It's obvious to those on the ground that there are vast differences between people doing the same job. You can say "we only want the best" and fire the pretty-good, but the tone that sets is incredibly harsh. You can try to promote your top performers, but L+1 is usually defined as a different nature and scope of work, not the same work done better. This creates perverse incentives like separating people from their mentors so that they can demonstrate leadership, or choosing the most complicated way of getting something done & involving a lot of people so that they can demonstrate scope. Managers play these games because if they don't, they lose their best workers to outside offers.