As Yahoo is not on the verge of bankruptcy, I'd say start with a headcount freeze rather than immediate layoffs. That immediately changes the tone from "oops, y

As Yahoo is not on the verge of bankruptcy, I'd say start with a headcount freeze rather than immediate layoffs. That immediately changes the tone from "oops, you fell below an arbitrary line that makes no sense for this team", while providing an incentive to lay off true under-performers because you can replace them with better people. Then start making individualized assessments of projects/teams. Start with the larger ones, where you can hopefully make meaningful cuts with the least disruption. Make individual judgements as to whether the team is pulling its weight or needs to be shrunk (or eliminated entirely). Where layoffs from a team are forced, offer transfers to other teams, which can evaluate whether they would be better served by replacing their lowest performers with these otherwise-doomed employees.