Sorry, but as a CS Ph.D. who works in high-tech industry, your institution's guidelines are just as bad as the participation trophies philosophy. Both extremes skew what people outside of academia really want to know when hiring: how qualified/competent is a person. It's an objective measure, not a relative one, period. Is a certain topic easier, and lots of people are good in it to do a job? Great. Is it harder to master, and few people are good at it? Good to know. Someone getting a low grade because they missed the trick/ambiguous/obscure test questions that profs use to artificially make subjects harder than they really are - the stuff NO ONE outside of academia gives a flying rip about? That's a tragedy. That could mean an otherwise qualified candidate got passed over.
Personally, I don't think any faculty who's never worked in industry has any business saying what an "A" vs. "B" vs. "C" student ought to be. They call it an "ivory tower" for a good reason.