Big Tech is rewriting the rules this year: Top talent gets big rewards, while underperformers face the heat.
The latest to follow suit is Amazon, which recently overhauled its compensation model to reward long-running top performers with larger payouts. Four years at the highest performance rank now pays off big with 110% of the pay band, which exceeds the previous 100% cap. But employees who achieve the top rank for the first time take a hit, with total comp cut to 70% of the pay range, down from last year’s 80%.
The move is part of a broader tech trend of using performance reviews and compensation to better incentivize high achievers and eliminate underperformers and their drag on the balance book. Big Tech firms, including Google, Microsoft, and Meta, have made similar changes, all in pursuit of leaner, top-tier teams.
These companies handed out lavish perks, pampering, and sky-high salaries to stay competitive. A pandemic-era hiring spree exacerbated a tech tradition of hoarding top talent and only added to the ranks. Now, a shift makes one thing clear: It’s no longer about head count — it’s about talent.
The changes go hand in hand with sweeping pivots across tech to replace perks and pampering with performance and efficiency. Big Tech still rewards workers handsomely, but the era of resting and vesting at the giants may be well and truly over.
“The industry overall has made big efforts to do more with less,” Brian Nguyen, a product manager at the salary data platform Levels.fyi, told Business Insider. “This has allowed them to scale back costs while pushing for higher-quality work with fewer employees and rewards for only the top-tier performers.”
Google declined to comment, and Microsoft did not respond to a request for comment.
A Meta spokesperson reiterated what the company previously shared with BI about its low-performer cuts: “Employees at Meta have always been held accountable to a goal-based culture of high performance.”
The new approach “creates a steadier compensation progression for employees as they develop within their roles,” an Amazon spokesperson said, adding the company offers “multiple channels” for employees to raise concerns about pay.
‘Appropriate distinction’
Amazon managers this year received a list of potential pay-related questions and suggested answers, according to internal talking points obtained by BI. If asked about pay cuts, managers are encouraged to focus on employees getting raises for improved performance.
“Employees moving to a higher OV level will generally receive an increase,” one talking point said, referring to Amazon’s performance rating called overall value. “This ensures an appropriate distinction between newer and consistently high-performing employees at each OV level.”
At Google, a larger share of employees can now earn top performance ratings, which lead to bigger bonuses and equity. Managers have also been given the authority to hand out more discretionary rewards to employees who are excelling.
But with a fixed budget, those gains come at the cost of lower-ranked employees, reinforcing the company’s focus on high performance and raising the stakes for those falling behind.
“High performance is more important than ever to achieve the goals we’ve set, and so we’re making some changes to further reward top contributors,” John Casey, Google’s vice president of global compensation and benefits, told staff in a memo last week.
Microsoft, meanwhile, has rolled out policies aimed at enhancing performance management and addressing what the company calls “low performers.” Managers also received “more transparency and clarity” in the rewards process, an internal note seen by BI said. The change came after the company laid off 2,000 employees deemed to be underperforming earlier this year.
Meta has ramped up what it calls performance-based cuts, aiming to shed about 5% of its lowest-rated staff. An internal memo revealed plans to make these layoffs annual under a “non-regrettable attrition” policy. Adding to the sting, some ex-employees — even high performers—have landed on internal block lists, barring them from being rehired.
Lower pay for new hires
While these companies are weighing an employee’s performance rating history more heavily, some are also reducing new-hire offers.
According to Levels.fyi data, Amazon used to regularly offer over $300,000 a year to newly hired midlevel software engineers in 2022. Nowadays, more offers land around $270,000 a year, with recruiters being especially strict about needing “extra approvals” for anything higher, said Levels.fyi’s Nguyen. Other companies, like Meta and Apple, are taking a similar approach, he added.
Switching jobs no longer helps either.
The Atlanta Fed’s Wage Growth Tracker shows that median pay increases for job switchers dropped to 4.2% in February, down sharply from 7.3% in early 2023.
Tech professionals, in particular, are feeling the heat with lower pay offers and significant pay cuts, BI previously reported, as reduced competition has weakened employees’ bargaining power.
Not everyone is sold that the shift to crackdown on underperformance is here to stay. Peter Capelli, a management professor at the University of Pennsylvania, told BI that many companies follow these trends simply because “others are doing them,” cycling through similar changes every decade or so.
“These are just fads,” Capelli said.
Still, the changes haven’t gone unnoticed. At one Amazon office, some employees quietly voiced their frustration on an elevator whiteboard.
“No raise, no RSUs — thanks!” they wrote, referring to the lack of employee stock awards, according to a photo of the writing seen by BI. “Do more with less.”
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