[throwaway0010]

'Unless a company has been completely asleep at the wheel, there is no scenario under which people will suddenly go "woah woah woah! these 200 people must go!".'

Of course there is. You're projecting this as black and white, but in reality performance is a curve and the company's economic context determines where that curve ends. Companies growing rapidly hardly ever fire. Companies faced with a squeeze (and perhaps a shortage of profitable work) will be willing to move higher and higher up the performance curve.

Your platitudes about morale are simply untrue. I mentioned before specific peers as counter-examples, so let's also name the company: Netflix has a policy of firing people who aren't top-level performers. It's flatly impossible to make these kinds of determinations reliably before a hire -- the ONLY way to maintain a team of A-level players is to fire people who you've hired and who turn out not to perform.

This is not theory, this is fact in practice. It works great. People who don't make it don't like it -- and that's largely unimportant. People who actually are A-level performers love it. It's great for morale.

http://www.businessinsider.com/henry-blodget-should-we-fire-...