Getting laid off is one of the most personally destabilizing professional experiences most people will encounter, and the narrative that surrounds it inside companies almost always frames it as a difficult-but-necessary performance call. It rarely is. Most layoffs are macro decisions made by executives based on cost structure, capital allocation, and market signals — not by managers grading individual contributors. Understanding that distinction matters for anyone going through the experience and for anyone trying to interpret what it says about them.
Layoffs are usually decided at the wrong altitude to assess performance
The decision to lay off staff typically originates several layers above the people getting cut. A CEO commits to a margin target, a CFO translates it into headcount reductions, a department head receives a number, and managers are then asked to identify candidates. By the time individual names get attached, the business case has already been made; the criteria are usually a mixture of performance, cost (more senior people are more expensive), team strategic fit, and project alignment. Pure performance is rarely the dominant variable, and in many cases it’s not the deciding one at all.
The “performance” framing arrives after the fact
Companies have strong legal and reputational incentives to frame layoffs as performance-linked rather than business-linked. It limits the public narrative that can be built around the decision, complicates wrongful-termination challenges in some jurisdictions, and reduces the perceived stigma on remaining staff. So performance language gets attached to decisions that were largely made on other grounds. The affected employees often discover, in subsequent reference checks or legal review, that their actual performance reviews don’t support the framing they were laid off under.
Layoff selection often correlates with cost, not output
Tech industry layoffs in 2022–2023 illustrated the pattern starkly. Many of the highest-rated, most senior individual contributors were among the cuts — not because they were underperforming, but because they were expensive. Recent hires with limited tenure were also overrepresented, regardless of performance, because severance obligations were lower and integration costs hadn’t yet paid off. Performance-linked layoff narratives are difficult to reconcile with those patterns.
What this means for the person being laid off
The single most useful reframe for someone going through a layoff is that the decision is rarely a verdict on their work. Severance packages, references, and unemployment claims are all easier to navigate when both sides acknowledge this — and most managers, off the record, will. Job searches go better when the candidate doesn’t internalize a performance narrative the data doesn’t actually support. The real signal in a layoff is usually about the company’s situation, not the employee’s.
Bottom line
Layoffs hurt regardless of cause, and acknowledging that they’re not personal doesn’t make them feel less personal. But the difference between “I was let go because of decisions made three levels above me” and “I was let go because I wasn’t good enough” is enormous for the next chapter — for the way the experience is described in interviews, for the energy available for the job search, and for the long-term professional self-narrative. The former is almost always the more accurate version.
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