Amazon reportedly evaluates its office workers with a tiered system that targets 6% of them leaving every year

Amazon reportedly evaluates its office workers with a tiered system that targets 6% of them leaving every year
·3 min read
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  • Amazon ranks office workers in evaluations to cut 6% of them yearly, the Seattle Times reports.

  • One reviewed document mandates considering workers' "future contributions compared to others."

  • Insider has reported that Amazon grades workers on a curve, but it has denied stack-ranking workers.

  • See more stories on Insider's business page.

Amazon reportedly pits office workers against each other in evaluations in order to eliminate 6% of their jobs each year, according to a report Monday in the Seattle Times.

Amazon told Insider that it doesn't take part in a controversial policy known as stack-ranking.

"We do not stack rank our employees," an Amazon spokesperson told Insider. "This is not a practice that Amazon uses."

However, the company does ask managers to rate office workers' potential relative to that of their peers, internal documents reviewed by the Times showed. Curve-based employee rankings mean even good workers can end up ranking in the bottom tier, which can adversely affect their pay and employment prospects at the company.

One document reviewed by the Times, called the Q1 2021 Talent Evaluation Packet, tells managers to consider an employee's potential on a four-point scale. It asks, "When thinking about this employee's future contributions compared to others, where would you place them?" The document also asks managers to evaluate workers against "the performance bar for their role and level" on a scale of 1 to 7.

Amazon then groups employees into one of five tiers, called Overall Value designations, the document says. Twenty percent of workers are expected to fill the highest tier, followed by 15%, 25% and 35% in the following tiers, respectively, all of whom are designated as "Highly Valued" employees.

The bottom 5% of workers make up the "Least Effective" tier. Employees at the bottom are sometimes placed on a performance improvement plan. The Times reports that Amazon expects over a third of the employees put on these plans to fail.

Employees are then told which of the three broad categories they fit into - "needs improvement," "achieves," or "exceeds" - based on their numeric evaluations on Amazon's performance input scale, according to the Times.

The packet also instructs managers not to tell employees what Overall Value tier they're in and what pay range accompanies their tier.

Amazon told Insider that having a recommended distribution doesn't amount to stack-ranking. In a group of 100 employees, for example, Amazon says stack-ranking would mean assigning every employee a position from 1 to 100. The company does not deny that it expects to have a distribution of employee ratings but says this is normal.

The evaluation system is key to Amazon's efforts to meet an "unregretted attrition" goal of having 6% of office workers deemed the lowest-performing leave the company each year, the Times reports. An Amazon human resources employee, Eilis Murphy, told the Times that this target fell to 4.1% earlier in the pandemic but has since returned to 6%.

Amazon warns managers to "avoid comparisons to other employees" and advises them not to adjust ratings "just to meet a recommended distribution," according to a presentation the Times reviewed. However, Amazon's internal personnel platform lets managers tweak performance ratings using the same tool that shows how team's array of employee scores line up with Amazon's recommended distribution.

Several Amazon employees told Insider in April that Amazon's practices amount to stack-ranking, despite the company's protests to the contrary. Fellow tech giant Microsoft stopped using stack-ranking in 2013. Among the others who have dropped the practice are IBM, Accenture and General Electric, whose former CEO, Jack Welch, is credited with popularizing stack-ranking.

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