Amazon‘s Performance Improvement Plan (PIP) is an intense, fast-paced program designed to boost productivity by quickly eliminating underperformers. Employees placed on a PIP are given 30-60 days to improve before being terminated. In 2023, PIP is still going strong as an iconic part of Amazon‘s infamously high-pressure culture.
As an experienced Amazon seller, I often get questions about Amazon‘s internal programs like PIP. In this comprehensive guide, I‘ll explain how Amazon‘s performance improvement plans work based on my knowledge of the company‘s culture and operations. Read on to learn:
- The purpose and origins of Amazon‘s PIP program
- How employees end up on a PIP and what happens during the process
- Controversies and criticisms surrounding PIP
- How common PIP cases really are at Amazon
- If severance pay is offered for PIP terminations
- Tips to avoid PIP as an Amazon employee
Let‘s get into the details on this complex and often misunderstood program.
What Is Amazon PIP?
Amazon PIP stands for "Performance Improvement Plan." It‘s a high-pressure internal program where underperforming employees are given 30-60 days to turn things around or face termination.
If an employee‘s work is lacking in certain areas, their manager will place them on a formal PIP. The PIP outlines specific deficiencies and metrics for rapid improvement over the next month or two.
Progress is closely tracked during the PIP period. If the employee successfully improves, they get to keep their job. If not, they are let go. Only about 6% of workers survive a PIP.
PIPs are controversial inside Amazon. Some see the rigid targets and short timeframes as unreasonable. Others argue PIP provides underperformers a fair chance to get on track. Whatever your view, the stakes are undoubtedly high.
A Brief History of Amazon PIP
Amazon adopted PIP principles in the early 2000s as the company rapidly expanded. There are two main influences behind the origins of Amazon‘s PIP system:
Jack Welch‘s Vitality Curve: Former GE CEO Jack Welch popularized "rank and yank" systems that weed out bottom performers. Amazon CEO Jeff Bezos has cited Welch as an influence.
Glengary Glen Ross "Always Be Closing" Culture: The David Mamet play about cutthroat real estate salesmen also shaped Amazon‘s intense, metrics-driven culture in its early days.
As Amazon grew to hundreds of thousands of employees, PIP evolved as a structured program to systematically identify and eliminate poor performers based on detailed performance data.
Why Does Amazon Use Performance Improvement Plans?
Amazon instituted PIPs to accelerate performance management. Specific reasons Amazon relies on PIPs:
Quickly remove poor performers: PIP provides a fast framework to transition out weak performers who don‘t rapidly improve.
Data-based performance benchmarks: PIP uses precise performance data to set improvement goals and objectively measure progress.
Incentivize productivity: The threat of PIP motivates employees to maintain high productivity to avoid termination.
Align with Amazon values: PIP reinforces Amazon‘s principles like high standards, ownership, and being right a lot.
Cull low performers during layoffs: When cost-cutting layoffs occur, PIP generates a list of poor performers to eliminate first.
Send a message: PIP reinforces Amazon‘s high-performance culture across the company.
While seen as ruthless by critics, PIP aligns with Amazon‘s intense, metrics-driven culture. The program serves Amazon‘s business interests through quick productivity gains and reduced costs.
How Do Performance Improvement Plans Work at Amazon?
Here is an inside look at how Amazon‘s performance improvement plan process plays out in practice:
Entering a PIP
There are two main ways an employee ends up on a PIP:
- Consistently poor performance data
- A new manager wants to clean house
Amazon has performance tracking baked into all roles. Metrics like productivity, error rate, and customer ratings are constantly monitored. If these indicators decline, a PIP may follow.
PIPs often surge when new managers join teams. Incoming managers frequently issue PIPs to pressure or prune lower performers they inherit.
The PIP Process
Once placed on a PIP, several steps occur:
Formal documentation – The employee receives a letter detailing their deficiencies and improvement goals. Deadlines are outlined.
Performance metrics – Precise speed, accuracy, revenue, etc. metrics become the employee‘s focus. Data is scrutinized.
Coaching – The employee‘s manager provides coaching and feedback during the PIP. External coaching resources may assist.
Job shadowing – Top performers may be tasked with coaching the employee to observe and learn.
Final evaluation – At the deadline, another review occurs. If goals are met, the PIP ends. If not, the employee is terminated.
The PIP period is filled with pressure to hit targets and save your job. Amazon does provide coaching resources, but the short timeframe leaves little margin for error.
How Long Are Amazon Employees Given for PIP Improvement?
The typical Amazon PIP duration is between 30 and 60 days. Some reports indicate customer-facing roles like account managers receive 30-day PIPs, while fulfillment center workers get 60 days.
The short PIP timeframes reinforce Amazon‘s bias for rapid, measurable results. However, many employees and critics argue 30-60 days is an unreasonable period to reliably improve complex performance factors.
Why is Amazon PIP So Controversial?
Amazon‘s PIP system has developed a controversial reputation both inside and outside the company. Some of the most common criticisms include:
Harsh time pressures – The short 30-60 day duration is seen as creating extreme, unrealistic expectations.
Inconsistent application – PIPs are not applied consistently across poor performers. Some get coaching plans first, others go straight to PIP.
Lack of transparency – Amazon does not reveal the exact performance data thresholds that trigger a PIP.
Culture of fear – PIP contributes to an environment of tension and anxiety about losing one‘s job.
Appears to be an exit ramp – With a ~6% survival rate, many see PIP as an exit disguised as an improvement plan.
The high-pressure, rigid nature of PIP has fostered intense employee stress. However, Amazon maintains the program reinforces high standards critical to the company‘s success.
How Common Are PIPs at Amazon?
While not an everyday occurrence for most employees, PIPs are more frequent at Amazon than at comparable firms. Industry estimates suggest:
~10% of Amazon employees are placed on PIP each year
PIP rates at other large tech companies are 2-3%
So the odds of receiving a PIP at Amazon are much higher than at Microsoft, Oracle, IBM, and other major corporations.
The difference stems from Amazon‘s demanding performance culture. Employees are expected to regularly exceed goals or risk repercussions. Even high performers can end up on a PIP.
Do Employees Get Severance if Fired for PIP?
If an employee does not successfully complete a PIP and gets terminated as a result, they are eligible for severance pay under the following conditions:
- Worked at Amazon for at least 1 year
- Terminated involuntarily
Severance pay amounts escalate based on years of service:
|Years Worked||Severance Pay|
The severance pay helps the transition. But finding a new job may be difficult due to the short tenure and PIP termination on your record.
How Are Employees Notified About PIP Status?
Notification of being placed on a PIP comes directly from an employee‘s manager in a written letter or email. This is preceded by a private discussion about poor performance.
The written PIP notification includes:
- Duration of the PIP (usually 30-60 days)
- Specific metrics and goals for improvement
- Consequences for failure to improve, i.e. termination
So the PIP puts employees on notice to measurably improve within 30-60 days or lose their job. This formal documentation leaves little room for ambiguity.
How Can Employees Avoid a PIP?
Here are my top tips as an Amazon seller for avoiding a PIP if you work at Amazon:
Track your performance data – Know your productivity, accuracy, customer ratings etc. inside and out so you can self-correct.
Solicit feedback – Frequently ask managers and colleagues for suggestions to improve. Don‘t wait for formal reviews.
Learn obsessively – Take advantage of Amazon‘s learning resources and training opportunities.
Build relationships – Develop internal allies and advocates who can give you insider tips.
Document thoroughly – Keep meticulous notes from meetings, feedback, and projects to protect yourself.
Speak up on unrealistic goals – If expectations seem unattainable, respectfully discuss this with management.
Study Amazon‘s leadership principles – Refresh yourself and live these principles to a T.
Even stellar employees can end up on a PIP due to politics or new management. But mastering your performance metrics is the best insurance against getting pip‘d.
Conclusion: PIP Remains Alive and Well in Amazon‘s High-Performance Culture
Based on my expertise as an Amazon seller, I expect the company‘s performance improvement plans to continue thriving in 2023 and beyond. PIP aligns tightly with Amazon‘s intense, competitive culture of direct performance measurement.
Here are my key takeaways on Amazon‘s PIP program:
- Purpose: PIP aims to boost productivity by removing poor performers quickly
- Duration: Employees have 30-60 high-pressure days to improve
- Criticisms: Unreasonable expectations, lack of transparency, culture of fear
- Commonness: ~10% of Amazon employees receive a PIP annually
- Severance: Fired employees get 1-6 weeks of severance pay if there 1+ years
- Avoidance: Obsess over performance metrics, solicit constant feedback
For better or worse, PIP is an instrumental process at Amazon for managing employee performance. The program‘s short timeframe and high stakes will likely continue to fuel controversy. But from a business perspective, it works as an accelerant for productivity and aligns with Amazon‘s DNA.
My advice is to thoroughly understand PIP and take proactive steps to avoid it. If you do end up on a PIP, maximize every minute of the short 30-60 day window to save your job. It will be an intense battle, but one that can be won with enough preparation and performance obsessiveness.