Stories of Three Employees Requesting Raises. Lessons on Increasing Your Income.
Asking for a raise is not as simple as phrasing it politely. There are costs involved.
Welcome to the Scarlet Ink newsletter. I'm Dave Anderson, an ex-Amazon Tech Director and GM. Each week I write a newsletter article on tech industry careers, and specific leadership advice.
I managed hundreds of employees at Amazon. Once a year, almost everyone in the company would get a token raise, except for high performers (or those who were promoted). Those would get much larger raises.
Over the years, I (or my team members) were asked for raises outside that yearly process a few dozen times. Which isn’t frequent in the grand scheme of things.
What’s the reason for the low number of raise requests? First, I’m skipping all the casual, “Hey, maybe I should be making more.” I’m talking about serious raise requests where someone requests a compensation change officially. I think primarily it’s because employees realize that asking for a raise has potential consequences (see the article below).
A few of the requests over the years were successful, and quite a few more were not. In the article below, I walk through three specific situations I remember, and then what I’ve learned about the raise process over the years.
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Amazon’s raise, promotion, and compensation model.
I’ll quickly run through how things generally work to give you context.
Amazon gives compensation in two general forms (apart from signing bonuses). They give salary, and stock. Salary is paid in regular paychecks. Stock vests over a period of time (depending on your level, or if it’s stock given when you’re hired). Basically, that vesting period is never less than 1 year from now.
Amazon has compensation targets for everyone at review time. A compensation target is how much they’d like to pay you for the year 1 year from now. In other words, if it’s April in 2024, they look at how much they’d like to pay you in 2025 and beyond.
Taking your current salary, vesting stock in 2025 (or any signing bonuses left), they determine if you’re going to make more, equal, or less than they “intend” to pay you. If you’ll make more or equal to their intentions, you might get a token salary raise, and no stock to vest in that year. If you'll make less money than they “intend” to pay you, they increase your salary or stock to their intended compensation level. Same with 2026 (usually they look 2 years out, unless you’re higher level).
This model (as a side note) explains a common phrase Amazon employees say, things like “I made double what they wanted”. If you get stock vesting in 2026, and Amazon’s stock doubles, you’ll likely blow out their intended compensation.
This also explains one terrible Amazon experience. Imagine you absolutely nailed 2023. Absolutely crushed it. Except Amazon’s stock doubled in the last year. You’ll still get no raise and no stock for 2025. That’s because your pending vesting stock (from the previous year) likely pushes you above your “intended” compensation level. The official Amazon policy is, “Well, you’re already being rewarded at a fair level.” In reality, it feels like crap, and is likely responsible for many high performers leaving Amazon.
Their intended compensation target is mathematically determined by many things (e.g., market rates, your physical location), but for you specifically, it is primarily: Your level, your job family, and your annual rating.
Each of those is a massive component to your compensation. However, you’ll notice two major things are missing. Your current compensation, and your negotiation input.
Your current compensation is not an input into your intended compensation level. They input your details into a formula, and it pops out a compensation target. That may be more or less than your current compensation. It’s entirely possible (and common enough) for someone to get a high rating one year, and a lower rating the next year. In that case, that person may have a lower compensation target for that following year.
When you’re hired, your initial compensation can be negotiated (within limits and bounds). However, at the annual raise time, there is very little control managers and their teams have to change compensation.
The levers that you and your manager have at Amazon are almost entirely: Your level (promotions), your job family (changing what official job title you have), and your rating.
I’ve repeatedly talked in the past about topics including how to get promoted and get good ratings, and about moving into management (which tends to pay a bit better).
This article is about the space in between. Those rare chances at a company like Amazon to get a raise unrelated to your annual review.
I’m going to walk through some examples, and then pull out what lessons we can learn.
Example One — Noob mistakes
Brendan entered my office for his weekly one-on-one meeting carrying a sheet of paper. He was a college hire (SDE-1), and had been on our team for 4 months. He had gotten past the worst ramp up pain, and was shaping up to be a decent new hire.
“Hey Brendan, what do you have on your list today?” I asked.
Brendan sat, and consulted the piece of paper in his hands.
“I’d like to get a raise to $215k. I have two friends who recently joined Meta, and they received $215k.” he said. And then stopped talking.
I thought of, and quickly rejected, my initial few responses. This often happens to me. Sarcastic or humorous (to me) statements pop into my head, and I’m tempted to use them at inappropriate times.
This time those statements included things like, “I’m not sure that being jealous of your friends is a valid promotion reason.” and “Cool, are you applying there?”
Part of the reason these things popped into my head was that, as a leader of a group, I had a dozen annoyances to deal with at any given time. Someone asking for a raise far too early is yet another annoyance.
Instead, I put on my big boy pants, and tried to remember what it was like to be in my first job.
“Brendan, when we offer compensation to new hires, we already decided how much we want to pay them.” I said. “Until something changes, such as you launching many major projects, we won’t re-negotiate.”
“But I’m performing well.” Brendan said.
“Yes, for a few months now. That’s not very long. Your first big opportunity for a compensation change is getting a promotion to SDE-2.” I said. “That’s what you should be thinking about.”
“But they’re making more at Meta.” Brendan said stubbornly.
I shrugged. “Amazon pays what it pays. Depending on stock performance, you will make more or less than people at Meta.” I said. “And more importantly, that’s not a factor which can get you a raise. If you want to immediately be paid that much, you’ll need to move to Meta.”
That was probably in the list of things I didn’t need to say. Or maybe I did? It’s challenging to find the line for honesty and peevishness. I like that word (peevishness) by the way, I’m glad it popped into my head.
Example Two — Dangerous Greed.
To be fair to the individual story I’m about to give, we’re all paid what the company is willing to pay us. It’s not morally unhealthy to want to be paid as much as your company is willing to write a check for. The problem is that asking for more is not free. Which I’ll get to later. My numbers below are totally fake by the way. If you want pay bands, look in Glassdoor or Levels.fyi or something.
Conrad was a high performing SDE-2 (Level 5), and was a couple of months from a likely promotion to SDE-3. He was in the final stages of a major project, and had enough feedback lined up to get it approved. My manager (who would need to sign off on the promotion) didn’t know Conrad well, but had a favorable impression (because I said favorable things).
Conrad sat down for his weekly one-on-one, and leaned forward in his chair.
“So Dave, I have something I want to go over.” he said.
That rarely means that someone intends to talk about something trivial, so I listened closely.
“Yes?”
“My current compensation is about $425k based on the current stock price, but I know SDE-2’s who have gone to Google and made $500k with my level of experience.” he said. “I would rather not have to go to Google, so I’d like Amazon to match that compensation.”
I sighed.
“Conrad, you’re up for promotion right now. You should focus on finishing that, and see if you’re happy with your compensation after it.” I said.
To be fair, I knew Conrad wouldn’t make any more money after a promotion (at least immediately, considering how Amazon pays newly promoted people), but that was a different discussion.
“I understand the pay band for SDE-3 is higher.” Conrad said, “But I’m currently underpaid compared to the market, and I’d like that fixed. I don’t know why I’d have to wait.”
I understood that Conrad had no reason to understand how these things worked. Shortly after this conversation, I gave a big talk on this topic to my entire organization.
“Ok, let me explain how this works.” I said, trying to be patient. “To get a raise outside the normal raise window, I would need to write up a couple of pages of justification, explaining why you needed a raise right now, rather than wait for our normal Amazon compensation cycles.”
Conrad nodded. I took a drink of water. I drink a lot of water.
“I’d need to show that justification to my manager, who is aware you’re up for promotion. She would ask me why you couldn’t wait 2 months for your promotion. Asking would likely annoy her, regardless of my answer.” I said. “Then I’d need to bring it to our compensation team, and our HR partners, who would say the exact same thing. In fact, hold on a few moments.”
I typed a few things into my computer.
“I see that you’re already around $150k above the top of the SDE-2 pay band.” I said. “I can’t imagine how hard it would be to justify a raise for you that far above the pay band, when you’re already paid more than they intend to pay for your level.”
Conrad shook his head. “But you don’t want Google winning all of Amazon’s SDE’s do you?”
I shrugged. “I’m not setting our pay bands, so that’s not what we’re debating here.” I said. “Keep in mind, in most situations when people get big raises at other companies, it’s because they interviewed well. If your peers interviewed well at Amazon and got principal engineer offers, they’d be paid super well too.”
“But I could probably get a higher offer at Google.” Conrad protested.
“You can feel free to interview.” I said. “But I’d still advise you lock in your promotion here. You’re two months away. At that point, you will be in a different pay band, and you’ll have that much more credibility inside and outside the company. But it’s not worth all our political capital to escalate a pay increase right now, this close to your promotion.”
Conrad eventually gave up on this push, but to be honest, his impatience left me fairly frustrated. Career growth at higher levels takes years. As we say to everyone repeatedly, it’s a marathon, not a sprint.