When it comes to employee ratings, absolute vs. relative is a red herring. Both lead to adverse outcomes. With the more common absolute ratings, managers have an incentive to rate everyone highly, so people who work for honest managers get screwed. With relative ratings, the weakest members of the strongest teams get screwed. Rating employees just doesn't work unless the departments are also rated. If you know the relative strength of each department then you can adjust the ratings of its members accordingly. There's still a serious question of what you do with that information, but at least then it won't be totally distorted by the differences between teams and managers.