On a related note, some of the more effective companies I've worked for have had strong "up or out" cultures. Now, I know that this sounds harsh and draconian at first. And it conjures up images of political intrigue, heated power struggles, and corporate backstabbing. But truth be told, I've actually found those evils to be more prevalent in companies that don't cull their dead weight.

What happens is that these firms accumulate a vast, stagnant layer of middle and upper management types who have no incentive to work any harder, take new risks, or develop talented employees. Instead, they're simply cashing in on a safe paycheck, riding a pretty cushy high horse, and fiercely fending off anyone they perceive to be competition for their sweet gigs.

Compounding this problem is the fact that mobility slows to a crawl, because the queue is full. This breeds dissatisfaction with the young, ambitious types, while simultaneously breeding resentment among the older, entrenched types who adopt the grumbly "kids these days..." defensive mentality.

Now, there are plenty of ways to screw up the up-or-out system: bad KPIs and standards, inept evaluation processes, etc. But no system is perfect, and at least a system that forces honest dialogue with managers about their future advancement prospects is better than a system wherein lousy managers can overstay their welcome.