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Internal Amazon documents reveal the company has a five-tiered ranking system for employee performance reviews, and expects managers to rank 20% of employees at the top level, 75% at the middle tiers, and 5% in the bottom tier.

More than half a dozen employees who spoke to Insider say the tier system is evidence of stack ranking, a controversial performance review system in which employees are evaluated on a curve and a certain percentage must rank at the bottom — potentially hurting both an employee’s compensation and their future at the company.

Employees who have been part of the performance review process told Insider the ratings have to be distributed across teams.

One person involved in Amazon’s review process told Insider the curve can force people whose performance is generally acceptable into the bottom. “It’s not the draconian, ‘everything was great and then all of a sudden…’ you might hear about from time to time,” the person said. But sometimes even employees who are performing well can end up in the bottom. “I was made to put someone [in the bottom tier] even though they were doing a good job,” one manager told Insider.

Amazon insists it does not use stack ranking and employees are evaluated on their own merit. “We do not, nor have we ever, stack ranked our employees. This is not a practice that Amazon uses,” a spokesperson told Insider in an emailed statement.

Stack ranking was popularized by General Electric under CEO Jack Welch, who used a 20-70-10 tier system to rank employees with 20% of employees in the top tier, 70% in the middle tier, and 10% in the bottom tier – similar to the breakdown expected at Amazon. Microsoft also used stack ranking until 2013, stopping the practice after widespread criticism that it contributed …read more

Source:: Business Insider


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