The Hidden Cost of Calling a Layoff a “Performance Cut”
Not long ago, Robinhood, the financial services company best known for its investing app, announced a round of layoffs that its CEO described, in part, as a move to cut low performers.
I kept thinking about that framing because it isn’t neutral. It has consequences.
Performance evaluation is rarely as objective as we’d like to believe it is. Research has found racial and gender differences in performance ratings and shown how bias can enter through subjective judgment and even through the design of the evaluation process itself. A study by researchers Iris Bohnet, Oliver P. Hauser, and Ariella S. Kristal, examining four performance-review cycles at a multinational company, found that managers rated employees of color lower than white employees.
That matters when performance ratings become part of how a company decides who stays and who goes.
And it especially matters when a CEO publicly characterizes a layoff as a performance cut.
The accountability gap
When a CEO describes layoffs this way, two things happen simultaneously.
The statement costs him almost nothing. A sentence in a press release. A talking point that protects the company’s narrative.
For the people impacted, it lands very differently. They may be job hunting in an already difficult market, carrying a label they didn’t choose and may not have earned. That label can follow them into interviews, into their own heads, and into how they explain what happened.
That asymmetry is the accountability gap.
I spent 15 years as an HR partner working alongside leaders through difficult people decisions, and I think this is something leaders can underestimate. The decision itself matters, of course. But so does the story you tell about the decision afterward, particularly when the people most affected by that story don’t have the same ability to shape it.
A company may have very real business reasons for reducing its workforce. Performance may even be one factor in how those decisions are made. But publicly labeling the people who were let go as low performers is a separate choice.
And I think leaders need to ask themselves what purpose that choice is serving.
What does the company need to say?
There are hard people decisions where there simply isn’t language that will make everyone feel good about what happened. I don’t think the answer is to soften the truth until it doesn’t mean anything or to avoid explaining a difficult decision altogether.
But I do think leaders should be thoughtful about what actually needs to be said.
If you’re communicating a layoff, I’d be curious about a few things:
What does the organization genuinely need people to understand about this decision?
What are we saying because it’s necessary, and what are we saying because it makes the decision easier for us to explain?
Is the way we’re describing the people affected actually fair?
What will they have to carry with them because of the words we choose?
That last question is the one I keep coming back to.
Leaders who want to act with integrity in hard moments have to reckon with the full weight of their words. Not just what’s convenient to say, but what it costs the people on the receiving end.
A layoff is already hard
Someone who has just been laid off has enough to navigate. They may be thinking about money, health insurance, their family, what comes next, and how long finding another role might take.
They’re also trying to figure out how to explain what happened.
A layoff is already hard. You don’t have to make it harder by handing someone a narrative that works against them on their way out the door.
I think leaders owe people more care than that, especially when they’re the ones who hold the power to shape the story.
And I’m genuinely curious: How have you seen this done well?
Navigating a hard people decision?
If you’re a founder or leader navigating a hard people decision and want help thinking through how to approach or communicate it with integrity, that’s exactly the kind of work I do.
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About the Author • Richelle Safe
Richelle Safe is a leadership coach and founder of Coral Coaching. After 15 years advising leaders at Amazon, Meta, and Netflix, she knows there’s a whole person behind every leadership title. Her coaching is curious, direct, and deeply human, helping leaders challenge old patterns, see new possibilities, and move forward with greater clarity and intention.
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