Heh, well then there are 3 ways to handle it:

1. Call it like it is "John failed, but we live in a class system so instead we're moving him to a less important team because we believe in this class system"

OR

2. Stop perpetuating that class system and fire people who do bad work, even if they went to Yale.

OR

3. Admit to yourself that you're not remotely honest, and don't expect any of your intelligent employees to buy your story either. [i.e. The normal choice]