Seriously? No wonder the practical quality has stagnated.
I mean you do realisr you're not getting any better employees with such a policy, just better swindlers and saboteurs in higher places, right?
It filters out honest people that are either unwilling or unable to game the system, especially as the swindlers and saboteurs previously mentioned feel threatened most of all by people if genuine quality that might inadvertedly reveal them.
Competition is not a bad thing, but it needs careful management if it is to produce anything more useful than a mess.