I disagree because we are not doing it based on the Science we already know now; we can do much better.
From behavioural psychology/social biology/game theory(Prisoner's dilemma) etc. we know Humans naturally have a in-group vs. out-group social structure. Within a group, cooperation with trust and fairness rules and competition is generally absent or if it exists is playful. The research by Frans de Waal (https://en.wikipedia.org/wiki/Frans_de_Waal) on Primate Social Behaviour (Cooperation/Fairness/Empathy/Reciprocity/etc.) is path-breaking. Here is one of his excellent must-watch Ted talks - https://www.youtube.com/watch?v=GcJxRqTs5nk Machiavellian competition comes in only for "status"/"reward" within a group and is not the norm. Competition is more prevalent between groups.
Thus if you look at a person in a organizational hierarchy, there are three immediate groups; a) the people you report to (out group), b) your peers (in group, cooperation predominating, with maybe a little bit of playful competition), c) the people that report to you (in group, cooperation but with trust/fairness predominating). For everybody else we don't know and hence almost always respond with tit-for-tat principle. Finally there is also a need to understand what drives self-motivation.
This is the natural order for Social Homo Sapiens as we understand from current knowledge. But none of this is being considered when measuring Performance/Productivity. For example, all Leaders/Managers almost always place Trust above everything else, Peers emphasize Fairness and the Managed Underlings emphasize Empathy. So while i may accept my manager "grading" me however begrudgingly provided it is "Fair", i will resent the same done by my immediate peers and underlings.
One way to do this properly would be; a) Everybody does a self-appraisal and gives it to their Manager b) The Manager does his job properly by closely monitoring throughout the year and makes his independent appraisal c) Both are submitted to a panel consisting of Managers (one of whom is my immediate Manager with one vote) who don't know the appraisee and finally d) The panel discusses the appraisals with the appraisee in a private interview-like setting. This takes care of the needed Objectivism, Self-Interest, Fairness all together.
PS: Resources for further study can be found in my comment here - https://news.ycombinator.com/item?id=39086359