Is anyone out there who doesn't believe in rewarding employees for the work they do? It's called Pay-For-Performance, and these days the concept is more popular than mom, the flag and apple pie. But how many advocates actually walk the talk? How many companies really differentiate reward levels on the basis of individual performance?
I suggest there's a good deal of smoke and mirrors out there, folks.
Check any survey that reports percentage of employees receiving a merit increase; you'd be hard pressed to find a figure lower than the 90s. Then look at the range of increase percentages actually granted, and you quickly come to two conclusions: 1) unless you're on the verge of being fired, managers are reluctant to penalize employees with low or no increases, and 2) the differential between what a high performer receives and that granted to an average employee is remarkably narrow.
Why is this? Because managers want to be the "good guy", they want to be liked - as if that will replace leadership in getting employees motivated. Because merit budgets tend to be so tight that managers can't afford to pay their high performers while still granting average increases to everybody else.
In order to effectively use a pay-for-performance strategy a company needs to come to grips with the need to say NO to those who are not performing in a satisfactory manner. If they do that they will find that they have the funds necessary to truly reward those who are performing at high levels.