Really curious about something: according to the Pareto principle you should identify the top square root of employees that are top performers and pay them significantly more than the rest (they are producing several times more,~ 9 times, you even if you pay them double you get more value than from the rest of the people). Was this a conclusion of your project on employee retention?
This can change from quarter to quarter. There are companies like Cisco which pay bonuses sometimes exceeding 100% of salary to top employees. This way they’re not stuck paying that if the employee loses motivation.
There are some downsides. Engineers are far removed from the money and complex problems often require the work of many people. Some of that work is 100% necessary and sometimes not valued (writing tests). The typical mistake I see is companies rewarding people who delivered big greenfield projects before the projects have been proven to actually work. A few people on the lucky team get raises, bonuses, promotions, and then more then half the time, the project fails and the older stand-by that was being supported and slowly improved by the less-cool engineers continues to being in all the money. Those engineers then get pissed and some fraction quit.
So a few major caveats
* correctly identifying the top 3% is difficult for upper management
* identifying too early leads to false positives and backlash
* because it’s far from the money, many programmers are quasi-communist in terms of thinking about team deliveries, so highlighting the output of a single engineer makes one person happy but half a dozen mad. There are many companies that don’t announce promotions too far and wide for that reason
