The alternative would be to actually measure how much employees are worth, and pay them that amount minus overhead.
However, most employers have no idea how much each employee is worth, especially in engineering. The equation is basically “coder? Ok, add $50k. special coder? Ok, add another $50k. We can’t do too many of those though.”
It’s like, utterly out of touch with the actual business value that people create.
Instead, companies should actually track changes to their business, and then map those back to the person-quarters that unlocked that business.
That’s work though. And it maybe opens you up to political infighting over those attributions.
But I suspect people would be more chill about it if they were getting paid what they are worth.
And, side bonus: you’d find a bunch of people who weren’t contributing much for their pay and save a lot of money by firing them.
Other side bonus: you’d probably eliminate gender and race based pay gaps in your company and drastically increase diversity, with many of the top female and minority workers joining you because you’ll actually pay what they’re worth, not what someone like them is “traditionally” assessed for.
In the end, all of that is probably too scary for most companies. We’d rather just follow some arbitrary rules and know wer’re going to get paid, and put the whole reaponsibility for solvency on the executive team, than to take responsibility for ourselves making a real, traceable contribution to the business.