COMP NEWS – Insider released study results on Amazon’s compensation structure. The study shows that Amazon pays employees much less than the industry average. This lower pay has led to complaints from Amazon’s workforce.
Insider reported on Wednesday that the e-commerce giant is facing criticism from employees over what they see as below-market pay. It’s led to contentious internal meetings and a higher-than-usual attrition rate: at least 50 vice presidents left the company in 2021, according to people familiar with the matter and Insider’s analysis.
Amazon pays employees roughly 15% less than average.
Amazon has historically sought out employees who are passionate about the company’s mission rather than driven by high pay. Company executives have referred to this hiring strategy as targeting “missionaries” over “mercenaries.” In the past, this strategy has helped Amazon retain employees, despite the fact that they could make more money at other tech companies. Amazon pays roughly 15% less than its industry peers and doesn’t rank among the 20 best-paying tech companies, according to Level.fyi, a startup that analyzes compensation data.
A separate survey of Amazon’s employees revealed that 50% of workers who were thinking of resigning were considering quitting due to the low pay.
In an internal survey conducted over the summer, half the employees who were considering leaving Amazon cited low pay as one of the main reasons, up from about one-third in the previous three years.
Other big companies are capitalizing on Amazon’s compensation structure by luring away talent with higher salaries. Amazon’s base salary is currently capped at $160,000.
But in 2022, working at Amazon is more challenging than ever, and the “Great Resignation” is leading to more open positions and competition for talent. Other tech firms are attempting to lure Amazon employees with a higher base salary — Amazon’s is capped around $160,000 — and stock that vests more quickly.
More and more companies are switching to a performance-based compensation structure. Local and State governments are even beginning to adopt these new structures in an attempt to maintain their workforce.
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