Yeah, I've seen similar appraisal systems, although ours had a stepped scale of what pay increase would be awarded depending on how I graded my staff:
Outstanding
High acheiving
Performing well
Needs improvement
Underperforming
It was quite difficult to grade team members higher than "performing well" which was the bare minimum to achieve in order to receive the standard 3% (or whatever), and I had to go to great lengths to justify any gradings above that level. Performing well meant doing a consistently good job within the parameters of your job description.
Any failings within that carried a lower grade of "Needs Improvement", which meant the pay increase would be reduced to 2% - this included new and probationary staff too, regardless of their performance.
Under performing guaranteed no pay increase - I've only had to use that grade once, but it was well deserved.
I have graded staff as High achieving and Outstanding, which carried increases of 4 and 5% respectively, but I had to produce a presentation and Q&A session for my superiors in order to justify them. They really went out of their way to make it a chore to reward staff, which is why very few bothered to make the effort; and probably intended.
As far as the teachers go - turning up and doing a good job should guarantee a standard increase. Jumping through hoops and doing all those extras (outside of the job description) should warrant extra over.
