High performance cultures are celebrated far and wide as the gold standard of business, yet it is perplexing to see top-rated employees being shown the door.

Equally baffling is the sight of organisations slashing jobs under the guise of “cost-cutting” despite boasting healthy financial results.

The recent layoffs at Meta, Microsoft, and JPMorgan Chase exemplify this paradox. At the heart of these decisions lies a growing crisis of trust between employers and employees.

If a strong performance review no longer guarantees job security, and if a company’s record profits still translate to job cuts, then what message are leaders really sending to their workforce?

Fired for ‘underperformance’ – even when employees perform well

The recent layoffs at Meta were not just routine cost-cutting measures. The company explicitly framed them as “performance-based” terminations.

But here’s the catch: some of those who lost their jobs had received positive performance reviews not long before being let go.

For employees, this sends a chilling signal that high performance no longer equates to job security. If even the so-called “good performers” can be axed overnight, then what exactly is the benchmark? And, more importantly, who gets to decide?

The practice of labelling mass layoffs as “performance-related” risks eroding psychological safety at work. It is one thing to remove genuinely underperforming employees after a transparent and fair evaluation process. It is another to use vague criteria as a pretext for downsizing.

In Meta’s case, the company appears to be redefining what “underperformance” means, and in doing so, undermining its own performance review process. So, can employees still trust that their reviews accurately reflect their standing in the company?

Cost-cutting layoffs when business is booming

If Meta’s case reveals a crisis of trust in performance management, Microsoft and JPMorgan Chase highlight a different paradox: companies laying off workers under the guise of cost-cutting, even when they are financially thriving.

JPMorgan Chase, for example, took a contradictory approach when, in a single quarter, it cut 1,000 jobs while continuing to hire 14,000.

CEO Jamie Dimon has repeatedly warned the world about economic uncertainty, yet the US lender has reported a record-breaking profit of US$58.5 billion, up 18%, in 2024.

All this suggests how cost-cutting layoffs are often not about financial necessity but about optics. Investors reward efficiency, and reducing headcount – even when it is not required – can give the impression of discipline.

This approach, however, can be short-sighted.

The long-term costs of layoffs

The issue with both performance-based and cost-cutting layoffs is that they breed distrust.

Employees who once believed in the company’s mission start questioning whether their efforts matter. They become disengaged, productivity suffers, and ironically, the very efficiency that leaders claim to pursue through layoffs begins to erode.

Organisations often underestimate the long-term costs of mass layoffs. The immediate savings in payroll might look good on a balance sheet, but the loss of institutional knowledge, morale, and trust can be far costlier.

And when companies eventually need to rehire, they might struggle to attract top talent – because why would skilled professionals bet their careers on a company with a history of unpredictable layoffs?

If businesses want to retain their best talent and sustain long-term growth, they need to rethink their approach to layoffs. Performance reviews should be a fair and transparent process, not a shifting goalpost used to justify job cuts.

Likewise, if companies are thriving financially, they should look at alternative cost-saving measures before resorting to headcount reductions.

Most importantly, leaders need to recognise that employee trust is not an infinite resource. Once lost, it is incredibly difficult to regain.

Companies that repeatedly undermine trust might soon find themselves the ones struggling to perform.