The sad thing is that the managers participating in these sorts of activities are unable to connect cause & effect. For example, if you rank individual employees then you destroy teamwork and incentivise all sorts of behavior that's bad for the company. It hurts morale, lowers productivity, increases employee turnover, increases hiring costs, lowers product quality, etc. It's a vicious cycle. And for someone who thinks it's a good idea to rank employees, these effects will simply confirm their beliefs that they need to rank employees.

Why does this happen? In the best case, it's a misguided attempt at career development. Or it's a way to figure out who to give more money and who to fire. Usually there is an element of fear: "I'm afraid my employees will not work hard unless there is the threat of a bad performance review".

To be fair, ranking employees does sound like a good idea if you don't know anything about humans. Most management activities are really just things that sound like a good idea (but fall apart under scrutiny). To be more fair, bad management is the norm, so no one has good mentors and role models. "If everyone else does this, then it can't be wrong." It's another vicious cycle.