Earlier quoted context omitted.
Why not just hire a (hopefully) good people manager? It's hard to find good managers, but it's also not entirely likely that your best IC engineer is going to be a good manager naturally either. Whereas you know they're good at what they're doing now. If they're not going to find a way to be more worthwhile, just don't pay them more. If they find a way to be more worthwhile (teaching, coaching, setting standards, wha…
You need to know the domain in complex fields. In my area, the non engineers have no clue what is going on and are almost dead weight. The high output engineers now in management aren't always the best at managing people, but at least they make good decisions and don't slow the rest of us down.
The managers I deal with day-to-day were all once ICs in the same role, but I wouldn't put almost any of them in the same category as the strongest ICs we have in technical skill. And they mostly don't make bad technical decisions - because they mostly don't make any technical decisions - they defer to their strong ICs.