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My (second hand) understanding is that if you get put on a PIP at Amazon it blocks you from doing an internal transfer. So if you have a manager who doesn't like you and you try to transfer out they can put you on a PIP and effectively you're done at Amazon, even if you had someone else who wanted you internally.

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It works like that at many companies. Sometimes a PIP is not even needed, a low performance review is all it takes. I do not fully understand the logic behind it, other than facilitating the process of reducing headcount in the company as a whole.

HR can create a policy like this to prevent managers from locally optimizing. Firing someone is a lot of work for a manager. It is easier for the manager to transfer that person, than to deal with the problem themselves (even if they really should be fired).

HR might also create a policy like this to improve the average quality of employees. An employee who underperforms on team #1, is more likely to underperform on team X than a randomly chosen new hire.

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