve and a certain percentage must rank at the bottom — potentially hurting both an employee’s compensation and their future at the company.

Employees who have been part of the performance review process told Insider the ratings have to be distributed across teams.

One person involved in Amazon’s review process told Insider the curve can force people whose performance is generally acceptable into the bottom. “It’s not the draconian, ‘everything was great and then all of a sudden…’ you might hear about from time to time,” the person said. But sometimes even employees who are performing well can end up in the bottom. “I was made to put someone [in the bottom tier] even though they were doing a good job,” one manager told Insider.

Amazon insists it does not use stack ranking and employees are evaluated on their own merit. “We do not, nor have we ever, stack ranked our employees. This is not a practice that Amazon uses,” a spokesperson told Insider in an emailed statement.

Stack ranking was popularized by General Electric under CEO Jack Welch, who used a 20-70-10 tier system to rank employees with 20% of employees in the top tier, 70% in the middle tier, and 10% in the bottom tier – similar to the breakdown expected at Amazon. Microsoft also used stack ranking until 2013, stopping the practice after widespread criticism that it contributed to a cutthroat corporate culture that prioritized office politics over innovation.

Documents show Amazon managers group employees in three broad buckets of performance grades — top tier (TT), highly valued (HV), and least effective (LE). 

Starting this year, Amazon expanded the “HV” rating with “HV1,” “HV2,” and “HV3” to add depth to each evaluation. An internal Amazon document states: “We expect 20% of Amazonians are TT,” 15% are HV3 (the highest of the HV ratings), 25% are HV2, 35% are HV1, and 5% are LE.

Amazon uses the five-tier ratings as a key factor to determine pay. Employees who receive a rating of HV1 or higher are eligible for a base pay increase, according to an internal document. 

The rating also sets the total compensation target for each employee. Amazon employees are each put in a pay band with a range for their total compensation, made up of base pay and stock options. One internal document said those placed in the top-performing group could reach 100% of their pay target, while those on the HV1 grade got zero upside.

At Amazon, a bottom-tier rating doesn’t just mean an employee doesn’t get a raise — it means they likely end up in a performance improvement program. Employees who receive an LE rating start a coaching program called “Focus,” and if that doesn’t improve their performance, they can end up in a separate program called “Pivot,” which is for Amazon’s most underperforming employees.

“The program provides employees with an option to either leave Amazon with a payment or meet the expected performance bar for their role by completing an Improve Plan,” an internal document describing Pivot said. If an employee leaves Amazon while in one of these training programs, or as a result of an unsuccessful Pivot, the person will not be eligible for rehire.

Amazon’s spokesperson disputed a tie between a performance rating and placement on a performance improvement plan, saying additional coaching is “something that managers determine is necessary if an employee is not meeting performance expectations.”

Do you work at Amazon? Contact reporter Eugene Kim via encrypted messaging apps Signal/Telegram (+1-415-926 -2066) or email ([email protected]).

Are you an Amazon Web Services employee? Contact reporter Ashley Stewart via encrypted messaging app Signal (+1-425-344-8242) or email ([email protected]).

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