If you eliminate the "average" segment of your staff, then the "exceptional" team members become the new average, and you terminate the next average group, you eventually wind up with one - maybe two.
In practice, many firms eliminate the "average" section of staff and replace with fresh grads who aren't particularly likely to be better than "average" but are cheap.
Rinse and repeat often enough (and preferably with an incentive scheme that justifies average starting pay and ridiculous working hours with the promise of fantastic rewards if you manage not to get fired for the first three years) and bizarrely, you get a reputation for high standards.
