Severance is NOT generally paid for sacking incompetent employees, that process is called Termination For Cause.
Consider the following:
1. A company lays off a thousand employees as it outsources a division, or combines with another firm (management decision).
2. A company decides that a product isn't cutting it and lays off the entire product team.
3. My own experience: I was asked to leave a senior position to join a brand new division of a >billion revenue organization - with the expectation that a new business unit would be formed. Four months in, the parent organization was facing external pressures and decided to stop the whole venture - and yes I had pre-negotiated a severance deal for just this eventuality. According to the author, that decision by the parent company was somehow my fault? Was I incompetent? Should I have skulked away in shame, with no payment at all for the risk I took?
This article is business advice as dispensed by a grade schooler.
First, the author is talking about startups, not companies which might have reason to lay off thousands of workers or whole teams.
Second, in a startup, it's probably worth getting an employee to sign a separation agreement even if they were terminated for cause. Part of that separation agreement will include a release of claims, making it impossible for the former employee to return after the fact and dispute the cause of his termination.
This makes it possible to say "There are no former employees who might come out of the woodwork a sue us for wrongful termination.", e.g., while fundraising.
Consider the following:
1. A company lays off a thousand employees as it outsources a division, or combines with another firm (management decision).
2. A company decides that a product isn't cutting it and lays off the entire product team.
3. My own experience: I was asked to leave a senior position to join a brand new division of a >billion revenue organization - with the expectation that a new business unit would be formed. Four months in, the parent organization was facing external pressures and decided to stop the whole venture - and yes I had pre-negotiated a severance deal for just this eventuality. According to the author, that decision by the parent company was somehow my fault? Was I incompetent? Should I have skulked away in shame, with no payment at all for the risk I took?
This article is business advice as dispensed by a grade schooler.