And the constant fear of being in the bottom 10% doesn't create destructive behaviours like credit stealing, passing on failures dressed up as successes, and actively sabotaging competing projects or people.

ie you risk ending up with an internal hunger games when in reality you should all be working together against the external opposition.

If you want to get rid of the 'dead wood' then there are much better ways that don't create such negative effects on both the company and the people.

A smarter way to do this, is to have a probationary period on initial recruitment to check either of you haven't made a mistake, and the occasional reorg to which gives the opportunity for managers to remove consistently poor performers over a longer time period - ideally into a better suited role in the same org.

Finally, if his method worked, you'd expect the distribution of performance to narrow over time to the point where you reach steady state where who is in the bottom 10% is essentially random noise on a tight distribution.

Assuming he wasn't that dim, then he could of only intentionally created it to create a climate of fear because he believed that was the best way to motivate people.

It's certainly the easiest.

Removing the worst performers is the issue, as you somewhat suggest.

You don't want to remove the worst performers. You want to remove those don't do their jobs or don't fit in the company. This is very different.