To me, that seems a lot more fair than implicitly believing all members of a team are of equal levels of skill, productivity, etc.
Here's why: 1. Some managers (of sub-par mind you) teams scored whole their team as "excelent" - as to compensate for lack of company success. Then when the MGMT figured that out - they implemented ratio - thus again hitting the team with many excelent overachievers, etc... 2. Myself personally am often transfered from f-ed up project to a f-ed up project (since I have the ability to mostly turn them around or help to mitigate the damage) thus ensuring that I will never be compensated for the level of effort necessary to turn around a f-up.
This system just makes me sick - because I want to compete but I don't want for my collegues to suffer because of it - currently it just encourages teamicide. So this kind of scheme appears to demotivate over-achievers more than it motivates under-achievers.
It does not follow that the way to do that is a rigid, formal cycle of performance reviews and ranking.