I like the way they handle this at the Sudbury Valley School (http://sudval.org). They essentially have realized that there is no objective way to measure a good teacher, so instead they take the darwinian approach. Every year all students (and staff) vote on which teachers thay want to keep, culling out the bad ones and just keeping the good ones.
They actually have had teachers so good that they have been re-elected every year for more than 40 years.
I'm glad they have good results with this system. I recall a teacher in my high school who was very unpopular with many students. He was an ex military man and what I am about to tell you will sound like a cliché: He believed in strict discipline, penalized students heavily for being slightly late or having corrections on submitted work, and so on. He actually invented a new form of punishment at the school involving hard physical labour. I don't recall anyone having a Hollywood epiphany when subjected to his brutal style, no wonderful breakthroughs or students discovering their hidden depths.
He would never have been re-elected by students. But was he a bad teacher? I don't know! I entered the school interested in the material he taught and left it still interested. Was he a bad teacher? Honestly, I have no idea. All I can say is that he was an unpopular teacher amongst many students.
They actually have had teachers so good that they have been re-elected every year for more than 40 years.