I also worked for a time in engineering. I thought this was a civil discussion, not a pissing match. My mistake. I keep forgetting this is FlightInfo... must be my "gross ignorance".
I apologize for the tone. One of the things that quickly raises my ire is people just making up "facts" about a subject they clearly know nothing about. Now that I know that you (apparently) have some insight, rather than being irritated, I'm just confused, confused as to why you would post something so inaccurate initially.
Look, I don't know what sort of organizations your experience was with. I agree that in governmental agencies often the scale is very rigid with little room for acknowledging excellence. That is not necessarily true outside of the government. Even at the technician level. Say a firm has a CAD department with 5 operators One operator will take a set of redlined plans and have all the revisions whipped out in an afternoon, notice an error that escaped the reviewing engineer, bring it to his attention, make that revision and be looking for something else to start on in the half hour before quitting time. Another operator, may take a day and a half to complete the same task, always be taking coffee breaks a little longer and more frequently than allowed, 10 minutes late back from lunch, etc.
Now, even if the second employee isn't quite bad enough to fire, not only is he less productive but he consumes extra effort from management, the frequent chats with the CAD supervisor, reminding him how long breaks are supposed to be, checking to see that he's actually working and not downloading funny videos from You-tube. Time that the supervisor doesn't have to spend on the first employee, because he knows that guy is going to be where he's supposed to be, doing what he's supposed to be doing. Like I said, I don't know where your experience has been, but at the firms I've worked for, there wouldn't have been any hesitation to give larger annual raises to the first guy that the second guy, even to the point of paying the first guy more despite the second guy having been there longer. Lawsuit, sure, anyone can sue anyone for anything. In my experience, most firms do not sit around worrying about a lawsuit resulting form rewarding a superior employee, at any level.
An example of how a pilot can affect the bottom line of a company: A number of years ago, a captain with whom I was flying, refused a large awkward piece of freight at an outstation, for no other reason that it would have taken more time to lead it. No safety or regulatory issues. He didn't want to make the effort. OK, this was something that the shipper was *very* anxious to have moved, and our agent had assured the shipper it would go out that day (there was no reason it shouldn't have) So now the shipper is unhappy, so he's less likely to ship something again on our airline, and more likely to tell his associates about the poor service, which doesn't enhance hte company's reputation. The agent is pissed off, because he looks bad, and oh yeah, he is also the agent for a competing Cargo airline, so when customers walk through his door he can direct their business to the other airline, because he's unhappy. And he *is* unhappy. Now all of this is very difficult to quantify, but if you don't think actions like this have a direct effect on the company's revenues, you have another think coming. Compare that to another captain who takes his obligation to the company's profitability seriously (within the bounds of safety and legality) one who looks at operations and make suggestions on how certain things could be accomplished more smoothly, makes sure the customers are served, makes sure that differences are settled smoothly, (instead of creating those differences).
Now this has nothing to do with safety, legality, or how tight either guy flies an ILS. It has to do with whether the employee behaves with a regard to the company's interests, or is actively hostile to those interests. It doesn't matter where you are or what you do for a living. You have employees who lean into the harness and pull their weight plus a little more, and you have employees who drag their heels and hold the whole wagon back.
Why shouldn't you reward the first kind above the second kind?