In 2022, is there a company more universally known than Amazon? The company started as a low-cost bookstore in the 90s. They are since turned into the e-commerce giant that usually sells anything and everything at a significant discount. Amazon is the world’s largest online retailer. I also cannot mention Amazon without mentioning its extremely notable Amazon Prime, which guarantees 2 days shipping and a generous return policy to most major cities in the United States.
Amazon has always relied on its cost leadership for its competitive advantage. Now, they pride themselves on it more than ever. It is truly difficult to find a product that is cheaper than Amazon’s listing price.
As far as compensation goes, Amazon divide itself its three categories: HQ employees, delivery drivers, and warehouse workers. For the sake of brevity, I would like to highlight their HQ employees’ compensation. I can speak in-depth about their HQ compensation policy, as I have personal interviewed and have several friends and colleagues that work there in various roles. For this blog post, I will dive in to analyzing a technical recruiter’s compensation plan.
Technical recruiters at Amazon are typically offered a generous base salary, stock, and a sign-on bonus immediately after accepting the position. In some circumstances, they also offer re-location (~$20K). They are set up on a sales-style compensation plan with commission to incentivize their hiring and keeping their talent. They also receive a year-end bonus of a percentage of their salary (performing permitting). Amazon deals with extremely high turn over rates, so they have specific rules when bringing on employees. For example, employees must forfeit their sign-on bonus if they do not stay for a full year at Amazon. Their stock is also given in a dragged-out vesting schedule, which makes it difficult for employees to actually obtain stock without staying at Amazon for a certain length of time.
Amazon’s HQ pay structures and overall compensation does not match up with their competitive strategy of cost leadership. Without the personal knowledge I have, I would assume that Amazon pays their HQ employees fairly poorly or at least at a much lower rate in comparison to the industry. Their warehouse and delivery drivers make up most of the workforce and does follow the low-cost model. While HQ employees are paid very well, it is well known that warehouse and delivery employees are not only paid poorly but treated poorly as well. This is more in line with Amazon’s competitive strategy.
The labor market and industry is deeply affected by Amazon’s compensation practices. Amazon is known to offer lavish compensation packages in comparison to the retail industry. Even for the tech industry, they remain towards the top of the list for compensation packages, as far as monetary rewards go (non-monetary rewards, like benefits, are another story).
