In today's special Dealbook section on BigLaw, there's a great article about the culture of firms like Cravath (here). What I found especially interesting was the notion that taking out the eat-what-you-kill types of incentives, as well as the "if we don't pay them a lot of money, they'll leave" instincts, leads to a firm where people aren't necessarily cutthroat and still get to do very interesting work.
Not a big surprise. After all, people work to fulfill the incentives given to them. The people who focus on salary (see "anchoring effect"), at least after they reach the "comfortable living" threshold, seem to me to be among the most unhappy people. I've had colleagues at every place I work whose mission in life seems to be to ferret out everyone else's salary and then sulk if they're not at the tippy-top of the list. (They also tend to taunt the higher-paid among their colleagues.)
So when folks are paid in lockstep, they have to find their self-worth in other areas, such as the quality of the work they're getting, or the opportunities to do new and interesting work.
Folks who head up organizations should take note. It cannot be true that people need to be at the top of the pay scale to be happy. And, because we don't live in Lake Wobegone, not everyone can be at the top of the pay scale. Giving people opportunities and--when the money is there--raises is important. Placing people into ordinal rank by salaries alone isn't.