I guess it seems like that argument takes the discussion to an extreme. Does anyone actually advocate never firing employees? That there are literally no bad employees?

> It is hard to enforce and cultivate organizational culture top down. Most of it is maintained peer-peer.

I think it's a combination. The leader has a large influence; they set the standards and the norms. At the same time, I agree with what you say about peers - perhaps peers spread and 'enforce' those norms. It may also depend on the size and age of the organization.