Firing You to Support You Better
Inside the dark art known as the Performance Improvement Plan
An old mentor of mine used to say “there are two types of people. Those who divide people into two types of people, and those who don’t.”
It was a red herring. Gibberish designed to stupefy.
Something else built for confusion and divisible into two categories is the modern day Performance Improvement Plan, or PIP.
The basic theory of a PIP is that sometimes, employees fall short of expectations. They need additional attention and support from their manager to get back on track.
Think of it as after-school tutoring for getting too many bad grades in a row.
But the reality of the PIP is different, and unsettling.
I can tell you about how PIPs work within Amazon. The subject is perennially ripe for discussion because Amazon is a very challenging place to work. How it maintains elite performance standards is worth understanding.
But I choose to comment on this now because the company has been recently scandalized in media reports for questionable use of PIPs. It’s clear this particular tool has become more rational and coercive since Andy Jassy became Amazon’s CEO.
This is not revelatory. But it’s also not cool. Let’s bracket this for a moment and come back to it.
Use Only As Directed
Most of the time, a thing should be used only in the manner intended by the manufacturer. Just ask anyone who has ever tried clipping their toenails with a lawnmower or waged a knife fight with a bottle opener.
But also, humans are non-linear and naturally curious creatures who enjoy testing the limits of the various devices they discover. Put them together into groups and they become even more volatile.
So it goes with the PIP.
It has but one intended use, but is enjoying a service life Renaissance of sorts, with crafty executives and their sidekick “people teams” concocting flexible and inventive new uses.
How this unfolds within Amazon can be understood by the subdivision of the PIP into two types, which I will call Type A and Type 2.
Type A PIPs are trying to do what it says on the tin.
Occasionally, whether as a function of skill or will or both, an employee will fall below expectations in their delivery.
When performance stagnates below the bar for long enough, unresponsive to the standard techniques of material and moral support, an intervention is necessary to double-click on the individual and focus on their performance.
This is what Amazon calls a “Focus” plan. The manager builds a set of objectives for the struggling performer to pursue, sets up a couple-month timeline, and conducts weekly meetings with the individual to assess and provide support.
Professionally conducted, a Type A PIP will help discern whether someone can recover to solid performance or is miscast in role.
Type A PIPs sometimes work out well. With genuine and positive support, people can improve dramatically, or alternatively achieve clarity that they’d be better off somewhere else.
When someone doesn’t pull through but also doesn’t resign, their Focus plan ends and they are entered into Pivot, which gives them a choice. Either take a cash severance, or enter into a last-chance improvement plan at the risk of being dismissed empty-handed if they fail.
While they don’t always work and are not always well-executed, Type A PIPs reflect an earnest impulse to lift individual performance as well as enjoyment, to invest in developing people, and to employ an effective mechanism that forces managers to take an interest in everyone — not just those who are crushing it.
Now let’s discuss what this same process looks when co-opted by the corporate dark side.
Type 2 PIPs are cynical wrenches turned by smiling joy thieves.
Twice a year, Amazon’s senior managers get together and rank every salaried employee in their organization according to performance and potential.
Amazon then superimposes upon this rank-ordered list a distribution curve which determines the overall performance rating for each employee. This rating determines compensation, promotion, and progression.
Individuals are not told their rating, but they figure it out by how they are positioned afterward, and what their compensation looks like.
For those determined to be in the bottom segment of the curve, there is a clear signal of how they fared. They are automatically entered into Focus and placed on a PIP.
There are a few things to notice about this.
First, these PIPs are often controversial. Sometimes, senior managers are aligned on which employees belong in the bottom segment. In such cases, a PIP is usually already initiated before the talent review.
But other times, a line manager is actually happy with an individual’s performance. The individual is not on a plan. They do not need extra support. They’ve not been given any negative feedback.
But someone had to be ranked at the bottom, so after dueling advocacy and various contests of evidence, a quorum of senior managers decided (or got directed) to designate someone as needing improvement.
By the strange alchemy of collective stupidity enforced at the point of a bureaucratic bayonet, a previously solid employee is haplessly laced into an inherently negative and stressful situation. Their career and livelihood and perhaps even their residency are suddenly hanging in the balance.
And it all came to them as a surprise. One day, their boss was happy with them. The next day, they were in trouble. All because someone had to be sacrificed in order to fit the curve.
Amazon will not deviate from the curve.
It doesn’t matter how superb an organization’s overall performance has been. It doesn’t matter the relative caliber of an organization.
It doesn’t matter if the organization has already identified, supported, and either rehabilitated or exited all of its struggling performers instead of waiting to be told.
Someone will be put into Focus.
This is true at every level in every organization.
For example, in 2022 I led the launch of a new Amazon facility with a 40-person management staff.
Launches are hard. You don’t hire weak performers into a launch. The team I recruited was superior across the board.
None of that mattered. As a building, we had to hit the curve, which then fed into the regional and country reviews which had their own curves to hit.
So we had to find struggling performers even if we had none. Refusing to do so would have left it in the hands of a director who didn’t have the first clue about the team, which would risk mangling an already tricky decision.
Multiply this across every business unit in every part of Amazon, and you have a huge number of people being performance managed who don’t need it, all so the company can maintain the fiction that despite a world-class hiring process, it is perpetually teeming with thousands of salary-thieving slackers.
But, as I am always saying, organizational policies exist because they serve interests someone powerful believes to be important.
Amazon uses its talent curve as a valve to modulate attrition and a stern signal to discourage would-be layabouts. Individuals will be motivated to avoid being anywhere near a PIP, so they will pour more of themselves into work to widen the moat between their performance and the danger zone.
Amazon leverages the fear of being managed to extract disproportionate discretionary effort from people who are already delivering. It’s oily to say the least. But this realization distinguishes PIPs bred in the captivity of talent review from the free range variety actually designed to help.
Type 2 PIPs are not about performance improvement. They’re not designed to help.
They are designed to put performance pressure on a fixed percentage of individuals Amazon assumes should be driven from the business.
One way we know this is true is that Amazon’s executives have robust surveillance routines to make sure line managers don’t go soft on those being managed in Type 2 situations.
A recurring call sequence to review how someone is progressing is commonplace, with HR directors in attendance to scrutinize and sharpshoot a line manager’s approach. The subtext for the line manager is that if they’re perceived as incapable of being sufficiently tough on their weak performers, they might find themselves in a PIP.
Before someone can be removed from a Type 2 PIP, the line manager has to make a convincing argument that they are not in danger of backsliding. This forces the manager to represent their performance as near the top of the scale, whether that is true or not.
Now let’s reflect on the dishonesty baked into this process.
Someone is managed whether they need it or not.
The object of the exercise is not their improvement, but their dismissal unless they can withstand immense coercive pressure and actually improve from it.
Managers are forced to lie to people about how they view their performance.
Managers are forced to play a disingenuous game with senior leaders to get someone off the dismissal track.
And these are just the artifices of first instance.
Now think about what organizations do once they understand how the game is played.
Managers are likely to manufacture low performers at each level by starving them of opportunity.
Managers are likely to overstate and misrepresent performance in order to keep a valued team member out of the trap.
Managers will time people moves precisely to either shield someone from being rated or expose someone to a low rating as they struggle in a new learning curve.
Individuals will undercut the performance of peers within and beyond their organization to push others into the ditch and spare themselves.
Individuals will behave a lot more politically to avoid being managed, replacing trust and relationships with toxicity and pragmatism.
Organizations will refrain from managing struggling performers in order to “save them” to pay their bill at talent review. This actually allows people to struggle for longer than necessary, layering their problems and often dooming them to eventual dismissal.
None of the above is intended as abstraction. I’ve seen it all first-hand.
But even with all of this dysfunction, there is still one more layer of chicanery for us to consider.
Everything I’ve described so far applies in a normal situation. Now consider an environment where staff cuts are desired by senior executives.
By creating and entrenching the Type 2 PIP system, Amazon maintains a flexible tool by which it can easily enlarge the percentage of employees it places on the path to dismissal, all without explicit mention of downsizing.
In many cases, PIPs causes people to resign. The stress of living under the professional Sword of Damocles is too much for some people. Others take a PIP as writing on the wall and look for other work.
When someone chooses to walk voluntarily, this saves Amazon a lot of money while insulating against wrongful termination lawsuits, complaints, or tribunals.
Which takes us back to the dangers of using tools in ways other than intended. PIPs can be great when properly applied. They are terrible when weaponized.
As the Fortune article linked earlier details, Amazon dramatically increased the number of employees on PIPs in late 2022 and early 2023. Many progressed to Pivot and left the business. Others resigned before even getting that far.
Not long after this, many thousands were terminated.
The timing suggests Amazon used talent review and the PIP process to generate as many volunteer quitters as possible before resorting to layoffs.
If so, this is a deeply manipulative act which serves a number of rational business interests, including the containment of bad PR.
But it makes Amazon a poor employer, well short of its own standards.
Obviously, I’ve written this piece with bias.
Let me tell you why I have a problem with this issue.
It’s not because performance pressure isn’t nice, or that people sometimes lose their jobs. Those things are part of any professional environment.
It’s because I expect Amazon to at least try to be a great employer, and it cannot be great and dishonest at the same time.
It is fundamentally dishonest to label something a “Performance Improvement Plan” when its object is actually the opposite.
In a great company, nothing dishonest is permitted to live, much less thrive. So, if the purpose of a PIP in Amazon is actually to mitigate risk and cost to the company before someone is fired, let’s re-label it to “Pre-Dismissal Performance Documentation.”
Or just bottom line it: Firing You to Support You Better
Who, maybe truth in labeling would give executives second thoughts about conducting mass layoffs in the shadow of record profits and unprecedented cash flows.
This would lead to a healthier and greater Amazon.
I can only think of one other company of Amazon’s size, profile, and consequentiality that chose to engage in similar levels of employee-facing debauchery.
One other company that enforced a performance curve for its own sake and used the fake result as a pretext to downsize while enriching institutional investors.
One other company that got into the nasty habit of choosing dishonesty at every turn while continuing to lip-sync an abandoned value system.
Things didn’t end well for that company.
TC is an independent writer, speaker, coach, and consultant with expertise in organizational leadership. He hold graduate degrees in organizational science, law, and strategy, and is a highly experienced military and commercial senior leader.