Earlier quoted context omitted.
Not all people add value to an organization, and they might stop adding value too. Unfortunately, it's not possible to know this for sure prior to hiring, so the only realistic way to maintain the organization is with constant pruning.
I think this is a bit of a fallacy. You don't have to always be firing some percentage of your workforce. While hiring the best is not easy and you may need to let people go you also shouldn't just constantly be on the hunt for the next head to chop. I have seen the effects of stack ranking and it's not pretty.
Like most things in life you need to strike a balance. Most managers hate firing people, even when they probably should. The person might be just the kindest sweetest person they know and maybe a friend but they're just not very good at their job. A big overall workforce cut gives them the excuse to fire the person without having to hurt feelings or look bad.