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Imagine being called into a meeting and told your job is gone. Not because the company overestimated its growth or mismanaged its resources. Not because of changing market conditions or shifting priorities. You’re being let go, they say, because your performance isn’t up to par. Even though your most recent reviews suggest otherwise.
Now imagine this happening to thousands of workers across some of the world’s most prominent tech companies. It’s happening at Block, where CEO Jack Dorsey recently stated that nearly half of 931 layoffs were due to "underperformance." It’s happening at Microsoft, where termination letters throughout 2024 were bluntly framed around employees failing to meet "minimum standards." And it’s happening at Meta, where CEO Mark Zuckerberg has described layoffs as part of a push to "raise the bar on performance management."
What happens when performance isn’t the real problem? What if companies are using performance as a convenient narrative to justify cuts driven by over-hiring, strategic missteps and unrealistic growth projections? More importantly, why is blaming layoffs on performance such a terrible idea?
The Performance Excuse Is Just a Cover
Block’s decision to cut jobs was presented as a matter of eliminating under-performers. However, according to the SFGate story, the company had already eliminated performance improvement plans, which ensured employees had no real opportunity to address perceived shortcomings. Instead, the company fast-tracked terminations without clearly explaining the criteria used to identify underperformance. It was a strategy built on a pre-determined outcome rather than any sort of substantive performance management.
Microsoft’s layoffs followed a similar approach, though it was fraught with some other challenges. Employees who received termination letters stating they “did not meet minimum standards” often found those assessments had been applied inconsistently. Many were told they failed to meet expectations only after the decision to reduce headcount had been made.
Meta’s handling of layoffs reveals how performance evaluations are being reshaped to fit specific outcomes. Zuckerberg’s push to "raise the bar on performance management" appears to be less about improving productivity and more about cutting costs. Reports indicate that many of those let go had recent positive reviews, making the performance narrative appear more like a convenient justification than a meaningful assessment.
All the Tactics Used to Hide the Truth
The emphasis on performance is meant to conceal a more straightforward explanation. From 2021 to 2023, big tech companies aggressively expanded their workforces to match what they believed were sustainable growth trends. They were hiring en masse to meet a groundswell of business coming out of the pandemic.
Those trends didn’t hold up. When revenue projections fell short, the same companies that hired in bulk found themselves looking for quick solutions.
Layoffs aren't the only way organizations have attempted to reshape their workforce. Other companies have used different methods to achieve the same outcome.
Some, like Dell, have enforced return-to-office mandates, knowing that it will drive resignations. Others have used performance improvement plans as a formal procedure to justify terminations without offering a genuine opportunity for improvement. And there’s “quiet cutting,” where employees are reassigned to roles with diminished responsibilities, making voluntary resignation the most appealing option.
A few are blaming the shift to AI for the need to restructure their organizations. And in fairness, at least this one is more believable.
Overall, these tactics aren’t being deployed to fix performance problems, create more collaborative environments or drive innovation. They are being used to avoid acknowledging hiring mistakes and poor planning.
The Damage of Shifting Blame
Regardless of the reason, what Block, Meta and Microsoft all get wrong is the shortsightedness of this strategy.
While it may appease corporate investors and Wall Street for a quarter, the decision to link layoffs to performance management undermines the credibility of these organizations’ people functions, though. Publicizing them as performance-based instead of a lack of a solid talent strategy or even just the inability to see what the future holds reeks of the sort of desperation of an investor relations leader spinning news of layoffs as a positive for the organization — usually unnecessary, since Wall Street loves layoffs.
If companies only use performance management for instances when they need to cut jobs, then the value of those evaluations is reduced to a tool for convenience or scapegoating rather than genuine assessment. While big institutional investors will eventually forget what your organization did to reduce the size of your workforce, the tech talent that these companies rely on certainly won’t. They’ll have friends and peers who got unfairly labeled as low performers and they’ll know they want no part in that.
Future candidates aren’t the only concern, though. Employees who remain are left to question whether their own evaluations are based on merit or whether they are simply a mechanism for justifying future layoffs. This can lead to the type of toxic politicking and underhandedness that can severely damage organizations in the long-run.
Separate Performance From Mass Layoffs
Performance evaluations can’t be both a tool for employee development and a justification for mass layoffs. If the problem is over-hiring, companies need to be clear about that. If the problem is economic pressure, they need to state it plainly.
Reframing strategic miscalculations as performance issues and throwing employees under the proverbial bus hurts the organization and its people.
Companies need to acknowledge when their own decisions, rather than employee shortcomings, are driving layoffs. The longer they continue to rely on performance-based messaging to explain away poor planning, the more difficult it will be to regain trust and establish honest accountability.
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Editor's Note: Read more about current workplace dynamics below:
- Stack Ranking Makes a Comeback — Jack Welch first popularized stack ranking at GE in the '80s. It's now seeing a resurgence, for better and for worse.
- Return-to-Office Mandates: Layoffs in Sheep's Clothing — Companies demand employees come into the office for many legitimate reasons. But in some cases, it appears to be a tactic to force employees out.
- Navigating the Great Gloom — Despite ongoing cutbacks in employee initiatives, organizations continue to demand more from their workforce. This isn't sustainable.
