Chris Anderson has some great blog posts regarding the review season at
Microsoft. One in particular I enjoy is called "Forced Ranking.". His "Ah, review season again..." follow-up is especially revealing:
I would almost take this to another extreme (but not quite) - your bottom 5%
should be cut, your top 5% should be given away. A strong organization
should be growing new talent, and should be farming them out to the rest of
the company. If you have super star performers in your team, give some away
(not all of them).
Chris represents a terrific shift in thinking: rather than taking on the
burden that every low-performing employee can be saved, you have to
transition to getting those people out of Microsoft. I'd be quite happy if
over the next year Microsoft fired 5% of its current staff and encouraged
the healthy pursuit of other opportunities elsewhere for another 5% (good
attrition mostly, but I'll take some bad attrition if it helps revitalize
the software economy).