One of the hidden downsides of this approach that I never see discussed: The competent jerk that chases off employees is going to shape your codebase and company in their image. This isn't something that may be immediately apparent, but when you start running into design walls where said competent jerk does not want to budge, then the costs of having such a person become a major problem. Especially if they decide to leave and take their knowledge of the system with them.