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Ann, you have illustrated why we should abandon "merit" pay, which simply annuitizes past behavior on the basis of performance appraisal schemas of (at best) questionable reliability and validity.

A far better and more defensible approach, in my view, is to pay all similarly-situated employees the same market-based wage, with separate "hot-skill" premiums if, when and as warranted.

The handful of truly outstanding performers can be recognized with enhanced variable pay, fast-track promotion opportunities, more training opportunities, and assignment to high-profile next big/next big thing task forces and projects.


That may indeed be where this whole transparency thing (along with other "trends and developments") are taking us. One of the things we discussed in this call was the likely outcome of transparency on pay decisions - that being greater risk aversion around differentiation based on performance results (often, as you note, of questionable reliability and validity) in favor of things deemed more measurable and reliable like skills.

Appreciate the comment!

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