I was a manager for about 10 years before growing quite tired of the bureaucracy where I worked and started consulting. I’d much rather be a worker-bee than a manager-droid.
Brief hijack: being a (middle) manager absolutely sucks – you’re responsible for everything your people do right or wrong (of course), plus your own performance, plus handling all the tonnage of crap that the upper managers fling your way (“The company strategy this week is to be ISO-81382 compliant, please attend this 12-hour meeting and create a complaince strategy for your team. And, no, you can’t move your schedule because of all the time this useless objective requires.” And 12 weeks later that strategy is forgotten and they’re off on something else. It’s like working for kindergarteners.).
Back to reviews: I managed from 2 to 15 software engineers, and wrote all the performance reviews. And I sweated blood over those reviews.
The 1-5 scale is fairly common. And I think it’s fairly useful to have a single mark to show an employee how they’re doing and if you think they can do better (or if they’re invincable gods, for that matter).
The important thing to me when writing reviews was in the bread-n-butter of the review document. There were broad suggested categories in the review guidelines, and I was more or less free to ignore them and make my own categories. It usually broke down to things like creativity - does the person come up with unique solutions to problems (or has to be led by the hand); accountability - does that person follow through on commitments (or sluffs off and misses deadlines); etc etc.
The really hard part about writing reviews was a) congratulating people for all the really good stuff they did – keeping track of the time when Diana really came through with a great idea or young Bob pulled an all nighter and kicked butt. Saying thank you in a sincere way and recognizing achievements.
And then – because this is a review – coming up with all the ways that someone can do even better, like trying to focus Diana’s efforts because she’s smart & creative but sometimes flakey and easily distracted, or channeling Bob’s tenacity towards goals that help him grow in his profession and ultimately work less in the long run while being even more productive.
Writing a decent review that really tells an employee where they’re at and what you think about them and thier relative value done in a tactful way that’s actually helpful to them is a bitch. But done well, can be really helpful to that person.
I can understand why many managers do a crappy job with reviews – it’s damned hard to do. I didn’t mind doing it at all – I owed the people who worked for me a decent and honest evaluation – but as I said I sweated blood trying to write these things.
The real challenge comes with a problem person – how do you review them and make them see your point of view? This isn’t usually done well just in the review process. If the manager writes a bad review, and the reviewee didn’t see it coming a mile away, the manager has done a terrible job of setting expectations. OTOH, the review is the opportunity to say to this problem employee, “hey, we got off on the wrong foot, here’s where I want to see things go” and help that person understand or negotiate with them to make a plan to fit in better.
(A less obvious problem is employees who are perfect – yeah, it’s just awful having these folks around 
– but as a manager you need to find something that can be done better, or your boss wonders if you’re doing your job on the reviews. I had one person who worked for me who was absolutely perfect – intellect the size of Jupiter, ego the size of a pin, absolutely dependable & helpful to everyone. Utterly indispensable. I finally made a deal with him and we’d just write his review together and try to find something to nitpick.
To sum up – the 1-5 scale is useful primarily as a summary of a review. If it constitutes the entire review, then the manager is not doing thier job correctly