Wonder if companies setting "Stretch" goals, and having people fail, is actually a form of control. Get results, but also keeps employees down. People may be less inclined to ask for raise if they miss goals, even if the results were 'good'.
My mother was a Manager at an insurance company for a very long time. She still firmly believes that one cannot get a 5 out 5 on a review because no one is perfect. Business likes to set unobtainable goals like that. In my experience, that kind of corporate behavior drives high performers away. High performers know what they have done and if you refuse to acknowledge it over time they leave.
The folly is the same as the rock star amplifier that “goes to 11” or how gig economy reviews are 5 star = acceptable or better, anything else means dreadful.’It is just a linear transform people have to do in their heads.
It's also a tool for HR to say they have a process that they follow but then still allow all of the decisions about pay increases and performance to be entirely subjective. You miss your stretch goals, and so depending on how your manager feels at the time that's either totally acceptable and you're doing a great job, or if they need justification to shaft you then it's totally unacceptable and you didn't do the work well enough to deserve that. Same situation but totally different outcome.
There's a coaching philosophy that says to never praise unconditionally; rather every piece of praise should be followed with a criticism.
I suppose this is theoretically a good practice, but only if you're already operating in a high-trust environment. If you're not, it starts to feel like you're never good enough, because absolutely every victory, no matter how big or small, is followed up with "but it could be better...". Which is, again technically accurate, but part of the finesse of being a good people-manager is understanding that humans are not robots who can simply process and accept criticism without any emotional hangups.
