Without ranking of some form, how do you identify the best people and reward them accordingly?
I think the biggest problem with your statement is that you're trying to identify the best people, rather than the best teams.
So lets say you identify the best team (itself a flawed concept - is sales more important than development, since they bring in the cash?) , then do you propose to treat everyone in the team the same? What about the new hire into the team who is struggling and should never have been a developer in the first place? What about the lazy stoner? What about the girl genius who reworked the problem areas over a weekend? Should they all get the same raise because they're on the same team?
your argument would be more convincing if you started to explain your reasoning rather than just throwing out a list of cliches of "undesirables" in your opinion.
These hypotheticals are to illustrate that that doesn't work.
the lazy stoner? sure he smokes up at home and comes in to the office late basically every day. he's also an outside the box thinker who pioneers the use of new technology on his team, and is an expert debugger who can view problems from angles his colleagues haven't considered yet and maybe never would have.
the new hire who's struggling? its not her technical ability thats lacking, she's just going through some shit in her personal life. her father is sick with cancer and she's splitting her time between her tiny New York apartment where she lives with 3 roommates and her parent's house in the suburbs where she helps her overwhelmed mother catch up on laundry and sweeping the floors at home.
the girl genius who reworked the problem over the weekend? well she's an arrogant workaholic and constantly talks down to her coworkers and drains the morale of the team. she spends a lot of time thinking about ways to make herself look better to the boss and eagerly takes full credit for projects she collaborated on with 5 other people, but she doesn't mention that at her quarterly review meetings.
you wanna keep going with this game?
If your point is that its hard to measure people's true performance, then yeah, sure.
If your point is that everyone should be paid the same because its too hard to ascertain actual performance, then you better find a gig on Cuba or some other functioning communist society.
In China, Ali Baba and others have created a ranking for regular population, called the "social credit". If you make friends with someone who has a low rank score, your own score will be penalized (they want to control who people make friends with and socially isolate people by descoring them). Also, if you watch too many American movies instead of Chinese. These scoring systems (and even Google's Page Rank) pervert the normal behavior of people.
Once we have more accurate profiles on individuals, and the profiles are shared more widely, you could make much more informed decisions about who you want to share public spaces, interact, work, live, or even enter into relationships with.
I believe this maximizes the motivation you get from rewards both on an individual and team level creating the "best" you can get.
Although, realize, studies have shown rewards generally don't impact performance greatly.
Sometimes it's the gestalt of the team that works well; sometimes there's simply no easy way to isolate contribution.