This is the last of the articles that I already posted on LinkedIn. It appeared on August 8th, 2025.

I want to talk about the recent changes to Amazon’s compensation, as discussed in Business Insider: [https://www.businessinsider.com/amazon-revamps-pay-structure-rewards-high-performing-employees-2025-5] Also refer to my previous posts about “The Curve”, which is: LE 5%, HV1 35%, HV2 25%, HV3 15%, and TT 20%.

LE and HV1 are 40% of the population, and by the new policy, they get the range minimum. So 40% of people at the company, by definition, will make the bare minimum of the range. Add in HV2, and 65% of people are making 20% or less of the range. With HV3 (50%), 80% of the people are making mid-range or less.

But it gets worse: by policy, when you get promoted, you’re an automatic HV1 at the next review cycle. So when you get promoted, you get range minimum for the next year, guaranteed, regardless of your performance. In year 2, if you get HV2 or HV3, you get LESS than other HV2s or HV3s, because you were (by fiat) HV1 last year.

Therefore, if/when you get promoted, you’re locked into the bottom of the next level’s range for a year, and the bottom half for 1 to 2 MORE years, unless you’re a rock star that can hit TT by year 3 (and even then, you’re capped at 70% of range).

Amazon already makes it hard to get promoted, and now they’ve reduced the incentive to do so. You have to perform “at the next level” for at least a year (or two or three, if you want to get promoted to L7). To them, they get people performing at a full level above their current compensation for as long as possible, but then pay them only AT THEIR LEVEL. And this new policy means that even once they’re promoted, they’re paid range minimum for a couple years, and probably below the range midpoint for 3 or more years. So Amazon gets 4 or 5 (or more) years where they L7 performance out of you for the low-low price of “at or below range minimum.”

One of Amazon’s leadership principles is “Hire and Develop the Best.” In the old days, I was told that one of the ways that we did that was to also pay them the best. I was told that Amazon’s pay range started at the 50^th percentile of the industry average, the midpoint was at 75%, and the top was at the top of the industry average.

The new policy makes me believe that what I was told is no longer true, and now Amazon’s midpoint is essentially industry average. But what if it’s still true? That Amazon’s “range” is from 50% to 100%? It means that “the best” people in the industry, who Amazon supposedly “hired and developed,” are mostly getting paid industry average, or maybe a bit better. It means 80% of Amazonians have their target compensation set at or below the 75^th percentile of the industry. And you’re trying to get promoted, they’re going to pay you at or below the bare minimum for your performance level for 5 or more years.