That's exactly it. The untapped people are actually getting bunched into the "underperforming" category because in the eyes of the beancounter they are not meeting some benign performance metric that the company wants to see.

Say I'm a phone support company. I have a script I want my employees to follow and the average support time per phone call should be anywhere between 15-30 minutes. Sally Sue is on the phone for the full 8 hours and handles 16 calls a day. Billy Brass is on the phone for 4 hours of the day but handles double the amount of calls a day.

To the bean counters Billy is underperforming because he only spends 4 hours time on the phone and the company only makes money for the amount of time they can keep people on the phone. In this example it doesn't matter that Billy is an all-star because he completed more calls, he's underperforming because he's not following the script that should keep people on the phone for as long as possible.

The point is that Billy will feel resentful because even though he's able to help more people in less time he's getting penalized so Billy has less incentive to go above and beyond and in fact needs to degrade his workflow to fit someone else's metrics. So Billy becomes "untapped" because the company has restricted his autonomy. He "CAN" do more but that's not what the company wants from him so he will choose not to do it even if it's to the benefit of the company.