Our company (not Microsoft, but a bit larger) used this model for over 15 years; it worked better than the replacement model, where people only get fired when they are really bad, so really weak people accumulate and re-baseline the competency in the company. On top of that, the new model based on diversity removed almost completely competency from promotions, so it is very easy to stay at the top of the peer group due to lack of competitors.
There could be a model where you just define what "bad" is in concrete terms and fire people who are not up to a relatively high standard; yet you aren't required to fire the the "bottom people" if they are good enough. I believe this is what FAANGs are doing.
