For America’s managers, 2025 is shaping up to be the Year of the Low Performer.
Around the same time,Microsoft axedscores of employees with low performance ratings.
And Elon Musk has been firing thousands of federal workers he claims have failed to meet performance standards.
Never mind that many of the targeted employees turned out to havehigh ratings.
Bosses all across the country are sending the same message:Raise your performance, or you’re next.
“They’re worried that people are a little too comfortable and complacent.
There’s only one problem with cracking down onlow performers: It doesn’t work.
“In the long run, you may be shooting your organization in the foot.”
What motivates workers to do their best?
It’s a questionmanagershave been wrestling with for as long as managers have been around.
The influential management theorist Frederick Taylor argued that workers were inherently lazy and in need of constant supervision.
Swooping into factories, he set brutally high productivity standards and summarily fired anyone who fell short.
By the 1950s, many companies were trying out a kinder, gentler philosophy of management.
The practice, which came to be known as “rank and yank,” spread throughout corporate America.
As a management philosophy, it proved to be a disaster.
Take what happened at Microsoft, where the rank-and-yank system was known by another name:stack ranking.
One of the primary culprits?
Its Welchian management system, which treated performance asa zero-sum game.
If you wanted to succeed, someone else had to fail.
“As a result, the company was consumed by an endless series of internal knife fights.
The long history of management by fear has given scholars a lot of data to scrutinize.
So what has all the research found?
But the initial surge in productivity, studies have shown, comes at the expense ofquality.
As workers rush to keep up, theiroutput is inevitably shoddier, and riddled with mistakes.
What’s more, work in the performance pressure cooker becomes less innovative.
After a series of layoffs, the remaining high performers becameless creativeand generated fewer new ideas for inventions.
“People focus very narrowly on protecting their jobs,” says Grant.
High performers, who have the most options, leave in far larger numbers than mediocre employees.
Creating aculture of fearalso makes it harder to recruit high performers.
In one study, businesses that conducted layoffsslidin Fortune’s rankings of the most admired companies.
The more you slash your low performers, the fewer high performers you’ll wind up with.
That effect is particularly large in R&D-intensive, high-growth industries like tech.
The feelings of uncertainty that job cuts engender end up paralyzing businesses instead of turbocharging them.
Most people aren’t sufficiently motivated by fear to actually do better.”
That’s not to say that CEOs should run their companies like Montessori preschools.
Those remain the cornerstones of good management today.
High performers weren’t getting recognized and rewarded, and low performers weren’t getting the help they needed.
Many bosses blamed the chaos on remote work, and ordered everyoneback to the office.
But the real problem was the lack of a properly functioningsystem of performance management.
“There’s a big difference between being demanding and being demeaning,” says Grant.
“Demanding is about saying: ‘Look, we have extremely high expectations.
We hired you because we believe you’re capable of meeting them.
Here are your goals.
Let’s talk through what I can do to help you achieve them.’
It’s basically the approach being taken by Zuckerberg and Musk.
Setting arbitrary quotas of the number of employees who should get cut.
Forcing managers to fire people who were consistently told they were meeting and exceeding expectations.
Publicly labeling them as “low performers,” which hurts their chances oflanding a new job.
It’s also a failure of management.
The tech industry, after all, was founded on the belief that everything should be dictated by data.
“They haven’t thought through the unintended consequences of their decisions.”
Perhaps using performance-based cuts to instill fear in their employees is just the CEO version of a threat-rigidity response.
In the 1980s, the threat was global competition.
Today, it’s the winner-takes-allwar over AI.
Low performers, he said, should never be surprised when the conversation turns to dismissal.
And they should never be “summarily shown the door.”
Aki Itois a chief correspondent at Business Insider.
