Autumn Jane is absolutely right—the probability of any set of employees becoming mediocre can be due to a variety of reasons. Even though the present team may be exemplary, human nature being what it is, the tendency to "take things for granted," "feeling indispensable," or "plain complacency" creeps into most people over a period of time. It's better and wiser to preempt such situations from arising rather than giving scope and then handling them at a later point in time.
Another reason—especially if the core strength of your company is in technical areas, meaning the company's business depends on upgrading/updating/enhancing technology on a very regular basis (IT, automotive, telecom, high-technology manufacturing, and some other sectors fall into this category)—is that attrition is good in the long run. The interest and convenience for any human being to upgrade/update/enhance their technical knowledge base regularly without interruption usually reduces with age—not out of choice, but due to changing priorities in life. This then leads to having, say after 5/10/15 years, what Autumn Jane mentioned: "a pool of mediocre employees."
However, this definitely doesn't mean that attrition should be ignored, since this aspect of HR has associated costs and effects on organizational well-being. The trick would be to know where to draw the line between what's acceptable and what's not. This obviously gets reflected in the scope and profundity of the training policies of the company—but that's another story.
While involving the Team Leaders in this exercise is good—it draws them into the HR process—I have a question. Has any effort been made to identify the teams where this problem is noticed/experienced more/less? If it's across the board, then the problem could lie elsewhere, and the chances of the Team Leads feeling disheartened later are high. I suggest looking into this aspect too.
All the best.
Regards,
TS