News Spotlight

Tariffs upend the job market. Increased import taxes and a declining stock market might further weaken the employment situation in the upcoming months (NPR).

Beware of fake job seekers. Some individuals looking for jobs are misrepresenting themselves by leveraging AI to create fake identification photos, invent work experience, and receive automated assistance during interviews (CNBC).

Employees aren’t going out for lunch. Fewer people are buying lunch out, and more are packing their meals for work, leading to a decline in lunchtime business for restaurants compared to 2020 (Wall Street Journal).

Stat of the Week

A new study finds that the average hours worked have dropped from 44.1 hours a week in 2019 to 42.9 hours in 2024.

This trend may indicate a shift towards greater work-life balance expectations among employees, potentially requiring HR to re-evaluate workload distribution, staffing levels, and employee well-being initiatives to maintain productivity and prevent burnout in a workforce working fewer hours on average. It could also reflect a tighter labor market where employees have more leverage to negotiate for shorter work weeks or increased flexibility, necessitating adjustments in compensation strategies and benefits packages to remain competitive. HR may need to analyze the impact of this shift on overall output and explore strategies to optimize efficiency and technology adoption to compensate for the reduced average work time.

Deep Dive Article

Should Performance Reviews Be Used for Layoffs?

The specter of job loss looms large in the modern economic landscape, particularly within volatile sectors like technology. When companies face the difficult decision of reducing their workforce, the question of how to select employees for layoff becomes a critical ethical and practical concern. One method frequently debated is the utilization of past performance reviews as a primary determinant. On the surface, this approach appears logical – retaining high performers while letting go of those deemed less effective. Jack Welch, the former CEO of GE, famously implemented a "stack ranking" system, or "rank and yank," where the bottom 10% of employees were laid off annually, aiming to improve organizational performance by replacing low performers with higher achievers. More recently, Meta laid off 3,600 employees globally, citing low performance. With employers gaining more leverage in today’s economy, this trend is set to continue. There is a complex web of potential pitfalls that HR should consider, from the inherent subjectivity and biases within performance evaluations to the demoralizing impact on remaining employees and the legal vulnerabilities it can create.

Today, I explore the arguments for and against using performance reviews for layoff decisions, examine the prevalence of this practice, and illuminate the real-world implications of this controversial strategy. While performance should be a factor in overall workforce management, relying solely or heavily on potentially flawed performance reviews for layoff decisions is a risky and often inequitable approach that can undermine morale, invite legal challenges, and fail to accurately reflect an employee's true value and potential.

The Appealing Logic of Performance-Based Layoffs

The allure of using performance reviews for layoffs lies in their perceived objectivity and efficiency. Proponents argue that it provides a data-driven approach, allowing companies to downsize strategically by retaining their most valuable assets and streamlining operations by removing underperformers. This method can appear to be a fair and transparent way to make difficult choices, aligning workforce reduction with established performance metrics.

Companies might argue that employees are already aware of their performance standing through the review process, making layoff decisions based on these evaluations seem less arbitrary. This approach can also be seen to incentivize higher performance within the organization, as employees understand that their contributions are directly linked to their job security during times of economic uncertainty. However, this seemingly straightforward approach often overlooks the inherent limitations and biases embedded within many performance review systems, as well as the broader context of an employee's contributions and the dynamic nature of organizational needs.

The Inherent Flaws and Biases in Performance Reviews

Despite the apparent logic, the practice of using performance reviews as the primary basis for layoffs is fraught with challenges. Research consistently highlights the subjectivity and potential for bias in performance evaluations. Factors such as manager favoritism, unconscious biases related to gender, race, or age, and inconsistent application of evaluation criteria can significantly skew review outcomes. A "bad" performance review might reflect a personality clash with a manager, a period of personal difficulty affecting work, or simply the inherent limitations of a flawed evaluation system rather than a true indication of an employee's long-term capabilities and potential.

Performance reviews often focus on past achievements within a specific timeframe and may not accurately predict future performance or an employee's adaptability to changing roles and responsibilities. Relying heavily on these potentially flawed assessments for layoff decisions can lead to the unfair dismissal of valuable employees and create a climate of fear and distrust within the organization.

The Prevalence of Performance as a Layoff Factor

While precise, up-to-the-minute statistics on the percentage of companies using "bad" performance reviews as the sole determinant for layoffs are difficult to obtain due to the sensitivity of the issue and the varying methodologies of different surveys, research consistently indicates that performance is a significant factor in layoff decisions for many organizations. Studies on layoff practices often reveal that companies prioritize retaining employees deemed "high performing" and are more likely to lay off those with lower performance ratings.

While the exact percentage of companies relying solely on bad reviews might be lower, the influence of performance evaluations on layoff decisions is undeniably substantial. The lack of readily available, specific statistics on "bad" reviews being the only factor underscores the nuanced reality that companies often employ a combination of criteria, with performance being a significant and often heavily weighted element.

2025 Tech Layoffs: Performance as an Unspoken Driver?

The tech industry in 2025 has continued to experience waves of layoffs, albeit at a potentially less frenetic pace than in the preceding years. Examining these recent examples, while specific internal decision-making processes are often not publicly disclosed, anecdotal evidence and reports suggest that performance reviews, either formally or informally, play a role in identifying layoff candidates. For example, in the early months of 2025, several mid-sized tech companies announced workforce reductions, citing restructuring and efficiency drives. While official statements often focus on strategic realignment, anonymous employee accounts and industry insiders sometimes point to the culling of teams or individuals who were perceived as underperforming based on recent evaluations or a general assessment of their contribution to critical projects.

The Significant Downsides of Over-Reliance on Performance Reviews for Layoffs

The dangers of relying too heavily on performance reviews for layoffs are manifold. Firstly, the inherent subjectivity and biases within these systems can lead to unfair and discriminatory outcomes, potentially resulting in legal challenges and reputational damage. Laying off a high-potential employee due to a temporary dip in performance or a biased evaluation can be a costly mistake in the long run. Secondly, such a practice can severely undermine employee morale and trust. Even high performers may become anxious and demotivated if they perceive the evaluation process as arbitrary or fear that a single "bad" review could jeopardize their job security, regardless of their overall contributions. This can lead to a decline in productivity and a loss of valuable talent who seek more stable and supportive work environments. Finally, focusing solely on past performance may overlook an employee's potential for future growth, their unique skills and perspectives that might be valuable in evolving organizational needs, and the broader impact they have on team dynamics and company culture.

The Prevalence of Performance as a Layoff Factor

While the desire for an objective and efficient method for conducting layoffs is understandable, relying heavily on performance reviews as the primary determinant is a flawed and potentially damaging approach. The inherent subjectivity and biases within evaluation systems, coupled with the dynamic nature of employee contributions and organizational needs, make past performance an imperfect and often inequitable metric for such critical decisions.

A more holistic and equitable approach to workforce reduction involves considering a wider range of factors, including skills gaps, future organizational needs, tenure, and overall contribution, alongside a cautious and nuanced consideration of performance data. Ultimately, companies must recognize that layoffs are not just about cutting costs; they are about making strategic decisions that impact the lives of employees and the long-term health and viability. A fair and thoughtful approach that minimizes reliance on potentially flawed performance reviews is crucial for navigating these difficult times with integrity and preserving a positive employer brand.

Thanks for reading — be sure to join the conversation on LinkedIn and let me know your thoughts on this topic!

Quote of the Week

“My interest is in the future because I am going to spend the rest of my life there.”
​Charles Kettering