If someone is always a low performer that makes sense, but the Netflix question is what do you do with people who have been good performers but aren't at the moment. Netflix philosophy is that you cut those people ruthlessly.

Here are some problems with that: A lack of loyalty to your employees can have a corrosive effect on morale. Employees can end up having very short term goals, or manage their careers in ways that they try to keep themselves in advantageous positions rather than the ones that serve the company. Why should a star take on a risky project, if failure results in termination? Firing can also be a lazy way to deal with a variety of management problems.