In boardrooms from San Francisco to Bengaluru, a troubling practice is gaining ground. Companies, faced with the need to trim their workforce, are increasingly reaching for a convenient euphemism: ‘underperformance’. Rather than acknowledging business challenges or strategic pivots, they’re choosing to badge redundancies as performance failures, leaving employees not just jobless but branded as inadequate.
“Terminating an employee is like performing the last rituals for a departed soul—it must be done with grace and respect”, observes Rishav Dev, head, talent acquisition, Century Plywoods. Yet grace and respect are often the first casualties in this corporate sleight of hand. The practice, according to senior HR leader Anil Gaur, stems from “the incapability of decision-makers to be transparent”, likening it to political diplomacy—a way to avoid confronting hard truths.
This trend has accelerated in recent years, particularly in the technology sector. Meta’s employees have publicly challenged their dismissals, pointing out the stark contradiction between positive performance reviews and subsequent termination for ‘underperformance’. Similar stories have emerged from Amazon, Google, and Microsoft, where waves of layoffs have been partially obscured behind performance improvement plans and selective “talent reviews”.
“The incapability of decision-makers to be transparent”, likening it to political diplomacy—a way to avoid confronting hard truths.”
Anil Gaur, senior HR leader
The consequences of such deception ripple far beyond the immediate job loss. For affected employees, the psychological toll is severe. Being labelled an underperformer not only dents self-esteem but complicates future job searches. In many cultures, where job loss carries particular stigma, the impact can be devastating. “Companies and HR professionals are often reluctant to hire someone who has been terminated—especially when it’s framed as a performance-related termination”, Gaur notes.
“Terminating an employee is like performing the last rituals for a departed soul—it must be done with grace and respect.”
Rishav Dev, head, talent acquisition, Century Plywoods
Consider Ravi, a sales manager in his forties. Despite consistently meeting targets for five years, he was suddenly branded an underperformer and shown the door. With no clear explanation from his employer, he found himself virtually unemployable in an industry that now viewed him with suspicion. His story echoes across continents, from Wall Street to Whitehall.
The practice has touched even the most prestigious tech companies. In 2023, Wipro terminated over 400 freshers, initially citing performance issues during training, though reports later suggested cost-cutting was the real driver. Similarly, Infosys laid off recent graduates who had waited two years to join, citing poor scores in an internal assessment—despite having initially hired them based on their competence.
Yet some companies demonstrate that there is another way. During the COVID-19 pandemic, Gaur headed HR for an auto components manufacturer facing financial strain. Rather than resort to disguised layoffs, the company implemented transparent salary reductions. “We reduced salaries to 75 per cent for a few months, but we communicated openly about the situation and promised to restore full pay once conditions improved”, he recalls. The result? Employee loyalty remained intact.
The corporate rationale for such deception is clear enough. Layoffs can tarnish a company’s image and complicate talent acquisition. Some firms fear legal repercussions or severance obligations. Yet this short-term thinking often backfires. In an age of social media and employee activism, corporate reputations are increasingly fragile. Platforms such as Glassdoor and LinkedIn have given employees powerful tools to share their experiences, making it harder for companies to control their narratives.
The practice has spawned a new form of workplace anxiety. Employees at all levels now report spending considerable energy documenting their achievements and maintaining paper trails of positive feedback—a defensive posture against potential future “performance-based” dismissals. This atmosphere of mistrust inevitably affects productivity and innovation.
The solution, experts suggest, lies in embracing transparency and empathy. “Processes are important, but empathy is more important”, emphasises Dev. This means not just communicating honestly about business challenges but providing genuine support for departing employees through career counselling, resume-building workshops and job-placement assistance.
Gaur advocates for diversity in decision-making—including age, experience and perspectives—to help organisations navigate these ethical dilemmas. He points to his experience at Maruti, where monthly divisional communication meetings openly discussed company performance and challenges, keeping employees informed and engaged.
Some progressive companies are pioneering more ethical approaches to workforce reduction. LinkedIn’s layoffs in 2023 were notable for their transparency, with CEO Ryan Roslansky openly discussing the business rationale and providing comprehensive support for affected employees. This approach, while initially more challenging, tends to preserve both corporate reputation and employee dignity.
As businesses face increasing pressure to adapt and restructure, the temptation to disguise layoffs will likely persist. Yet companies that choose honesty over expedience, empathy over ease, tend to emerge stronger. In the end, how organisations handle their departures may say more about their culture than how they manage their arrivals.
For while tough decisions may be inevitable in business, deception need not be. Behind every exit is a human being with a story—and how that story ends is entirely up to those who write it.
