Amazon is leaning harder on its leadership principles to rate employee performance, as CEO Andy Jassy continues to create a more disciplined workforce at the tech company.
Starting this quarter’s midyear review cycle, Amazon managers will use a three-tiered system to evaluate how effectively corporate employees demonstrate the company’s core values in their work, according to an internal document obtained by Business Insider.
Though the leadership principles have long been central to Amazon’s culture and considered in performance reviews, this is the first time they’ve been formally embedded into the evaluation process. Amazon relies on its 16 LPs, which stress things such as customer focus and cost discipline, to guide nearly all business decisions.
As part of this shift, Amazon is streamlining the rating scales for the other two evaluation criteria (“performance” and “potential”). Together with how employees use LPs, these factors determine an overall value score for each corporate employee, which influences future raises and whether they may be placed on a performance improvement plan.
The internal guideline says the changes will “improve our ability to identify top talent and further strengthen our culture.” It adds that only 5% of the employees will be eligible for the top “role model” grade when measuring their LP behavior.
“By making Leadership Principles a formal input to Overall Value ratings and increasing the granularity of the input rating combinations, the updated process helps us strengthen the connection between performance and culture,” the guideline adds.
The move is part of a wider wave among tech giants to rethink how they manage performance and reward employees. Microsoft has a new two-year rehire ban on ousted underperforming employees. Both Google and Meta have also made policy changes that better reward high performers this year.
More discipline
The initiative demonstrates Jassy’s ongoing commitment to cultivating a more rigorous workforce and a more cohesive corporate culture.
In the past year, Jassy has enforced a full return-to-office policy, reduced management layers, and updated Amazon’s pay model to better reward top talent. Last year, he also shared a video series explaining each LP, and he recently warned that AI would reduce Amazon’s workforce because of efficiency gains.
An Amazon spokesperson, Sam Stephenson, told BI the company regularly reviews its performance review process to “ensure it best supports the growth and development of our employees.”
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“Our unique culture, which is rooted in our Leadership Principles, drives the innovation we deliver for customers each day,” Stephenson said. “These changes streamline the process for managers and help to ensure greater consistency.”
‘High-judgment decision’
Amazon’s performance review policy has long been controversial.
Some employees have cited concerns over limited oversight and the potential for misuse, with one former employee describing the system as “predatory and opaque.” Some people have also criticized Amazon’s cutthroat “stack-ranking” culture, in which a fixed percentage of the workforce is replaced every year.
Amazon managers group their employees into five broad buckets of performance tiers: top tier (TT), highly valued 3 (HV3), highly valued 2 (HV2), highly valued 1 (HV1), and least effective (LE). Teams with more than 50 employees should categorize 20% as TT, 15% as HV3, 25% as HV2, 35% as HV1, and 5% as LE, the internal guideline says.
Amazon seems to recognize the nuanced nature of performance evaluations. The internal guideline urges managers to dedicate sufficient time to reviewing each employee to ensure accurate assessments.
“Evaluating employees is a high-judgment decision,” the guideline said. “You should invest sufficient time in gathering comprehensive and objective feedback to ensure accuracy and minimize unconscious bias.”
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