Yep. People are horribly fragile when it comes to this, and vastly overestimate their importance in comparison to others.

Just this week I had a talk with an employee asking for advice. He was paid $10k under one of his peers, and he was rather upset he got told to go pound sand when he asked to be brought up to that level.

My thoughts at the time? Only $10k? The other guy is vastly more valuable in his role than you, sounds like either you're overpaid, or the other guy is underpaid to me!

The fact the guy thought it was unfair is the norm for humans. Exceedingly few folks have the self-awareness to step back and say "oh yeah, that guy really is more valuable to the company than I am - maybe I should step up my game".

Typically we call those folks high performers, and they aren't generally the ones having issues getting paid well :)

Except that it'll become the same as any other public indicator of performance if public - you don't make X because you perform, you clearly must perform because you make X.

Transparent compensation inherently ranks performance, what's valued by the company, etc.

"Secret" compensation allows the thinking of "I am equal to my coworker" to arise in the first place. So when a discrepancy in that ranking suddenly appears, there's significant cognitive dissonance, and a desire to re-establish equality (or rise above it).

Transparency means from day one, you know who are the movers and shakers, and how much you need to step out up in the eyes of management.

This whole argument is sort of silly, as we already have a less specific public designation of performance in job titles, and that hasn't stopped the world. Should we get rid of job titles so that employee A doesn't actually know they are junior to employee B? That's dumb - the job title hierarchy informs the junior employee they aren't as valuable or experienced, and as they improve, it's extremely likely that title will change over time (and in a not so well kept secret, their compensation as well).

We can all cite one off examples where there was drama associated with job titles, but in general, having them provides more benefit to both the organization and the employees than the outliers where it's an issue. Transparent compensation would likely be no different.

"Typically we call those folks high performers, and they aren't generally the ones having issues getting paid well :)"

I know plenty of high performers who suck at negotiating.

True, very good point I didn't consider. This is pretty common actually, as unfortunate as it is.

And most companies are perfectly content underpaying high performers.

Why wouldn't they be? If Apple started selling iPhones for $20 against their best interests I sure wouldn't complain.

That's fine if management gives targets on how to improve. Just telling the other guy that he's not productive enough is incredibly bad for morale.

If you as a manager can give him targets on how to improve productivity and what level would justify a pay rise, that's actually helpful.

Personally, I would love to have a performance review where I received specific, actionable feedback based on quantifiable metrics. Usually it's "You need to improve in some unspecified way in this vaguely defined category of skills like 'Innovation.' Yea, do more 'Innovation' next year."