But I suspect you are talking about something more formal, something tied to salary increases.
I think such appraisals are damaging to the relationship between employer and employee. The only benefit is for the company in that they make it clear that you can't have maximum marks on everything (which is fair enough), but then tie that to salary increases. "Well, we would have given you a bigger pay rise, but you didn't get top marks on this particular skill." Or similarly, evidence to get rid of someone you wanted out.