Amazon HR document reveals an increase in employees put on PIPs during a time of record layoffs
A document shows the number of Amazon staff put on PIPs spiked from spring 2022 through early 2023. Some employees saw this as a “quiet firing” tactic to minimize severance costs and market noise. Amazon PIPs have been a source of frustration for some employees for several years.
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.
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.
“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 has changed mechanisms for reporting this data, so the numbers in the document are no longer reflective of accurate internal data. The company constantly refines its internal data-reporting mechanisms.
To suggest that Amazon uses its performance management process to drive any other outcome, such as reducing its employee base, is wrong. The company maintains a high performance bar and provides coaching and opportunities for employees to improve before considering termination.
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.
“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,” said Erik Gordon, a business professor at the University of Michigan. “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.”
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, said quiet firing was “not an uncommon practice” at many companies. It could help save costs for a company with a policy of paying severance for layoffs but not for performance-related dismissals.
The data from Amazon’s PXT document from early 2023 shows an increase in employees put into Focus and Pivot programs during a period of layoffs. Amazon had roughly 400,000 total corporate employees in that period, and based on those figures, a little more than 1% of its total corporate workforce was put 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.