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Valve hardware engineer Jeri Ellsworth made news this week when she tweeted that she had been fired, and now it looks like that was just the beginning of big changes happening at the Bellevue-based video game company.

Gamasutra is confirming that potentially up to 25 people have been let go from the Valve Android and hardware departments. A few employees told Gamasutra that the cuts are part of a “great cleansing” and “large decisions.”

Develop also reported that Jason Holtman, Valve’s director of business, is leaving the company.

The 16-year-old game maker is renowned for its counterintuitive corporate culture, one in which bosses don’t exist and employees are encouraged to take big risks without consult.

Speaking last October at the Seattle Interactive Conference, Valve designer Greg Coomer talked about how things get done at Valve when there’s little structure and “nobody is checking your work.” He also shed light on how Valve handles terminations:

“The short answer of how we handle terminations, really, is the same as we approach all other decisions at the company. It is a peer driven process. If it turns out that we made a bad hiring decision, or that somebody is just not working out, there’s a method we use to get the people who are involved in the same room and to walk through the decision about what should really happen as a result of this person not functioning very well. Some of the details are kind of boring, but the main answer is that it is peer driven, just like we evaluate each other as peers.”

And here’s what he had to say about hiring people at Valve:

“The interview process looks more like a collaboration and a work process…. It is a very real world kind of problem solving. It is not a lot about asking people what they would do in a certain environment, or what they have done in the past. We ask those things. But the meat of our decision making comes out of a process where we are putting people in an environment, even in an interview, where they are really doing work and watching them collaborate and pushing them and finding their limits.”

Valve’s Greg Coomer speaking at the Seattle Interactive Conference

Valve’s culture of innovation and experimentation was highlighted last year when its now famous “Handbook for New Employees” leaked out, a manifesto of sorts in which employees were told that “this company is yours to steer.”

We wrote earlier today about how Valve hired Louis Barinaga, who previously worked as director of mechanical engineering for Xbox accessories at Microsoft. He was spotlighted on Microsoft’s Careers Site for his role on the team behind the Xbox 360′s wireless controller. His work was key to getting the controller’s rotational d-pad to work.

This is certainly a critical time for Valve, a company of over 300 employees that is diving into the hardware world with its planned “Steam Box,” a PC designed to connect to your TV and take advantage of the Steam’s Big Picture mode.

Valve co-founder Gabe Newell was the keynote at last week’s DICE Summit and spoke about how Valve is re-thinking what games are and how you sell them.

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