If you do a good job, you get more money, which then inspires you to do an even better job, so you can get even more money. That's the bargain we've all struck with our employers, but research highlighted in the Harvard Business Review suggests that when it comes to what we are paid, individual job performance matters little next to other, more influential, factors.

The researcher, a sociology professor at Washington University-St. Louis named Jake Rosenfeld, said that, first of all, it is very difficult to accurately determine pay for performance at all. To calculate this, one first needs a job where one can fully separate a single person's performance from the contributions of others, a difficult task outside jobs with specific quantifiable performance metrics, such as a salesperson. Second, the job would need an agreed-upon definition of performance, and that definition needs to apply to things that matter to the organization (for example, Texas A&M University measured professors' performance based on class size and grant money brought in, which ignores all the other things professors do). Finally, that same definition of performance needs to produce a positive benefit to the organization (contrast with Wells Fargo's sales practices, which ultimately incentivized bank workers to commit identity theft on customers).

But, according to Rosenfeld, all this preparatory work is intended to get to some sort of metric for individual performance, but performance is not a major factor in how much someone is paid. Far more influential are four other factors: power, inertia, mimicry and equity.
 
Power is a factor because those in possession of it can often force the resolution of resource disputes in their own favor, meaning that pay is more a reflection of power dynamics than performance.

Inertia as a factor is reflected in our default assumptions of what certain jobs ought to pay, which itself is often due to the victors of previous power struggles consolidating their position. This turns into thinking that it's "natural" that one job pay more than another. Basically, management determines that a position pays a certain amount and then becomes loathe to change it due to inertia.

Mimicry is looking to competitors to see what they pay workers in similar positions. It is essentially the prevailing market wage for a given position. So even if you're the best grocery store cashier in the country (by whatever metric one might determine that), you're still a grocery store cashier and your pay will reflect this.

Equity, or the lack thereof, forms the final component—basically what is considered a fair share, which can vary widely from company to company, as well as within the company itself, even among ostensible peers. Employers often discourage their workers from talking about their pay with each other as a way to head off discontent.

While performance is definitely a factor (Rosenfeld says he would not get far trying to be a surgeon), he also said that we should not look to it as the general explanation for why we are paid what we are. This is unfortunate, he believes, as these other factors have contributed to an environment where a few benefit at the expense of many.

To fix this problem, Rosenfeld said companies should pay workers more, leaders less, and be more open to unions, which can provide secure jobs for average workers.