"The second technique is that of trying to normalize employee performance review ratings across departments"
And here goes your sloppy thinking. You didn't actually normalize anything, you just assumed it away. You didn't attempt to understand if some team really is all-stars or not - you just assumed that the distribution of capabilities of people in the teams follows the same bell curve. Regardless of how good their manager or project or other circumstance is, for instance. Basically, you decided to fudge the numbers for a warm-fuzzy feeling.
And here goes your sloppy thinking. You didn't actually normalize anything, you just assumed it away. You didn't attempt to understand if some team really is all-stars or not - you just assumed that the distribution of capabilities of people in the teams follows the same bell curve. Regardless of how good their manager or project or other circumstance is, for instance. Basically, you decided to fudge the numbers for a warm-fuzzy feeling.