If everyone employed by the company is doing something that somehow contributes to revenue I think your position is correct. If a significant percentage of employees activities don't contribute to revenue, then your position isn't entirely correct. Performing layoffs of those employees should improve revenue outcomes.

But it is also incorrect to assume that since some employees don't contribute to revenue that layoffs are going to improve the companies profitability. Executives may not have the information to know exactly who to layoff. Or they may have that information, but actively chose to ignore it. But if you're willing to engage in something vaguely equivalent to the shotgun debugging of your personnel, you probably can cut more non-revenue generating staff than revenue generating staff.