High churn rate in any dressing leads to stress. Stress often counterproductive for creativity. The expected result of the policy is a mediocre work with a lot of unproductive politicking self-selecting corresponding survivors.
This is exactly how the opening reads to the book No Rules Rules. Erin Meyer, a business professor, has that exact analysis of what "should" happen in an environment like one Netflix describes. But she interviewed dozens of Netflix employees for the book and found that the theory you state doesn't hold. The book is about figuring out why that is the case.