It's one of those things that work well only in certain circumstances. Most especially a continuous stream of applicants, some of them above average, is needed

It's one of those things that work well only in certain circumstances. Most especially a continuous stream of applicants, some of them above average, is needed. At my not-particularly-good university they keep hiring faculty at assistant professor rank. Since the graduate school isn't impressive the applicant quality and publication record isn't great, and someone getting a grant is a rarity. After five years they won't get tenure, the position is re-advertised, more startup money is spent, wash, rinse, repeat. Under these circumstances it would be wiser for them not to shoot for the star performers they won't ever get. The research quality will be just as mediocre, but they can spare themselves the hiring process and save on startup funds.