You may joke about it, but these aren't a joking matter. The ultimate function of the HR department is to prevent management from being sued. If an employee who has been around for a few years and has a good history is suddenly put on such a plan it means some manager has decided that they simply don't like them. It's turning the resources of the organization into a mechanism for bullying an individual. Never, ever sign one, and start researching the law around unfair dismissal.
You're right, I guess, but ... yuck. I suppose that's another reason why I prefer smaller companies. I think companies ought to be free to hire and fire who they want, when they want, even when it's a stupid decision.
If a company had a legal right to fire me whenever they wanted, and I had a mortgage or family, I wouldn't work for them unless they agreed to waive that right and give me several months notice (or severance).
"At-will employment is a doctrine of American law that defines an employment relationship in which either party can break the relationship with no liability, provided there was no express contract for a definite term governing the employment relationship and that the employer does not belong to a collective bargain (i.e. a union)."
This is the default employment relationship in the US. Most states, in particular California, have implied contract or good faith exceptions to this, where an employee has more protection, but the law is different in every state, and if you do not have an explicit contract, you should probably operate under the assumption that your company can terminate you at any time, without cause.
I think there should be a social safety net too, that all profitable companies pay into. That way, you're not screwed if you're fired, but the company is still free to act as they see fit. Perhaps they're even less constrained in some ways, because they know they're not throwing you to the wolves, so to speak. Contractual negotiations, like you mention, might also be a sensible approach to providing something similar, but they would only tend to cover workers with enough bargaining power to obtain them, either by being really valuable, or via unions or something.
In Italy, companies, not the government, form the social safety net, because it's nearly impossible to fire people. This has created a huge mess - people are afraid to change jobs, people work for years doing stuff they're not good at or don't like, companies can't hire young people... It's a bad solution.
In theory unemployment pay is similar to this system, but in practice... maybe not so much. Personally I don't know anyone who's ever received severance pay either.
In general I think "at will" employment is a net win, but it's certainly not a friendly system.
It is tho' a system in which everyone knows at all times where they stand. There's no need for backhanded techniques like "performance plans" that are only really about stripping the employee of what legal protection they do have.
A small percentage of Wall Street workers who have jumped ship from a 'marquee' firm to a smaller firm have gotten 'guaranteed employment contracts' in which the company guarantees to pay them X amount a month for 1-2 years. Basically, they don't get laid off because the company has to pay them anyway.
Wall Street employees can get 60% to 80% of their take home pay from bonuses. So while I'm sure they would be a lot of money over those months, it wouldn't be anywhere close to the actual pay once you include bonuses.
Do you expect to have the same responsibility to your employer? Namely, that you can't jump ship two weeks before a product is supposed to ship/go live?
I've experienced both sides of at-will employment (being "released to industry" because of a lack of funds and leaving a company for a clearly better job), and am happy to live with both. A savings account is protection against a company terminating my employment without notice.
Then that's what you should get in your contract when the hire you. They will probably stipulate that you must give them X notice where X is a fairly is larger than average, with the stipulation that if you aren't performing at a good level during X period they can somehow get money from you...
At the top level in CxO roles, it is normal to have it written into your contract that if you get fired you will go on getting paid for so many months/years, all your options will immediately vest, etc. Scam, or equivalent to tenure for college professors? Varies, I guess.