There are a lot of good answers here, so rather than pile on, I thought I'd provide one that is razor focused on management's perspective.
Businesses are more successful to the extent that they make good decisions and effectively follow through on them to successful outcomes.
Agile teams are more successful to the extent that the people closest to the work (the team) make the decisions about how the work is going to be done, who is going to do what parts, and when it will mostly likely be completed (forecast).
Did you notice the conflict? Managers in pre-Agile organizations traditionally have the key decision making skills (measurement, analysis techniques, etc.) as well as follow through tools/skills (bonus control; sticking to good, but tough, staffing decisions; etc.). Teams may not have those tools/skills and yet Agile calls for the teams to make the decisions and turn them into positive outcomes.
During an Agile transformation, managers have the right and responsibility to insist that important decisions continue being well made but the more decisions you can transfer to the folks closest to the work, the better. For decisions being transfered to the team, the team needs to understand the business' perspective on the relative value of comparison criteria for each type of decision. "That's uncomfortable" is generally not highly valued as a decision making criteria from the business' perspective.
Good Agile coaching will prepare the team for this additional responsibility; it will give them the techniques they need to work through these tough decisions. Good coaching will also prepare managers for the fact that the team will reach different conclusions than the team's traditional managers... and that they may use a more qualitative approach (Eric's "Things just go... well... better... when John's around.") in contrast to management's traditional quantitative one.
The team's perspective on this individual tracking issue should ideally sound something like this:
We understand that it's critical for the business to maintain high productivity. We recognize that individual performance is a key to overall productivity and that our team members will need to be paired with work that matches their skills. When the business' expectations of our team cannot be met with its current capability, individuals may need training or coaching in certain areas, and there may be situations where it's necessary to remove or replace a team member. We will be fully transparent regarding mismatches between current expectations and capabilities so that management can identify opportunities to provide resources, assistance, or intervention. We ask that you trust us not to shirk this responsibility and to collaborate with the team to devise a plan to satisfy this critical business need.
As for the bonuses, year end reviews, etc. ideally, your management would allocate your bonus portion to the team and the team decide how to divvy it up. As Eric says, management's relationship with individual team members becomes less of evaluation and more about career guidance.