As someone who has to give the news about the review outcome, I can confirm this from my own experience as well. Pretty much only those who come out of it as "top-tier" get any benefit, and no amount of "spin" will cushion the news of anything lesser. Of course, this isn't helped by there being an enforced normalisation curve on the ratings…
Even excellent scores can be demotivating. When one is blocked from internal career movement due to being 'too valuable to the team', and when the only reward on offer is a nice pat-on-the-back and a thumbs-up; One starts to wonder how much less work it would take to drop down to just 'good'.
I generally got excellents on performance reviews for my brief, entry level stint at Big Corp.
I still felt demotivated by the whole process, because it was a forced ranking of the system that wasted the whole teams time to say what everyone had already known: some of us did more work, some of us did less, and some of us were on a faster upward trajectory than others.
It turns out that it doesn't actually motivate any of your employees to throw social hierarchies in their face -- it only causes tension and undue focus on micro-social hierarchies (those heiarchies within a social class, eg, the hierarchy of entry level tech workers).
Actually I find when I've gotten an excellent review it's encouraged a little complacency immediately after. Good feedback after a single assignment doesn't seem to do that.
As someone who typically is a top performer, I found the dance just added overhead. I must keep tallies of all my "goals" and lists of everything I've accomplished in every respective category, and then waste hours cranking out my side of the review. Sure, I don't have time for it, so I make time for it, meaning less time for sleep.
A good manager should know what you're contributing without this kabuki theater.
Can confirm, both employees that receive good score but not excellent and average score not good are demotivated.
Only the excellent minority is motivated.