In the period preceding Amazon’s mass layoffs of tens of thousands of employees, a substantial number of its workforce was also subjected to Performance Improvement Plans (PIPs), as revealed by recent findings. The disclosure stems from a collection of documents retrieved from Amazon’s HR division, as reported by Business Insider. As per records dating back to early 2023, Amazon initiated the placement of thousands of employees monthly into the preliminary phase of its PIP procedure. These actions unfolded in the months leading to several waves of layoffs spanning from November 2022 to March 2023, resulting in a cumulative reduction of 27,000 positions within the company.
Performance Improvement Plans, a practice commonly observed in large corporations, serve as a formal mechanism to communicate to employees the necessity for improvement, with placement on a PIP often perceived as a precursor to termination.
In April 2022, approximately six months prior to the onset of layoffs, Amazon enrolled fewer than 2,000 employees in the initial phase of its PIP program, internally labeled as “Focus.” By the year’s end, amid the commencement of layoffs, the number of employees under such plans surged to over 3,300 per month. This figure continued to escalate even further in January of the subsequent year. During this period, the number of employees advancing to the second phase of Amazon’s PIP programs, referred to as Pivot, doubled.
Similar trends of tightening performance evaluation policies have emerged in other major tech companies aiming to streamline their workforce, whether through layoffs or alternative measures. Companies often view performance evaluations as a means to increase employee turnover, especially when employees are inclined to remain in their current roles. Meta, for instance, which conducted layoffs affecting 21,000 employees between November 2022 and May 2023, implemented more stringent performance criteria regarding employee bonuses. Once recognized for its generous stock bonuses for high-performing individuals, Meta reduced bonuses from 85% to 65% for employees with good, though not exceptional, performance ratings.
Meanwhile, Google, which saw approximately 13,000 layoffs throughout the previous year, directed managers to consider office attendance as a factor in performance evaluations. This directive followed Google executives’ push for employees to return to office settings, a request met with anticipated resistance from the workforce.
Some perceive these shifts in management approach as attempts to discreetly nudge certain employees out of the organization without resorting to costly and morale-dampening layoffs—a tactic commonly referred to as “quiet firing.” By creating circumstances that prompt voluntary departures, companies stand to reduce expenses associated with severance payments. However, such a strategy carries the risk of inadvertently losing talented employees who might have thrived with proper support and coaching.
Amazon is renowned for maintaining a high-performance culture characterized by rigorous standards. It is acknowledged for its practice of annually letting go of a certain proportion of its lowest-performing employees, termed “unregretted attrition” within the company. This concept was alluded to in the memorandum outlining the number of employees enrolled in PIPs, as reported by Business Insider. The publication previously highlighted Amazon’s target of achieving an annual “unregretted attrition” rate of 6%. Should the company fall short of this objective, managers were encouraged, according to the documents, to place underperforming employees into the “Focus” phase, promptly address Focus cases, and transition employees to the “Pivot” phase if they fail to meet performance expectations.
Relevant articles:
– Official Amazon HR document reveals a spike in employees put on PIPs during a time of record layoffs
– Amazon sharply upped ‘performance improvement plans’ for workers. Then came tens of thousands of layoffs, Fortune, Wed, 20 Mar 2024 20:13:00 GMT
– Performance-improvement plans in tech: 4 Google and Amazon employees share what happened after they were put on PIP, Business Insider, Sun, 03 Dec 2023 08:00:00 GMT
– Inside Amazon’s little-known Slack channel for performance improvement: Leaked messages reveal anguish, despair, but also community, Business Insider, Fri, 28 Apr 2023 07:00:00 GMT