When you know you have a job for the next n years at least, you also tend to put more effort into efficient processes. When you have to wonder every other month if you will still be there a lot will be just quick and dirty ad hoc solutions.

It is still not easy to find good people, but the truth is: HR are not the best people to decide who is. If you have good people already and they don't try to build an empire, they will select good people. The danger there is only that they will select people that are too much like themselves or they will select the worse candidate because they fear about their own standing etc.

More accurately: such an environment requires paying a premium to compensate for the decreased job security. (As with any market, employees expect to be compensated for their higher risk with higher returns.)

Netflix, for example, and Amazon (to some extent) have gotten away with this model but the vast majority of companies are simply unwilling to pay top of market.

Additionally, in many markets there's no such thing as 'firing lightly'. Here in Scandinavia firing people requires a significant amount of work on the part of the manager and HR.

In Germany new employees usually have a probation period of 3 months, during which companies can pretty much fire them at will if they don't perform as expected. I think that's almost always enough time to assess whether someone is a good fit for long term employment.

That's what probationary periods are for.

You should fire lightly early, and fire hard if late.

Where I live you have a month when starting were you can be fired with 2 weeks let-go period, after which it takes 3 months or more.

I think you should have an intensive monitoring/evaluation in the first month, and fire lightly if you think there is a mismatch. After you have determined an employee fits you, if they stop fitting you try to figure out why, help them to fit again (are they the kind who gets bored, needs new challenges?, do they have problems at home? If you found someone who fits I think it is more efficient to make them fit again then try to find someone else who fits). I believe this is the way to go even in areas where you do not have the rules about the dismissal period that you have here.

Yeah, exactly... depends a lot on who is doing the firing and why too.

I suppose if ALL companies did that then there might be some sort of fluid equilibrium state where most companies had some mix of mostly competent engineers who chose to work there for positive individual choice/reasons. But in a more winner-take-all world where the "best" need to hire the "best", because that means second tier companies get the rejects and therefore will fail to compete and the chosen few get success and riches? Set the bar incredibly high and forget fairness. (also an extreme for purpose of conversation, just on the other end of the spectrum)

Also, no one deals with technical debt if they don't stay long enough to suffer consequences of compromises, so the quality will decline over time.