Many years ago, I worked at Intel. Layoffs/restructuring/reorging were...common. Often affecting thousands of people. It's brutal.
The theory is by cutting the bottom and always hiring you constantly improve your workforce.
The reality is then you will always fill reqs, sometimes as quickly as possible, to make sure there is a sacrifice for the gods. Perversely, a team of high-performers is actually punished, as everyone is also ranked against each other, so even if you have the top 10 performers in the company, one or more of them may be fired and will often have their compensation effected (less/no RSUs etc.).
Certainly that was how it felt about 5 years ago, not sure about today.
1. The "periodically cull the bottom" way of doing things invariably leads to a toxic culture with people looking over their shoulder. 2. Conversely, I've been in tech companies where it was EXTREMELY difficult to fire anyone who wasn't outright awful. Over time that can really erode your culture because people who are on the poor side of mediocre hang around and weigh everything down.
The best solution is to always have high standards, but evaluate people against those actual standards, and don't be afraid to take action if necessary, but don't have arbitrary X% cutoffs.