Sabotaging growth
Performance evaluation processes can be a great fuel for personal growth. However, some strategies become the obstacle or even sabotage any chance at growth.
Focusing on weaknesses
Working on one's weaknesses is great, if done for the right reasons. However, if the process forces people to work on skills they hardly use, just because they're a requirement on a checklist, it can kill all motivation to grow.
Forcing a great engineer to learn management skills, just to move to a senior position is one common example. Skill matrices are particularly prone to this.
Grading on a curve
Grading on a curve, or allowing for only a set number of promotions a year, or providing a set budget of points to distribute within a team towards promotion, all of those have one thing in common: They incentivize joining weak teams to get promoted quickly and leaving high-performing teams, because they slow down a personal growth trajectory.
Systems like this will lose self-motivated high-performers, that don't want to leave their teams hanging for their own gain. They're a great environment for the politically savvy, that don't mind a bit of back-stabbing to look better than their team mates.
Targeting averages
Similar to grading on a curve, targeting averages across teams, departments or a whole company incentivizes back-stabbing or even sabotage to look better by comparison.
They offer a second incentive too: Joining a low-performing team and taking it slow, joining the low average that then will be increased to stay inside the target band.
Hidden agendas
Nothing hurts trust and motivation more than a hidden agenda. Teams are fully dependent on what their managers and the company as a whole communicate. Great motivational speeches about career path systems are very common but it's just as common for those to not reflect the whole truth.
Some companies value looking good over transparency. They praise career opportunities and rewarding individual growth, but then, when the chips are down, apply methods like the ones above to 'equalize teams', 'harmonize growth' or 'avoid having too many leaders'.
Motivation from this is temporary. At some point the people will catch on, motivation will drop and churn will increase.
Recommendation
Design your career model with transparency and fairness in mind. Allow employees some freedom to develop the skills they are most interested in or motivated by. Evaluate them as objectively as possible, based on demonstrated behaviors and past performance. Reward success on team level and growth on personal level. Be open about your intentions.