Amazon is changing how it pays employees, focusing more on consistent top performance over time rather than one-time achievements.The new pay structure aims to reward employees who consistently perform at a high level and to reduce bonuses for those with less consistent records.According to an Amazon spokesperson, the new framework “better distinguishes between newer high performers and those who have consistently exceeded expectations for their role and level.”Amazon’s new pay model for ‘high-performing’ employees:Starting in 2025, employees who have received the company’s highest performance rating, “Top Tier,” for four straight years will get 110% of their pay band, up from the previous maximum of 100%, according to internal reports obtained by the Business Insider.However, first-time Top Tier performers will see a drop in their bonus from 80% of their pay range to 70%. Those with two consecutive Top Tier ratings will now receive 90%, slightly down from 100%.According to the internal pay guideline, Amazon wants to create a “steadier compensation progression.”Amazon’s new pay model for first-time achievers include:
- First-time Highly Valued 3 (HV3) performers will get 40% of their pay range instead of 50%.
- Employees moving up to Highly Valued 2 (HV2) will get 10%, down from 20%.
- Those dropping from HV3 to HV2 will still receive 20%.
- Employees with three straight years of Top Tier will receive 105% of their pay band.
The changes reflect a broader trend among tech companies like Google and Meta, which are also placing more emphasis on similar performance-based compensation strategies, with stricter review policies and reduced rewards for underperformers.Amazon says it will continue to offer the option for employees to take 25% of their new stock awards as cash, helping those who prefer immediate payouts over long-term stock value. Despite the changes, Amazon claims most employees who improved their performance still saw pay raises this year.Managers are not allowed to share individual Overall Value (OV) ratings with employees, so staff often have to guess their standing based on compensation outcomes. Amazon also said it has “multiple channels” for employees to raise concerns about their pay.
