I would like to add the perspective of psychometrics and validity to the ongoing discussion of performance measurement.  First, Derek Irvine suggestion to include employee recognition and behavioral metrics to preformance management is an excellent use of the psychology of performance and engagement.  Some people seem to be abandoning performance reviews, but I think there is also a case that many measures are just not well constructed or well integrated into the daily activities and behavior of those employees the metrics are designed to serve.  (Note; that's the employees outside the C-suite!)
When your measures involve people, there will always be a question as to what construct you are measuring and how well it is being measured.  Whether the metrics were based on performance reviews, management by objectives or behavioral modification, I've seen many elaborate metrics systems undermined when the final measures are determined in a haphazardly fashion.  
Consider this example.  If the construct of interest is ethical behavior, it's important to thoughtfully consider what the observable correlates of ethical behavior are and not be afraid to modify these measures as you gain a greater understanding of how those measures are functioning within your overall environment.  It's is also important to recognize the limitation of any measurement system and not go beyond what it is designed to do. Metrics are great, but it is important to understand how they are functioning and how they are (or are not) supporting the people they are designed to support.