I think that even worst is that it does not look fair or transparent at all. Which means, remaining employees are going to be demotivated and resentful. It is going to be chaos organizational, competences will be unclear etc. Which will make organization as a whole more dysfunctional then it needs to be.

Exactly. It smells very strongly of the same kind of overgeneralized superficial thinking that leads people to believe that less moderation is always good. You can’t possibly expect that everyone in your company will be 150% invested work-any-time business evangelists. Maybe the 50% who are left now have to work double? Are they so incredibly enthusiastic about the job to take the hit silently?

> The chance of making big mistakes and cutting critical staff and teams is very high.

It turns out that in the big picture, there are fewer people who are truly critical than most people think.

Especially individual contributors. There are rare exceptions but those, who truly make a difference, stand out.