Like most things in life you need to strike a balance. Most managers hate firing people, even when they probably should. The person might be just the kindest sweetest person they know and maybe a friend but they're just not very good at their job. A big overall workforce cut gives them the excuse to fire the person without having to hurt feelings or look bad.

The process of evaluating the people that make up the organization should be under constant improvement though, and again, simply because of dealing with large numbers, there might be a few false positives, but on the whole as an organization, management should be on the lookout for who isn't performing.