Amazon now pays high performers more, or does it?

My take on this week's change to Amazon's compensation structure

This week Business Insider broke the news that Amazon revamps pay structure to favor consistently high performing employees:

Employees are ranked across five performance tiers: Top Tier (TT), Highly Valued 3 (HV3), Highly Valued 2 (HV2), Highly Valued 1 (HV1), and Least Effective (LE). Employees who earn a "Top Tier" performance rating for four consecutive years will now receive 110% of their pay range, exceeding the usual cap. In contrast, first-time Top Tier recipients will get 70% of their pay band, down from 80% last year.

Of course, the devil is in the details: high performers will actually get paid LESS than in the previous structure in their first two years, but more after 4 years of consistently high performance. So this is really an employee retention play, which is familiar territory for Amazon. Indeed, Amazon’s internal pay guideline specifically states that

"This approach ensures a steadier compensation progression”