Amazon is changing how it pays its employees, and these changes are designed to reward those who’ve shown long-term excellence over one-off achievements. Under the company’s revised compensation guidelines, employees who have consistently received high performance ratings over four years will now receive 110 per cent of their pay band — up from the previous maximum of 100 per cent. But there’s a catch for newcomers: first-time top-rated employees will see their payout reduced to 70 per cent of their pay band, compared to 80 per cent last year.

The changes, first reported by Business Insider, reflect a clear shift in how Amazon values performance. While the earlier model gave solid bumps to any high achiever, the updated system favours those who have proven themselves over multiple review cycles. A company spokesperson confirmed the change and said it allows Amazon to better recognise employees who have “consistently exceeded expectations” for their role and level.

The new model breaks down payouts by rating tiers. Employees promoted to the Highly Valued 2 (HV2) level from a lower tier will now receive just 10 per cent of their pay range — a cut from the earlier 20 per cent. Interestingly, those who fall from Highly Valued 3 (HV3) to HV2 won’t face a cut and will still get 20 per cent, indicating Amazon’s preference for recognising past performance even when someone slips a notch.

First-time HV3 earners will also take a hit, receiving 40 per cent of their pay range instead of the previous 50 per cent. Meanwhile, those with two back-to-back Top Tier ratings will get 90 per cent of their pay band, a slight drop from the earlier 100 per cent.

Amazon’s decision comes as other companies like Google, Meta, and Microsoft also shift to performance-based pay models, tightening internal review processes and reducing rewards for underperformers. These companies are increasingly focused on long-term value from their staff rather than year-by-year fluctuations in output.

That said, not everyone is happy with the changes. Amazon has long-faced criticism from employees over a lack of transparency in how pay and performance are linked. Managers are still barred from disclosing individual Overall Value (OV) ratings, often leaving staff to guess where they stand based on changes in their compensation.

To offer some financial flexibility, Amazon will continue its ongoing pilot programme that allows employees to convert up to 25 per cent of their new stock grants into cash. This option is aimed at addressing concerns from workers who prefer immediate returns over long-term stock-based rewards.