Amazon put many more employees on performance-improvement plans at a time when the company was also conducting the largest layoffs in its history, according to an official human-resources document from last year obtained by Business Insider.
In April 2022, Amazon put just under 2,000 staff into the Focus program, the initial stage of Amazon’s PIP process. By the end of that year, more than 3,300 were going into Focus each month. In January 2023, those numbers spiked even higher, the document shows.
Pivot, the second phase of Amazon’s PIP system, saw the number of new monthly entries more than double during the same period, according to the monthly business-review document prepared in early 2023 by the company’s “PXT” group. That stands for People Experience and Technology, the name of Amazon’s HR department.
Layoffs vs. terminations
The spike in PIPs coincided with 27,000 layoffs that Amazon announced between November 2022 and March 2023.
Layoffs happen when companies no longer need certain roles because of mostly financial reasons such as downsizing. In contrast, PIPs are related to situations in which employees may be terminated for cause. They’re used when workers aren’t performing well enough, and managers want these staff to either improve or leave, depending on the outcome of the programs.
The fact that Amazon was using PIPs more heavily while also doing major layoffs suggests the company was raising the bar for employee performance in early 2023 to increase efficiency as it went on a massive cost-cutting campaign.
“In order to maintain a high and rising performance bar, we plan to refresh part of the employee population each year,” Amazon’s PXT team wrote in early 2023, according to the document obtained by BI. “Managers, however, do not engage in performance management work eagerly. Therefore we cannot rely on good intentions and need to create accountability.”
Amazon changed data-reporting mechanisms
In comments emailed to BI, an Amazon spokesperson, Margaret Callahan, didn’t question the authenticity of the official HR document or the accuracy of the data at the time the document was created in early 2023.
But Amazon said it had changed mechanisms for reporting this data, so the numbers in the document were now no longer “reflective of accurate internal data.” Amazon also noted that it constantly refined its internal data-reporting mechanisms.
Callahan added that any past reductions in the workforce were “in no way connected” to its PIP process.
“There’s no question we keep our performance bar high, and that’s one of the reasons why Amazon is one of the most sought-after places to work in the world. Like most companies, we have a performance management process that helps our managers identify who in their teams are performing well and who needs more support,” she wrote in the email. “The vast majority of our colleagues regularly meet or exceed expectations, but for the small number of employees who don’t, we provide coaching and opportunities to help them improve. If they’re unable to do that, then we may have to discuss them leaving the company.”
“To suggest we use our performance management process to drive any other outcome, such as reducing our employee base, is wrong,” Callahan added in a statement.
It’s possible the document obtained by BI included data on the PIPs that represented a snapshot in time. The document noted that the data was “as of 01/31/2023” and was updated on February 9, 2023. As time progressed in 2023 and beyond, Amazon may have collected more data about how many employees went on its Focus and Pivot programs in particular months.
“We continue to share actual results and forecasts of Focus additions, Focus resolutions, and Pivot additions for visibility,” the document stated.
‘Quiet firing’ concerns
The document and its data add weight to concerns among some employees about what they call “quiet firing.” This is the idea that Amazon is discreetly eliminating jobs to minimize severance costs and reduce the public noise associated with large-scale job cuts. Speculation over such moves has been swirling inside the company for months, as BI previously reported.
“The number of performance-improvement plans goes up because you draw the performance-requirement line higher than you did when you weren’t doing a reduction in force,” Erik Gordon, a business professor at the University of Michigan, said while discussing PIPs in general. “You hope that many of the people put on a performance-review plan get the message and find a job at another company, reducing your severance costs and the size of the layoff number you report.”
Focus and Pivot
Employees previously told BI that Amazon’s PIP system was opaque and often unrealistic.
The multistep coaching process starts with the Focus program, which requires employees on PIPs to finish certain tasks set up by their managers. Focus typically takes about 60 days to complete, according to a person directly involved in the program.
Those who fail Focus are given the choice between leaving Amazon with a severance package or being put on the second stage of the PIP, named Pivot. A typical Pivot program takes about 30 days to complete, this person said. They asked not to be identified discussing sensitive topics.
An employee who fails Pivot gets to choose between leaving Amazon with a smaller severance package or appealing the outcome in front of an internal jury. This appeal process can result in an even slimmer severance payment if they’re unsuccessful.
‘Unregretted attrition’
On top of that, Amazon managers have a target that’s based on the percentage of employees they must eliminate each year. This is internally called “unregretted attrition,” or URA, as BI previously reported. That can create a system in which employees are effectively evaluated on a curve, causing some employees to feel they were given unfairly low performance ratings.
The PXT document from early 2023 mentioned unregretted attrition and URA several times. It charted monthly URA cumulatively, starting in April 2022, showing a steadily rising percentage toward a 6% annual goal.
“When performance management falls below planned rates, management should manage the inputs shown on this slide by adding underperforming employees to Focus, resolving Focus entries in a timely manner, and moving employees to Pivot if they are unable to meet the performance bar,” the PXT document said.
PIPs and quiet firing
Some Amazon employees previously told BI that the company had put more people on PIPs as part of what they perceived as the quiet-firing push. They said the idea was to create conditions that caused employees to quit through tougher performance reviews, a stricter return-to-office policy, or just assigning less work.
Peter Cappelli, a management professor at the University of Pennsylvania who’s the director of Wharton’s Center for Human Resources, said quiet firing was “not an uncommon practice” at many companies. For example, it could help save costs for a company with a policy of paying severance for layoffs but not for performance-related dismissals, he said.
Another added benefit is employee motivation. Cappelli said that by putting employees through a higher performance bar during layoffs, those who passed the process would know what it takes to stay employed.
“The plus side is that the survivors know why they survived,” Cappelli said.
The data
According to Amazon’s PXT document from early 2023, the number of employees put into Focus was below 2,000 from April to June 2022.
For the next six months, it hovered around 3,300 new entries a month.
In January 2023, however, this shot up to 4,527 new Focus placements. Amazon forecast these numbers to exceed 5,000 in February and March 2023. The actual recorded numbers for those two months couldn’t be learned.
For Pivot, the actual numbers were lower, but the rate of increase was notable. In April 2022, Amazon had 467 new Pivot entries. That number surpassed 1,000 in November 2022, as layoffs were announced, and reached 1,284 in January 2023.
Amazon had roughly 400,000 total corporate employees in that period, according to another internal document obtained by BI. Based on those figures, Amazon put a little more than 1% of its total corporate workforce on Focus every month during the layoffs.
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Correction: March 20, 2024 — An earlier version of this story misspelled the surname of the management professor at the University of Pennsylvania. His name is Peter Cappelli, not Peter Capelli.
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