I assume the logic is that, at many/most places, the charlatan may actually be let go if they really don't work out whereas the person who is just "OK" will be allowed to cruse along indefinitely. Most companies aren't pro sports teams.
I get that's the logic but I think it's completely stupid. If someone is "mediocre" enough to scrape by that implies they are competent enough to get the job done. If they are not able to get the job done, then they are by definition a charlatan and will be let go.