Instituting such a rule is pure silliness - and ignores the most important factor: what is the supplied voltage?
For example, NEMA standards require motors to operate within 10% of the nameplate voltage. Let us, for the sake of this discussion, assume a motor is marked "220v"
If that motor is installed on a nominal 208v system, it can operate as low as 198v. The 5% rule would give you 197v. You're outside the motor specs.
If that motor is installed on a nominal 240v system, you're OK - as long as the supplied voltage does not exceed 242v. Since the utility might very well be providing 250v, you're in trouble unless you make sure you have at least 4% drop.
Moreover, about half of that 5% is assigned to the PoCo side of the circuit - the one part you have no control over.
Why are PoCo voltages a concern? Because areas still under development tend to have really high voltages, while older installations have voltages drop as loads increase. That's what transformers do at full capacity: lose voltage.
Therefore, the really important issue is the actual voltage delivered to the motor, and not some percentage of voltage drop.
If you want to check your overall circuit, then test it for impedence. A higher impedence -reflected in voltage drop under load - might suggest a bad connection somewhere. Still, keep in mind the critical voltage range of the appliance.
After all, a motor marked "230" will be fine at 208 - but out of spec at 207!
