The effect on morale and real productivity of getting rid of the toxic and worst performers is amazing.
I can't name that place without doxing myself, but it sounds like Netflix has a similar culture. Some people love it. Some people hate it. But I don't think many people would say they have an issue with employing less-than-stellar employees.
Of course this is only "solving" (it's certainly not perfect) the problem of hiring for engineers, which most of us are on HN (at least I assume, but certainly more engineers than engineering managers). It does nothing to address the issue of hiring bad managers. I have no solution for that, other than to make sure the first manager is excellent. A players hire A players because they want to do the best work they can, and will go out of their way to hire people better than themselves. B players hire C players because they just want to make themselves look good. Once you have a bad manager, the assumption is everyone beneath him will be as bad or worse (obviously there are exceptions).
Leadership, from the top down, is absolutely responsible for the mentoring, training, and environment created by the management. None of the systemic problems with & induced by management is new. It comes down to: does leadership actually care enough to do anything about it? Companies institute all sorts of formal stuff like internal surveys and NPS scoring and so forth but it always comes down to trust & communication and then follow through. And the follow through is the clearest way to create trust. All of the things that even well intentioned leaders spout, if not followed through, quickly erodes and ultimately destroys trust. So, just like with kids, don't make promises you won't keep.
- More headcount is always better for the manager's prestige and career prospects, as long as those people contribute to project success at least a little bit (and most low performers do, just less than you'd hope). Managing infinitely many people each producing epsilon above breakeven is much better than having 1 rockstar.
- Headcount availability ebbs and flows with the business cycle. It's important to take everything you can while the money is flowing in case you might need it during a contraction. It's important to have nonessential staff on hand during a contraction so you can satisfy your X% cut requirement without compromising effectiveness too badly.
- As a manager of a high-performing division at a growing company, you will be given an integer multiple of your current headcount, and expected to deliver proportional results with it. If your strategy was "employ only high performers" you will fail, someone will be brought in immediately above or immediately below you to "help out," and within six months you'll be "spending more time with your family."
- The hiring process is hard to mess with. Recruiters put your ICs onto the panels directly; systematically leaning on them to change their votes will probably get the ethics hotline involved. But the decision to retain year over year is entirely yours.
It has a bad reputation as it's often used year on year - it's meant to be done just once or twice to get back on track after years of over-hiring and reluctant firing.
Like I said, it's not for everyone. A bad manager can ruin your experience anywhere and fire you regardless. That place was just very forthcoming about the fact that you need to demonstrate value if you want to keep your job.
Toxic systems are always the responsibility of the managers and that's from the top down. The systemically perverse issues created by people "managing up" is one of the most critical problems that people higher up the food chain need to correct for.
How often do you actually boot someone though? For juniors we have pretty low expectations so they never fail this.
This was not the practice where I worked, but you could have different probation periods for different roles. So someone who is primarily focused on technical debt might have a longer probation period than someone focused on rapid feature development.
I think you could reduce the 10% to 1% simply by actively firing bad employees, and the easiest way to do that is with a probationary hiring period (let's say 6 months, maybe a year).
I am fully aware of how systemic rot can be, and how hard it can be to remove. The real problem is when you hire a bad manager, because they will not only let the rot fester but encourage it to grow.
I think you could wildly relax hiring standards for ICs and be incredibly successful. What we need are better practices around hiring managers more than anything.