Amazon gives employees rude awakening with harsh policy change | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

Amazon’s (AMZN) work culture has gradually undergone a significant change over the past few months. Amazon CEO Andy Jassy has ushered in a new era that involves scaling back remote work, cutting bureaucracy, and encouraging employees to complete work faster.

In Jassy’s annual letter to shareholders, he stressed that Amazon needs to “operate like the world’s largest startup” as it navigates “fiercely competitive market segments.”

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In the letter, he also revealed that Amazon will continue to invest heavily in artificial intelligence, emphasizing that the company needs to keep up with the pace of the technology.

Last month, he even sent a memo to employees warning them that AI may soon replace their jobs.

“As we roll out more Generative AI and agents, it should change the way our work is done,” said Jassy. “We will need fewer people doing some of the jobs that are being done today, and more people doing other types of jobs. It’s hard to know exactly where this nets out over time, but in the next few years, we expect that this will reduce our total corporate workforce as we get efficiency gains from using AI extensively across the company.”

Amazon CEO Andy Jassy says employee performance reviews will look different going forward.

Image source&colon; Michael M&period; Santiago/Getty Images

Amazon makes bold move to crack down on employee performance

Amid layoff fears, Amazon has made a major tweak to how it reviews the performance of its corporate employees, raising the bar on expectations.

The company is now using a three-tiered system to evaluate how effectively employees are implementing the company’s 16 leadership principles into their work, according to a recent report from Business Insider.

Some of these principles include leaders displaying ownership, prioritizing customer needs, and finding ways to invent and simplify.

In addition to officially embedding leadership principles into reviews, Amazon is simplifying how it rates an employee’s “performance” and “potential” at the company.

In an internal document that outlines the new performance guidelines, Amazon claims the changes will “improve our ability to identify top talent and further strengthen our culture.” It also said that only 5% of the employees will be eligible for the top “role model” grade when measuring their adherence to the company’s leadership principles.

“By making Leadership Principles a formal input to Overall Value ratings and increasing the granularity of the input rating combinations, the updated process helps us strengthen the connection between performance and culture,” said Amazon in the document.

Amazon’s latest move mirrors a growing workplace trend

The move from Amazon follows in the footsteps of some of its top competitors in the tech industry.

For example, in May, Meta (META) reportedly sent a memo to its managers instructing them to give more employees a “below expectations” performance rating in the company’s June mid-year performance reviews, allowing the company “an opportunity to make exit decisions.”

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Specifically, for teams with over 150 employees, Meta told managers to give 15% to 20% of employees (including those who recently departed the company) this low rating, a higher range than the 12% to 15% requirement they had to adhere to last year.

Earlier this year, Microsoft (MSFT) also made bold changes to its performance system to weed out low-performing employees.

In an email, Microsoft Chief People Officer Amy Coleman warned managers in April that the company will introduce “new and enhanced tools” to help them “accelerate high performance and swiftly address low performance.”

“Our focus remains on enabling high performance to achieve our priorities spanning security, quality, and leading Al,” said Coleman in the email. “This focus and our growth mindset encourage excellence, motivates us to push ourselves through challenges, and enables us to deliver results.”

One of these tools involves putting low-performing employees on a Performance Improvement Plan, which has “a new globally consistent approach to set clear expectations and a timeline for improvement.”

Also, if an underperforming employee leaves Microsoft, they will be banned from getting rehired or transferred to another part of the company for two years.