Re: "Only exceptional performance will constitute a passing grade."
That's more or less been my experience: performance simply raises the bar for recognition and it is never judged relative to the standards of others or to absolute, objective contribution. One is rewarded for exceeding their own past and the worst thing one can do is set that bar too high to sustain in the future.
After five years at one place, I approached management and told them that I was unhappy because promises to bring my pay-scale up to par with my industry, given my experience, had not been met despite the fact that the entire small business was then pretty much defined by what had been my own, personal prototype – started literally from file-new-project, by me, and grown, by me, into its overwhelmingly dominant position. They said they did not need me any more – they had the product, now – and that they did not care about my concerns. Wouldn't everyone like to earn more? Nobody else was getting bumped so why should I be? Absolute contribution and effort and excellence and the fact that I had stuck through the company's hard times – the very reason I was paid below par, then – were forgotten, as were the all-nighters, the coding-on-holiday, the support-calls-on-weekends and the rest.
After many such experiences, I've learned: one must go in with excessive demands that must be met to the letter and, then, one does the minimum and spares the horses – more is never rewarded but relative decline is never tolerated so excellence is only a route to disadvantage in the future.
Do these employees expect that their going-of-the-extra-mile, today, will lead to something in their future? If so: they're naiive fools – at best, they will be recognised as people who "can" and subsequently find themselves having to compensate for the shortcommings of others who "can't".
It is ironic that I would be less bitter and jaded, today, had I stood up for myself and demanded more from the start of my career instead of trusting the promises of corporations and believing the stupid fallacy that merit, effort and ingenuity were the routes to success.