10 ms·

Judging from what an insider in the HR org told me, we're going to be hearing a lot of stories like this going forward. Apparently, Amazon scale is so large and

by lhorie 5y ago

Judging from what an insider in the HR org told me, we're going to be hearing a lot of stories like this going forward. Apparently, Amazon scale is so large and their attrition rates are so bad that in some markets, every potentially qualified candidate has already applied and failed an interview, or previously worked at Amazon and quit. As the adage goes, necessity is the mother of invention and Amazon seems to be at a point where it really needs to try everything under the sun to try to attract talent, given their extremely poor reputation. With this said, from reading the article, this move seems reminiscent of Netflix's pay structure, in the sense of offering a higher cash portion but lower equity. Some people here already mentioned that this was already sort of the case with a sign on bonus compensating for the backloaded vesting structure. From my experience interacting w/ professionals outside the FANG bubble, equity tends to be a bit confusing, so I wonder if a move towards bigger cash portions is a way to try to lure people who wouldn't otherwise be looking at big tech as a prospective career choice. What's also curious to me is that bumping up cash comp is in direct opposition to the trends from some other tech giants, where they are frontloading equity vesting. My sample size might just be small, but it feels like cash comp seems to correlate somewhat with bearish stock feeling and that frontloaded equity tends to correlate w/ bullish stock feeling. Would love to hear whether I'm off the mark here or not.

pishpash 5y ago
At these bubble valuations and Fed funds rate going up I would hope cash is valued more.
MattGaiser 5y ago
> every potentially qualified candidate has already applied and failed an interview, or previously worked at Amazon and quit. A company so large as to literally run out of humans. Happened with their warehouse workers too. https://www.essence.com/news/amazon-burning-through-workers/ https://www.essence.com/news/amazon-burning-through-workers/
- sangnoir 5y ago
  > A company so large as to literally run out of humans It's not the size, its the attrition that's the problem. Everything would be fine if they retained employees, but stackranks for the stackrank god.
vanusa 5y ago
As the adage goes, necessity is the mother of invention and Amazon seems to be at a point where it really needs to try everything under the sun to try to attract talent, given their extremely poor reputation. So rather than address the problems that are giving rise to this extremely poor reputation and commensurate attrition rates -- the only "fix" that Amazon can think of is to offer people more cash so that the net experience becomes somewhat more palatable.
- ramesh31 5y ago
  Yes, that's how labor markets work.
  - throwawayboise 5y ago
    At some point, no amount of money is worth it. I can hardly imagine earning $350k a year. I've never earned a third of that anually. What I can imagine is a job that places such a demand on my time and attention that I don't have time for a life outside of it.
    - omegaworks 5y ago
      Exactly. No amount of money can buy you time. You are committing to a significant quality of life deterioration during the period you are employed at Amazon.
    - CyanLite2 5y ago
      You work there 3 years and you'll earn a million bucks. Plenty of life to live after that and a lot of money to do whatever it is you want. Many people are willing to make that tradeoff, perhaps not you though.
      - vmception 5y ago
        and you get to say "ex-Amazon or ex-FAANG" on any of your future projects to a completely non-discerning audience that will drown out any nuanced discussion from cynics.
karmasimida 5y ago
> this move seems reminiscent of Netflix's pay structure, in the sense of offering a higher cash portion but lower equity I won't read it that way. This is upper threshold, not some number a L5 SDE would hope to get. Frugality is still frugality.
slaymaker1907 5y ago
I actually did some statistical analysis of what is supposed to be their hiring strategy and found this exact problem. They apparently use the strategy of always hiring above the mean (so new hires are better than the average employee). This does have some advantages, but I found that it ends up severely limiting growth when you take attrition into account. It would probably be a lot cheaper to change their hiring practices to be less strict and reinvest some of that money in training.
- coredog64 5y ago
  > It would probably be a lot cheaper to change their hiring practices to be less strict and reinvest some of that money in training. Isn’t that what a boomerang promotion is?
  - kidfiji 5y ago
    What is a “boomerang promotion?” I’ve never heard of the term
    - lhorie 5y ago
      Basically, it's supposed to describe this: - Bob works at Amazon as a SDE 2 - Bob finds getting promoted to SDE 3 is hard (despite being qualified) because the bar for promotion is too nitpicky/convoluted/whatever - Bob quits and goes to work somewhere else - Bob then applies for a job at Amazon again, but for a SDE 3 role. He lands the job, effectively getting a promotion in a really roundabout way. The premise is that getting hired as a SDE 3 is presumably easier for someone who was already a successful SDE 2 than it is to navigate promotion committee politics internally for that same SDE 3 title. This "trick" isn't limited to any specific company or role level; rather it's mostly a hypothetical scenario that is used as an insider joke when there's a perception of an overly obtuse promotion criteria. In the context of this thread, I'm guessing they're saying that lowering the hiring bar would effectively open the floodgates for ex-amazon people to join back at higher paying roles since they were already able to pass the previously harder interviews.
drewg123 5y ago
FWIW, Netflix basically has a slider, where you can take from 0% to 100% of your salary in options vs in cash. You get to decide once a year during a sort of "open enrollment" (like how you choose health care plans).
- allthecybers 5y ago
  What a great idea. I feel like this would let you make the choice on an annual basis based on your goals for the year, lifestyle needs, etc.
- jedberg 5y ago
  FYI they changed it to 50% max a few years ago, but otherwise yes. I had a few friends who went 100% stock (which meant that they technically qualified for food stamps and medicare since it was pretax dollars) and some went 70%.
  - mslate 5y ago
    There is no maximum. Reed is taking 100% in 2022.
    - jedberg 5y ago
      Reed has always been on a different plan than everyone else, so that doesn’t mean much either way, but it’s quite possible they changed it back. I haven’t checked in with my friends in a while.
trunnell 5y ago
> this move seems reminiscent of Netflix's pay structure, in the sense of offering a higher cash portion but lower equity. Netflix gives you 100% of your total comp in whatever form you choose: all cash, all stock, or any combination in between. Also, Netflix's stock plan vests immediately-- they don't try to lock you in with 4-year vesting. They view stock compensation as something you've earned, so there are no strings attached. It's well known that for top roles, Amazon's pay ranges are often well below their peer companies. You can see this on https://levels.fyi https://levels.fyi. So it makes sense that Amazon is trying to catch up.
allthecybers 5y ago
I think you are on target. IMO it is an attempt at employee retention as well as attracting new talent. Purely anecdotal on my part, but I've seen post after post on LinkedIn of senior/tenured Amazonians moving on to other roles after five, ten, and even fifteen years. The stock performance has been pretty flat for the last few years, so the TC growth is lagging behind the gains you could get from being a new hire. Also a base salary cap of $160,000 is really low. Not everyone joining Amazon wants a large portion of potential comp to fluctuate with the whims of the market. This increases the choices for TC configuration. If you wanna have lots of base and a minimal RSU grant, you now have the option.
- ghettoimp 5y ago
  Is AMZN stock really flat? Looks close to 4x its price from 5 years ago.
  - imwillofficial 5y ago
    It’s been flat for about a year and a half
    - kaesar14 5y ago
      If you move that slider even just a few months to March 2020 you capture a doubling of the stock price, 1.5 years seems incredibly arbitrary as a cutoff point
      - imwillofficial 5y ago
        It’s when I joined and started watching them. Completely and utterly arbitrary
        kaesar14 5y ago
        Ha. Fair enough
hintymad 5y ago
If it's just lowering equity payout, then it's not Netflix's structure. Netflix really tries to make its pay structure fair to its employees by implementing the following policies: 1. They give cash that is generally 20% higher than average market price. 2. If you convert your cash into options, you don't pay the income tax for the forfeited cash. It's your choice on how much cash you'd like to convert. And of course, if you joined company by 2015 or so, and consistently converts, say 40% (or whatever percentage other FAANG companies use) of your cash, you should be have enough money to to retire and focus on angel investing. 3. They give you a discount of the options. It used to be 5X. That is, if you forfeit $1 of income and the strike price of options is $1, you get to have 5 options instead of 1. That is, if the stock price increases by 25% compared to the strike price, you'll make even, roughly speaking. 4. They options expire in 10 years! I mean, 10 years! 5. Options vest every month. The strike price is the the price of stock of that month (not sure if it's average of the month or at the time of vest). Combining this and #4, employees will make money as long as Netflix stock has volatility. The only scenarios that employees will lose money is that the stock price keeps going down for 10 years or there is not enough volatility. 6. They don't give bonus. If you perform really well, you will become more important to the company, and you get a hefty raise. The raise stays. If this is not fair, I don't know what is.
- hintymad 5y ago
  Mind you, though, Netflix's pay and scope are competitive for up to entry-level staff engineer with very few exceptions (Brendan Gregg is one such exception). That means every engineer writes code, is responsible for one or more services, and uses their services to assert their influence. Very few engineers get more than $800K or whatever comparable packages offered to Sr Staff/Principal engineers in other companies. I personally view this as a strength of Netflix. They have such a wonderful culture that empowers its engineers to focus on building and being autonomous. They don't need people to drive company wide initiatives most of the time.
- yogenpro 5y ago
  > 3. ... if you forfeit $1 of income and the strike price of options is $1, ... Does this example need another prerequisite "and the current price of NFLX is $1"? Because if the example runs with NFLX at, say $10, then each option already have an intrinsic value of $9. And combined with #5, those options look like at-the-money call options that expire in 10 years. But in this case it won't make any sense to set the option price (the amount of income to forfeit for each option) according to either strike price or stock price -- shouldn't it be set according to the difference between the two?
Osiris 5y ago
If that's the case, why do they continue to reject candidates based on their automated algorithm test as the first step in the interview? If they had too many candidates and not enough positions, it makes sense, but in the opposite scenario you just lose our on candidates that hate those tests.
- zem 5y ago
  i would guess because thinking of people as interchangeable resources amenable to algorithmic management is deeply embedded in the company's dna.
- Qub3d 5y ago
  +1 to this. I will grit my teeth and go through a leetcode/coderpad step (I get it, FizzBuzz and all that) but jumping straight to the technical stuff and not giving me the decency of talking to a human leaves the impression that I'm really just a code-producing machine for the org (Which for Amazon, I no doubt expect I would be). As a recently posted article here said[0]: "My hunch with those companies was that it wouldn't have been a major issue if I was video-ing in from the State Penitentiary (due to murder charges) as long as I solved the algorithms correctly" [0]:https://www.joshcsimmons.com/posts/why-i-quit-shopify https://www.joshcsimmons.com/posts/why-i-quit-shopify
- rmdashrfv 5y ago
  Yeah, I'm definitely not into those tests. It's so played out. This means that the only way I'm going to do one is if I want to work for the company just that bad. And Amazon is not it. If my passion was crushing competition in unfair ways, I'd just take steroids and be a professional athlete.
- mdavis6890 5y ago
  I will guess that it's because there are a lot of candidates that will do fine in the more "human" parts of the interview, but cannot solve FizzBuzz. It's just more efficient to screen those out quickly, and save the human interviews for those who have already established a baseline technical capability.
ab_testing 5y ago
> Amazon seems to be at a point where it really needs to try everything under the sun to try to attract talent Maybe, just maybe they can try and get rid of their crazy PIP policies to try and retain talent .
dwg465 5y ago
Amazon also has this trick where they quote your total compensation with the built in assumption that $AMZN will appreciate by 15% per year. When I went through the process, it was pretty confusing to understand but the gist is that they try to hit a total compensation of whatever your target is. And when they quote the total compensation of your salary 3 or 4 years in, they assume that the stock has appreciated by 15% per year. So 15% of your potential gains (compounding per year) of getting RSUs and exposure to Amazon stock is removed.

by lhorie 5y ago

pishpash 5y ago

At these bubble valuations and Fed funds rate going up I would hope cash is valued more.

MattGaiser 5y ago

> every potentially qualified candidate has already applied and failed an interview, or previously worked at Amazon and quit. A company so large as to literally run out of humans. Happened with their warehouse workers too. https://www.essence.com/news/amazon-burning-through-workers/ https://www.essence.com/news/amazon-burning-through-workers/

sangnoir 5y ago
> A company so large as to literally run out of humans It's not the size, its the attrition that's the problem. Everything would be fine if they retained employees, but stackranks for the stackrank god.

vanusa 5y ago

As the adage goes, necessity is the mother of invention and Amazon seems to be at a point where it really needs to try everything under the sun to try to attract talent, given their extremely poor reputation. So rather than address the problems that are giving rise to this extremely poor reputation and commensurate attrition rates -- the only "fix" that Amazon can think of is to offer people more cash so that the net experience becomes somewhat more palatable.

ramesh31 5y ago
Yes, that's how labor markets work.
- throwawayboise 5y ago
  At some point, no amount of money is worth it. I can hardly imagine earning $350k a year. I've never earned a third of that anually. What I can imagine is a job that places such a demand on my time and attention that I don't have time for a life outside of it.
  - omegaworks 5y ago
    Exactly. No amount of money can buy you time. You are committing to a significant quality of life deterioration during the period you are employed at Amazon.
  - CyanLite2 5y ago
    You work there 3 years and you'll earn a million bucks. Plenty of life to live after that and a lot of money to do whatever it is you want. Many people are willing to make that tradeoff, perhaps not you though.
    - vmception 5y ago
      and you get to say "ex-Amazon or ex-FAANG" on any of your future projects to a completely non-discerning audience that will drown out any nuanced discussion from cynics.

karmasimida 5y ago

> this move seems reminiscent of Netflix's pay structure, in the sense of offering a higher cash portion but lower equity I won't read it that way. This is upper threshold, not some number a L5 SDE would hope to get. Frugality is still frugality.

slaymaker1907 5y ago

I actually did some statistical analysis of what is supposed to be their hiring strategy and found this exact problem. They apparently use the strategy of always hiring above the mean (so new hires are better than the average employee). This does have some advantages, but I found that it ends up severely limiting growth when you take attrition into account. It would probably be a lot cheaper to change their hiring practices to be less strict and reinvest some of that money in training.

coredog64 5y ago
> It would probably be a lot cheaper to change their hiring practices to be less strict and reinvest some of that money in training. Isn’t that what a boomerang promotion is?
- kidfiji 5y ago
  What is a “boomerang promotion?” I’ve never heard of the term
  - lhorie 5y ago
    Basically, it's supposed to describe this: - Bob works at Amazon as a SDE 2 - Bob finds getting promoted to SDE 3 is hard (despite being qualified) because the bar for promotion is too nitpicky/convoluted/whatever - Bob quits and goes to work somewhere else - Bob then applies for a job at Amazon again, but for a SDE 3 role. He lands the job, effectively getting a promotion in a really roundabout way. The premise is that getting hired as a SDE 3 is presumably easier for someone who was already a successful SDE 2 than it is to navigate promotion committee politics internally for that same SDE 3 title. This "trick" isn't limited to any specific company or role level; rather it's mostly a hypothetical scenario that is used as an insider joke when there's a perception of an overly obtuse promotion criteria. In the context of this thread, I'm guessing they're saying that lowering the hiring bar would effectively open the floodgates for ex-amazon people to join back at higher paying roles since they were already able to pass the previously harder interviews.

drewg123 5y ago

FWIW, Netflix basically has a slider, where you can take from 0% to 100% of your salary in options vs in cash. You get to decide once a year during a sort of "open enrollment" (like how you choose health care plans).

allthecybers 5y ago
What a great idea. I feel like this would let you make the choice on an annual basis based on your goals for the year, lifestyle needs, etc.
jedberg 5y ago
FYI they changed it to 50% max a few years ago, but otherwise yes. I had a few friends who went 100% stock (which meant that they technically qualified for food stamps and medicare since it was pretax dollars) and some went 70%.
- mslate 5y ago
  There is no maximum. Reed is taking 100% in 2022.
  - jedberg 5y ago
    Reed has always been on a different plan than everyone else, so that doesn’t mean much either way, but it’s quite possible they changed it back. I haven’t checked in with my friends in a while.

trunnell 5y ago

> this move seems reminiscent of Netflix's pay structure, in the sense of offering a higher cash portion but lower equity. Netflix gives you 100% of your total comp in whatever form you choose: all cash, all stock, or any combination in between. Also, Netflix's stock plan vests immediately-- they don't try to lock you in with 4-year vesting. They view stock compensation as something you've earned, so there are no strings attached. It's well known that for top roles, Amazon's pay ranges are often well below their peer companies. You can see this on https://levels.fyi https://levels.fyi. So it makes sense that Amazon is trying to catch up.

allthecybers 5y ago

I think you are on target. IMO it is an attempt at employee retention as well as attracting new talent. Purely anecdotal on my part, but I've seen post after post on LinkedIn of senior/tenured Amazonians moving on to other roles after five, ten, and even fifteen years. The stock performance has been pretty flat for the last few years, so the TC growth is lagging behind the gains you could get from being a new hire. Also a base salary cap of $160,000 is really low. Not everyone joining Amazon wants a large portion of potential comp to fluctuate with the whims of the market. This increases the choices for TC configuration. If you wanna have lots of base and a minimal RSU grant, you now have the option.

ghettoimp 5y ago
Is AMZN stock really flat? Looks close to 4x its price from 5 years ago.
- imwillofficial 5y ago
  It’s been flat for about a year and a half
  - kaesar14 5y ago
    If you move that slider even just a few months to March 2020 you capture a doubling of the stock price, 1.5 years seems incredibly arbitrary as a cutoff point
    - imwillofficial 5y ago
      It’s when I joined and started watching them. Completely and utterly arbitrary
      - kaesar14 5y ago
        Ha. Fair enough

hintymad 5y ago

If it's just lowering equity payout, then it's not Netflix's structure. Netflix really tries to make its pay structure fair to its employees by implementing the following policies: 1. They give cash that is generally 20% higher than average market price. 2. If you convert your cash into options, you don't pay the income tax for the forfeited cash. It's your choice on how much cash you'd like to convert. And of course, if you joined company by 2015 or so, and consistently converts, say 40% (or whatever percentage other FAANG companies use) of your cash, you should be have enough money to to retire and focus on angel investing. 3. They give you a discount of the options. It used to be 5X. That is, if you forfeit $1 of income and the strike price of options is $1, you get to have 5 options instead of 1. That is, if the stock price increases by 25% compared to the strike price, you'll make even, roughly speaking. 4. They options expire in 10 years! I mean, 10 years! 5. Options vest every month. The strike price is the the price of stock of that month (not sure if it's average of the month or at the time of vest). Combining this and #4, employees will make money as long as Netflix stock has volatility. The only scenarios that employees will lose money is that the stock price keeps going down for 10 years or there is not enough volatility. 6. They don't give bonus. If you perform really well, you will become more important to the company, and you get a hefty raise. The raise stays. If this is not fair, I don't know what is.

hintymad 5y ago
Mind you, though, Netflix's pay and scope are competitive for up to entry-level staff engineer with very few exceptions (Brendan Gregg is one such exception). That means every engineer writes code, is responsible for one or more services, and uses their services to assert their influence. Very few engineers get more than $800K or whatever comparable packages offered to Sr Staff/Principal engineers in other companies. I personally view this as a strength of Netflix. They have such a wonderful culture that empowers its engineers to focus on building and being autonomous. They don't need people to drive company wide initiatives most of the time.
yogenpro 5y ago
> 3. ... if you forfeit $1 of income and the strike price of options is $1, ... Does this example need another prerequisite "and the current price of NFLX is $1"? Because if the example runs with NFLX at, say $10, then each option already have an intrinsic value of $9. And combined with #5, those options look like at-the-money call options that expire in 10 years. But in this case it won't make any sense to set the option price (the amount of income to forfeit for each option) according to either strike price or stock price -- shouldn't it be set according to the difference between the two?

Osiris 5y ago

If that's the case, why do they continue to reject candidates based on their automated algorithm test as the first step in the interview? If they had too many candidates and not enough positions, it makes sense, but in the opposite scenario you just lose our on candidates that hate those tests.

zem 5y ago
i would guess because thinking of people as interchangeable resources amenable to algorithmic management is deeply embedded in the company's dna.
Qub3d 5y ago
+1 to this. I will grit my teeth and go through a leetcode/coderpad step (I get it, FizzBuzz and all that) but jumping straight to the technical stuff and not giving me the decency of talking to a human leaves the impression that I'm really just a code-producing machine for the org (Which for Amazon, I no doubt expect I would be). As a recently posted article here said[0]: "My hunch with those companies was that it wouldn't have been a major issue if I was video-ing in from the State Penitentiary (due to murder charges) as long as I solved the algorithms correctly" [0]:https://www.joshcsimmons.com/posts/why-i-quit-shopify https://www.joshcsimmons.com/posts/why-i-quit-shopify
rmdashrfv 5y ago
Yeah, I'm definitely not into those tests. It's so played out. This means that the only way I'm going to do one is if I want to work for the company just that bad. And Amazon is not it. If my passion was crushing competition in unfair ways, I'd just take steroids and be a professional athlete.
mdavis6890 5y ago
I will guess that it's because there are a lot of candidates that will do fine in the more "human" parts of the interview, but cannot solve FizzBuzz. It's just more efficient to screen those out quickly, and save the human interviews for those who have already established a baseline technical capability.

ab_testing 5y ago

> Amazon seems to be at a point where it really needs to try everything under the sun to try to attract talent Maybe, just maybe they can try and get rid of their crazy PIP policies to try and retain talent .

dwg465 5y ago

Amazon also has this trick where they quote your total compensation with the built in assumption that $AMZN will appreciate by 15% per year. When I went through the process, it was pretty confusing to understand but the gist is that they try to hit a total compensation of whatever your target is. And when they quote the total compensation of your salary 3 or 4 years in, they assume that the stock has appreciated by 15% per year. So 15% of your potential gains (compounding per year) of getting RSUs and exposure to Amazon stock is removed.