When Dismissal is the Best Course! How Corporates Decide to Fire Employees

The Different Types of Dismissals and the Conditions Which Precipitate Them

How and when do corporates decide to fire employees? Are there any alternatives to dismissing employees? What are the circumstances in which dismissal is the only option and is the best course of action? The answers to these questions lie in the way in which corporates and the executives heading them make decisions based on data points, and individual decision making aspects.

Before we go deeper into the dynamics of dismissal and firing employees, it is important to distinguish between the different types of dismissal from employment. While layoffs and mass firing of staff during recessions and downturns and other unfavorable economic conditions is well known and publicized, there are other forms of letting go of staff and these can range from dismissal due to poor performance, bad behavior, or simply because the said employee(s) have violated the workplace rules and policies.

More often than not, it is the dismissal due to poor performance that receives relatively more attention than the last aspect, namely dismissal due to policy violations. However, in our working experience, we have seen all three types of dismissals happening depending on the exact circumstances.

Mass Layoffs Due To Recession: First Meta, Next Tesla, and Now Amazon & Big Tech

To start with, mass layoffs are becoming more common these days and more so with the tech firms that are now letting go of employees like a “leaking” sieve. Whether it was Meta/Facebook laying off 11,000 employees, or Twitter under its mercurial new owner, Elon Musk, downsizing nearly half of its employee base, or the very fresh instances of Amazon and other tech firms firing employees in thousands, the reason for the mass dismissal of staff is mostly economic.

Indeed, while the pros and cons of these decisions are debatable, what is clear is that The Great Tech Moderation has begun, as Big Tech firms realize that the “party is over” and the golden age of tech is coming to an end. However, in these cases also, dismissal is based on both cold logic of cost benefit analysis as well as the more emotional aspect of taking loyalty and capability into account.

In other words, corporates, even during downturns often retain their best staff and those who have been with them for years, and the best course dismissal hits those who the Senior Execs think can be let go. So, there is the element of the human touch as well.

Employee Dismissal

When Dismissal is the Best Course! Mass Firing/Downsizing Due to Poor Performance

Having said that, dismissal due to poor performance happens anytime and not only during recessions. Indeed, in our working experience, we have come across two types of dismissal due to non performance.

  1. One, isolated and case by case dismissal of employees due to poor performance that involves one or a few employees and the more notable aspect of mass layoffs due to non performance, which is followed as a policy in many Consulting and Financial/Banking entities.

    For instance, there are policies in these entities that specify the layoff of the Bottom 10% of employees based on their appraisals every cycle. In addition, many leading firms review performance metrics periodically and decide to let go of those deemed unproductive.

  2. However, the other case of dismissal of a few or more employees due to poor performance is more of an outlier and happens in rare instances. This is because (though it might seem counter intuitive) it is easier to lay off on a mass scale than on an individual basis as the former entails decisions based on metrics that affect companywide performance making the job easier to layoff. On the other hand, dismissing one or a few employees often involves broad consultation.

The Rarest Of the Rare! Dismissal Due To Policy Violations and Other Deviations

This is because in case of individual employees, the labor laws specify that such employees should first be placed on PIPs or Performance Improvement Plans and then given chances to make amends and only if they fail to better their performance even after these that they are fired.

In addition, dismissal becomes the best course only under extenuating circumstances or in other words, only under the most compelling circumstances. This is also the case with dismissal due to policy violations that happens very rarely.

Indeed, both these types of dismissals often entail elaborate review and reasoning steps as the laws mandate such conditions. Of course, the rarest of the rare form of dismissal is the instant firing where the employee(s) are asked to leave immediately. This happens in case of serious policy violations like poaching staff, corruption, and misconduct and sexual and other forms of harassment.

In our working experience, we have come across only one instance where this happened and that was because the said employee was encouraging the colleagues to switch to rival firms. Of course, these spot dismissals also happen at the senior levels as the case of some leading corporate figures involved in business scandals shows.

Employees Must be Aware and Alert Always to Avoid Dismissal

Last, letting go off employees is always a hard and painful decision to make, and more so if the employees have been with the firms for a longer period of time.

Having said that, the corporate world is a very competitive and brutal place for anyone who falls afoul of the conditions which we described lead to dismissals and so, our advice to prospective graduates entering their careers is to be aware and alive to the various circumstances in which dismissal is the only course of action left for the corporates and so, they must be on their toes always.


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The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.