Can confirm, both employees that receive good score but not excellent and average score not good are demotivated.
Only the excellent minority is motivated.
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).
Surely a minority of the excellent minority that 1) get recognised as excellent and 2) are motivated by such recognition.
A good manager should know what you're contributing without this kabuki theater.