And don't forget that the percentages are not global, but in small buckets. This makes the worst performers extremely valuable, because not only you have someone to get rid of, but if they are bad enough, the rest of the team knows who will be laid off, so they can be far less tense.

It's also bad for the high performers, as working in the same team is bad: Having 3 great performers in a team means at least one, if not two are going to get a middling review. Everyone's behavior gets warped in ways that don't align well with what would be good for the company