You can do it your way - it works, but it is not as accurate.
This comes straight from the Fender setup page at
http://www.fender.com/support/basses.php
INTONATION (FINE TUNING)
Adjustments should be made after all of the above have been accomplished. Set the pickup selector switch (if your bass has one) in the middle position, and turn the volume and tone controls to their maximum settings.
Check tuning. Check each string at the 12th fret, harmonic to fretted note (make sure you are depressing the string evenly to the fret, not the fingerboard). If sharp, lengthen the string by adjusting the saddle back. If flat, shorten the string by moving the saddle forward. Remember, basses are tempered instruments! Re-tune, play and make further adjustments as needed.