I agree with the assessment, but do not feel that the proposed solution will fix it. Performance reviews have a lot of management overhead and are done poorly in many companies. Many managers do not want to give honest feedback, because it takes time and employees may not be able to handle it. Committee based employee ranking leads to infighting, sabotaging, and low morale.

Perhaps we need to just accept that the compensation systems will never be fair, and managers will just promote and pay the people they like and fire or keep stagnant the employees they don't like.