Talent Watch - "Meets" vs. "Exceeds" from the Employee's Point of View

A couple of days ago, I commented on Performance Differentiators that compared/contrasted the difference between a employee who "Meets' expectations and one who "Exceeds" expectations.  Lots of quality comments followed, most tweaking the logic based on their experiences and perspective - which is good!

One item I've been thinking about is how the normal employee views the Meets vs. Exceeds situation when you transition to a 3-point rating scale.  My own experience with this suggests that we have historically conditioned employees poorly through the use of tools like the 5-point rating scale.  Why is the type of rating scale important?  Though the use of the 5-point rating scale, most employees have been conditioned by their managers to expect to receive a blend of 3's and 4's (think meets and sometimes exceeds) - resulting in blended average overall scores of 3.4, etc. 

The result under the 5-point scale?  Since the manager didn't have to make the tough choices on Meets vs. Exceeds, the employee walks away thinking they "Sometimes Exceed", and loses motivation to figure out how to improve.  Additionally, by giving the blend of 3's vs 4's, the manager rarely is accountable for raising the bar on performance - the employee never pressures them to tell them what it is going to take to "Exceed". 

Of course, when you try to migrate to the 3-point scale to drive more direct conversations with employees, the 5-point history is a significant barrier to overcome.   

What are your experiences?

UPDATE - Deb at 8 Hours and A Lunch grabbed onto this in about 3 minutes and posted a killer performance management conversation for the ages from Office Space.  Notice the Employee taking charge of this one.  ..... Thanks Deb!!