The trap of self-improvement within a group

My friend who works for a big company was unhappy about the way the company bases its bonuses and promotions on an internal corporate rating that is the result of an employee poll. On top of that, there is a corporate goal within each department so somehow make that imaginary number go up 2 points per interval. Well, how do you do that? You have to artificially inflate the ratings in your own poll, and/or influence others to do the same. And if you're a manager, you fire those who don't keep their numbers up (because your own promotion is on the line).

This is absurd. Why?
The purpose of the index was, I assume, to make the company better using the feedback of its employees. However, by hooking in incentives and rewards, the system is neither measuring a true sense of company "happiness" nor is it changing itself to increase this happiness.

The danger of this arrangement is that it weeds out the very thing needed to actually fix the system. Dissent!

I believe all democracies are in perpetual danger of falling into this trap, because people are not generally aware of system-wide dynamics.