This does not work in practice. You don’t have a perfect metric to evaluate performance, and managers at all levels have some margin of decision and they can interpret different people’s productivity differently. The effects on morale are also usually terrible and can reduce the productivity of the remaining employees while the best ones polish their CV and look elsewhere.

This idea is rooted in a philosophy where people are interchangeable cogs that can be evaluated purely on a one-dimensional axis, don’t have emotions, and where you don’t have competitors taking advantage of this by getting good engineers for cheap you fired for ideological reasons.