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The same logic applies.

At least where I live, universities used to run entrance exams. They didn't care about high school grades, or even if you'd ever been to high school: if you passed the entrance exam, you could enroll.

At the end in very large cohort standardised testing. And by very large I mean at least hundreds if not thousands of test takers. At that point you have enough test takers to stack rank them in properly done test. And it smooths things over the years. This is the least bad way of evaluating large number of students.

In class room stack ranking is just meaningless. Either student passes demonstrating various levels of knowledge or not.

To play devil's advocate, evaluations and scoring should probably be used at the systemic or team level rather than stack ranking individual employees... I mean students. Improve the educational system rather than blame the individuals.