My guess, knowing nothing about Valve specifically, is that they’ve probably never fired an engineer, but that they’ve had “manage out” a few people who haven’t been able to get along with the culture– and that they’re probably quickest to act against those who are trying to set themselves up as executives (inappropriate delegation, threatening, disparagement of colleagues to gain status).

A bad fit in a closed-allocation company is someone who doesn’t get on well with his direct manager. A bad fit in an open-allocation company is someone who insists on having the kind of authority that impinges on others and thereby weakens the culture.

It’s probably true that no one has been officially terminated, so much as people who were obvious bad fits and asked to leave. They probably either (a) got generous severance packages including the right to represent the departure as mutual, or (b) left on their own accord before The Axe could fall.

This is good for the culture, because if no one seems to be leaving on bad terms, people aren’t afraid. The company benefits by giving these people severance and letting the departure seem mutual, because if you cold-fire, you generate a gossip and fear load. It’s when people are afraid that they glom on to strongmen who become the next generation’s nobility (5th-century Europe) or de facto bosses.

Again, I know nothing about Valve per se, but this is how I would imagine firing playing out in such a culture. Yes, you have to do it, but you can be conservative and humane about it.

Open allocation means people choose what they work on. Valve made a poignant statement about this by putting wheels under employees’ desks. (http://michaelochurch.wordpress.com/2012/08/09/dont-look-now-but-valve-just-humiliated-your-corporate-culture/…