With reference to Bruce Webster, "Dead Sea Effect" in an organisation is an undesirable effect in an organisation. When an organisation expands and recruits more staff, the overall competencies of the staff should be distributed equally. But this is not the case. There will be more talented people and less capable people. The "dead sea effect" happens when the talented people leaves and only the less capable people remains.
This is what happens in the dead sea. The sea water got evaporated but rain did not come to replace the lost water and so the sea got more saltish over time. Talented people will leave a company when they see the "dead sea effect". New recruits that are talented will know the organisation is showing the "dead sea effect" and will not stay on for long.
Over time, the company will only be left with all the less capable people. A good management should be able to see this type of effect forming and take corrective actions to let go of less capable people in order to retain the talented people. Unless the management is also part of the "dead sea", if not, the company should be able to bring in more "rain" and neutralized the "dead sea" effect.