It does work to a certain extent. There are a lot of people whose would leave if they weren't going to lose their family. It also keeps people from finding out that "The Truth" is actually "The Lie", since those who find out cannot talk to those still in. It also breaks up families, which causes those still in to be more dependent on their relationships in the organization.
The Watchtower doesn't care about those who aren't 100% committed. they would rather they leave, imo.