Amazon is in that club of employers (Google, Twitter, Facebook, Microsoft, etc), where working there functions as a stamp of quality. Their employees are frequently cold called by recruiters working for other members of the club, middle tier companies, and start ups that cannot get enough people through their personal network. Amazon pays very well relative to most jobs, even many programming jobs, but it does not pay as well as other members of the club. The salary is just a little less than you’d make elsewhere, but equity and bonuses are backloaded such that many people are driven out before they receive the bulk of them. The health insurance isn’t as good. I realize paying for your own lunch is normal, but Amazon makes employees pay for a lot of things other companies offer for free, like ergonomic keyboards. And then there’s the work environment.
How does Amazon maintain a talent pool equivalent to the other prestige club members while paying less?
This is anecdotal, but my friends at Amazon are much more likely to have come from unprestigious companies or schools than my friends at other club companies. Working at Amazon doesn’t make them smarter, but it does provide widely-accepted proof of their intelligence that they didn’t have before, and can leverage into cushier jobs later. In some ways Amazon’s reputation for chewing people up and spitting them out is a feature here, because leaving after 18 months raises 0 questions among other employers.
So my hypothesis is Amazon invests more in finding and vetting smart people who aren’t currently holding Official Smart Person Cards, and that part of employees’ compensation is getting that card. In this way it’s like the US Armed Forces, which are grueling and don’t pay well but people tend to leave them with many more options than they started with.
I’m unconvinced this is a winning strategy. Operational turnover is expensive, and bad working conditions decrease people’s productivity even when they’re well compensated. But it does at least explain why it hasn’t collapsed already.