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How are Performance Ratings given out?

Just wondering on how this rating system work.

I know a few facts (from peers and managers):

  • You are compared to your ranks/peers (associates will be compared to associates, seniors, with seniors)
  • There are always "below average" (4 at KPMG) and/or "low" (5) performance grades that are handed out.

How about "1"s? Are those always given out as well? If we take the bell curve approach, if you always have people in Ds or Fs, you are bound to have A's as well, right?

Also, do they consider past years groups and compare them with present years group? Example, if you have a fantastic performer in a past year who got a "1", and this year's crop's best performer doesn't really match up to the last one, would that person get a 1 or would it be a 2?