I have spoken with owners and business leaders who used the covid crisis and other events to do a 'no fault' layoff - they cut their low performers regardless of whether they financially speaking had to. They felt that doing layoffs in this way was less likely to impact overall morale.

The other thing to think about is that firms also have to signal to their investors. If all my competitors are laying off, but I don't, it might signal that I'm not carefully managing my investor's dollars. Investors might then punish the stock.

Me personally, I've been trying to get managers to be more thoughtful about who they want on their teams, being more careful in the hiring process, coaching those who aren't up to snuff, and letting go of people who are underperforming. Doing that on a regular basis instead of playing layoff games seems to make for a stronger culture overall.