Meta is about to start rating more workers as 'below expectations,' internal memo shows
News Summary
Meta has instructed managers to rate more employees as 'below expectations' in their midyear performance reviews. This move expands the ranks of its lowest-rated employees, targeting 15% to 20% of employees in the bottom tier for teams of 150 or more, up from last year's 12% to 15% range. This expanded range includes employees who have already left the company as part of 'nonregrettable attrition' (non-critical staff who resigned or were dismissed for underperformance). An internal memo states that the midyear review process is "an opportunity to make exit decisions," but clarifies there will be no company-wide performance terminations. Managers can select employees for performance cuts based on a 'below expectations' rating, formal discipline within the past six months, or an 'employee relations' case (a performance management plan) in the first quarter. The review process is set to begin on June 16, with manager-employee performance conversations scheduled for July-August. This change comes just months after Meta laid off nearly 4,000 low-performing employees and echoes a similar move Meta made in late 2022. It underscores Meta's ongoing effort to reshape its workforce following years of overhiring, streamlining teams, and cutting costs.
Background
During the COVID-19 pandemic, tech companies generally experienced rapid expansion and overhiring, and Meta was no exception. However, with slowing growth in the post-pandemic era and a renewed focus on efficiency, Meta has initiated significant structural adjustments. Earlier in 2025, Meta had already laid off nearly 4,000 employees, approximately 5% of its workforce, due to performance issues. CEO Mark Zuckerberg publicly stated that the company would "raise the bar on performance management" and move faster to "move out low-performers." This move also reflects a broader trend in the tech industry, which is streamlining operations by cutting middle management and non-core roles to improve efficiency and refocus on high-growth areas like artificial intelligence.
In-Depth AI Insights
What are the core strategic objectives behind Meta's intensified performance management, beyond mere cost-cutting? - This transcends simple cost reduction; it represents Meta's strategic human capital restructuring during a period of macroeconomic shifts and technological transformation. The company is pivoting from a past 'grow-at-all-costs' expansion model to a 'lean and agile' efficiency model, prioritizing the allocation of resources and talent to future core growth areas, particularly AI and the metaverse. - Through rigorous performance management, Meta aims to shed employees who do not align with the new strategic direction or efficiency requirements, thereby freeing up human and financial resources to attract and cultivate high-end talent with emerging technology skills in AI, advanced software engineering, and AR/VR. This is a critical skill-set transformation for future competitiveness. How might this continuous tightening of performance management affect Meta's long-term innovation capabilities and corporate culture? - Short-term: It could boost employee urgency and productivity, compelling workers to upskill to meet new company demands. Simultaneously, it might lead to attrition of some employees due to excessive pressure, including talent who might perform well elsewhere but are culled due to cultural misalignment. - Long-term impact: An overly aggressive 'stack ranking' or 'rank and yank' system risks stifling innovation and risk-taking. Employees might become more risk-averse, focusing on short-term, quantifiable results rather than engaging in high-risk, high-reward long-term innovation projects. This could negatively impact Meta's ventures in areas like the metaverse, which require bold experimentation, and potentially harm employee loyalty and morale, leading to talent drain to more culturally accommodating competitors. How should investors interpret Meta's actions, and what does it imply for the broader trend of efficiency gains in tech stocks? - Signaling significance: Meta's move further confirms the 'efficiency-first' and 'talent streamlining' trend among tech giants under profit pressure. This indicates that major tech companies have decisively shifted from a 'burn rate' model focused on user growth and market share to a 'lean' model prioritizing profitability and return on capital. - Investment implications: Investors should focus on tech companies that not only cut costs but also effectively reallocate resources to high-growth, high-margin areas. For Meta, this means short-term profitability may improve, but long-term growth drivers will depend on whether its streamlined team can achieve breakthroughs in critical technologies like AI and the metaverse. Furthermore, this suggests that the tech industry's demands for talent will become increasingly stringent, potentially creating opportunities for companies investing in relevant education and high-end skill training.