I worked for a company (name withheld to protect the guilty) that allowed something similar but not identical to this. It was a bonus scheme open to the whole company, specifically:
- There were a number of tiers, starting at a $US50 bonus and going up to $US1000. Management approval was required for anything above the first tier, although it was rarely declined.
- Rewards were provided as gift cards from a long list of country specific vendors. This is mainly to avoid the increased taxation for direct monetary rewards.
- Broad guidelines were in place for each tier to ensure equivalent effort was required for each tier.
- The rewards came from dedicated cost centers to not disadvantage a project or team that wanted to reward its staff.
- Currency conversions for non-US staff and taxation implications were handled automatically.
- Management tracked the rewards and the recipients of higher tier awards got executive visibility.
- Awards could be made anonymously or publicly (chosen by the person giving the reward).
This system differs from the OP's in that it is not a rating system - a lack of reward does not mean the individual has not done his or job, just that he or she has not been visibly exceptional. However, as stated above, anyone in the company can give a reward to any other.
This was successful in some ways. For example, it was easy to give someone a monetary reward for working late or over a weekend. Rather than go up the hierarchy to beg for that voucher or movie tickets, you just gave them a lower tier award. If someone helped a different team, it was sometimes easier to give them a reward this way then bill from one project to another.
However, although there were guidelines and examples, its use differed from one team to the next. For example, some salespeople would reward each other after each major sale, effectively becoming an additional source of commission. Thankfully, I was not aware of any team that degenerated into a "work for reward" only situation.
The biggest problem with such a scheme is many roles are just not motivated financially that much. Roles were success can be clearly translated into monetary compensation are usually already on commission. Similarly, many senior roles already have bonuses or stock allocations based on meeting their KPIs.
While no one is going to refuse additional compensation, paying people what amounts to a small fraction of their annual salary to is not going to be a significant motivator. It is better to promote them, publicly recognize achievements or give them more responsibility, particularly for the longer term.
However, if you want an easy way for people to reward good behavior without the ability to punish bad behavior (as giving a low rating might) or open to abuse (giving someone a low rating as "pay back"), this is a good place to start. Staff also did not have to give bonuses, saving the time a compulsory rating system may consume.