It would be less obviously bad, but the same issue applies: say the company has three teams of ten people and they are all good: one gets fired/lower salary any

It would be less obviously bad, but the same issue applies: say the company has three teams of ten people and they are all good: one gets fired/lower salary anyway each round. And now you have the additional issue that evaluations need to be objective, which is hard, while a manager never wants to lose member of their team, so they're naturally pushed to overrate their people to protect them from ending up at the bottom.