Yes. The challenge is how to measure individual contributors. It’s easy in Sales, which is why salespeople can do very well without being managers. Harder with engineers, whose work is very interconnected.
For sure. And it's why frankly in my opinion it's very hard to scale software development effectively beyond 25-50 engineers. After that politics and faux-meritocracies take over as people lose personal touch with each other.
Team mates, usually know who is a good engineer, and who's not - much more accurately than management.
When I was in Google, Perf process was based on peers feedback, and it worked well.