http://web.mnstate.edu/alm/humor/ThePlan.htm
This poem is my favorite description of this pattern, because it focuses on the the bad communication that creates the problem. Regardless of the intent of the people involved, gradually filtering out important information at each level as people try to please their superior guarantees a GIGO mess for the that the people at the top. As the poem says, "this ... is how shit happens",
Adopting something like the airline industry's "no-blame" culture that focuses on getting accurate reports by explicitly not focusing on blame might help avoid the natural tendency to eventually fall into this pattern.
