The only time I have seen a correlation greater than 0 is where bonuses where directly linked to earnings or sales ... even then the correlation was not 1
Maybe I've been lucky to work for moderately reasonable companies, but I've never seen that.
For example in my current company, yearly raises are directly tied to performance rating. And while there is subjectivity in the rating, it is basically impossible to squeeze in a high performer rating for someone who doesn't do anything even if I wanted to (which I don't). It is also impossible to give a very low rating to someone that all peers see doing great work.
The correlation will never be a perfect 1.0, but it is closer to 1 than to 0. Low performers end up getting low to nothing in raises, and the high performers get a multiplier that increases their raises.
I work at a smaller company now, with a lot of very good people, so I've been happy enough with my rating and bumps.
When I was at "bigcorp", I was still as good at my job, but I didn't play the game very well. I presume I was not visible enough to be rated highly by my peers (peers aren't those in your team, but outside your team) and so I didn't see the rate of progression I think I merited, and eventually left.
That was a very good decision.
- Some employee salary discrepancies are inefficiencies due to humans sucking at rationally evaluating other people
- Some employee salary discrepancies are legitimate outcomes of value produced relative to other employees
The problem is the more we create policy assuming the first one is true, we eliminate everyone in the second category (however small or large that category), making the economy less efficient. I would argue pay transparency isn't one of those policies however, and in fact would lead to more efficiencies.
That said, all interventions have consequences, and less growth and higher inefficiency from cutting tall poppies is indeed a risk. As someone in Europe, our total lack of productivity growth is leading to collapsing governments, underwater social entitlement systems and mass riots. These are serious issues that should be discussed and not dismissed outright with downvotes.
Let me guess, your next rebuttal:
> "But then we'll create more policy to try to stop the downsides of the first policy we created!"
Now you have a patchwork of 48,000 regulations all collectively harming the efficiency of the economy and creating all sorts of weird un-intended consequences and loopholes for low-trust people to game instead of rewarding honest people for doing the right thing like you intended.
My actual response "But then we will have to deal with biases, discretion and management collecting their 10mil bonus by giving the juniors a pittance"
The flip side of course is people who actually work in bonus heavy revenue generating roles - where the impact is easy to measure - tend to leave if they are not valued and take their clients with them.
Things work a lot better in a healthy economy with competition and low friction for people to move around - exploitation blossoms when people are trapped by economic circumstances