Formal reviews distill virtue signaling into a standard process with explicit rules rather than an informal set of norms that individuals may or may not be aware of.
For instance, tackling existing bugs or documenting code often seems to be undervalued compared with writing new code, when writing new code often just introduces new bugs and requires new documentation. If you start tracking bugs, people will benefit from creating and tackling easy bugs, while tackling harder bugs is effectively a punishment.
Goodhart's law: https://en.wikipedia.org/wiki/Goodhart%27s_law
Evaluating performance is tough. Evaluating performance without greatly distorting incentives is much tougher. I agree fairness should be a consideration, but it is not the primary purpose of a business.
Senior executives (usually VP and above) at major companies typically sign contracts explicitly outlining their goals for the next 12-24 months. They are incentivized or fired based on meeting those goals. And it’s the executives who demand this, not the companies.
Point being, if the executives are demanding clear performance goals for themselves, it’s probably good practice. Managers typically are not responsive to demands from below, so guess where the mandate has to come from.
Give me somebody who can actually do the work instead of talking about how great they are — or about how unfair others are to them.
Getting to the bottom of it all is hard, if not impossible given the power imbalance. So yeah, virtue signaling is important when different cultures teach you to show virtue in different ways.