My company’s been through layoffs/reorgs every 3–6 months for three years. One thing is true: performance management happens faster. Many chronic low performers were laid off, and a few “too many cooks” problems were resolved. Those benefits are real and genuine.
But it’s a mistake to assume the remainder is automatically high‑performer‑only. Three patterns I’ve seen:
1) People with options leave first. If you can find a stable, supportive org at similar pay, you go. That’s often your top performers. We've lost some truly amazing people who left because they were simply not willing to tolerate working here anymore. Being absolutely ruthless in getting rid of low performers is honestly not worth it when you also lose the people who truly move the needle on creating new products, etc. If you make a mistake and get rid of some people who were talented high-performers, trust is instantly gone. The remaining high-performers now know that they may also be a target, and so they won't trust you and they'll leave whenever they can. And when you're axing 10k+ people, you're absolutely going to make mistakes.
2) The survivors change. Trust and empathy plummet. Incentives tilt toward optics and defensiveness, and managers start competing on visible ruthlessness. You can keep the lights on, but actually trying to innovate in this environment is too scary and risky.
3) In an atmosphere of fear, people who are willing to be genuinely dishonest and manipulative -- and who are good enough at it to get away with it -- have a serious competitive advantage. I've seen good, compassionate leaders go from a healthy willingness to make tough decisions on occasion to basically acting like complete psychopaths. Needless to say, that's extremely corrosive to meaningful output. While you could argue that skillful dishonesty is an individual advantage regardless of climate, an environment of repeat layoffs strongly incentivizes this behavior by reducing empathy, rewarding "do whatever it takes to win" behavior, etc.