Top Salary Now, No Bonuses—The Science of How to Attract and Keep Rock Stars

Paying top-of-market salaries instead of relying on performance bonuses seems counterintuitive, but it’s rooted in both research and real-world results. Most organizations use annual targets and bonuses to incent effort, but studies show this only works for routine, mechanical work. For creative or innovative roles, tying a chunk of motivation to arbitrary future metrics decreases flexibility, creativity, and adaptability. Rather, people do their best work when they have security and trust that pay reflects their true value—now. Enabling employees to openly know their worth, talk with competitors, and even take interviews elsewhere is not disloyalty; it’s healthy market awareness. This creates a virtuous cycle—when leaders raise salaries before they're asked and select a few top-performers (instead of many average ones), talent density soars, and the best want to stay and thrive. True, it means tough choices: sometimes, several “good” employees must be replaced by one “stellar” one. But the overall energy, camaraderie, and output more than make up the cost.

Take a hard look at what you (or those you hire or work with) are actually worth on the open market—look up ranges, ask peers, and engage with recruiters without guilt. If you’re in a position to set pay, channel resources into stable salaries rather than dangling unpredictable bonuses. When someone’s value rises or the market heats up, be the one to bring up a raise, not just respond to frustration or competitor offers. Create a culture where knowing and stating your value is normal, not taboo, and where people choose to stay because they have the best deal and the work challenges them. Try reframing compensation this way in your next negotiation.