[spiffytech]

The consensus I've seen is that it's useful for a year or two while you clear out the people who really need to go, but after that it creates perverse incentives and constant fear among employees, doing more harm than good.

[ido]

A better solution is to "just" be more thoughtful & honest about who (if any) needs to be fired (it sucks to fire people so a lot of managers put it off but really shouldn't, sometimes). I don't think there's a systematic/technocratic solution to a human/social problem like that, at least not one that doesn't have other massive downsides (like stack ranking).

Your hiring process should be good enough that firing is rare but nobody is perfect and if/when the situation arises (either due to a bad hiring decision or the situation changing) it's better to resolve it earlier rather than later.

[bombcar]

Many companies should offer a quit/buyout alongside the performance plan - most employees who are on the fired path know they’re on it and pretending they’re not doesn’t help anyone really.

[Brian_K_White]

I read that as it's useful for the startup that the established companies do it, not that it's useful for the startup to do it.