When all are treated the same, regardless of performance, there are two possible situations - either all are rewarded as though underperforming (i.e. raise below inflation), or all are rewarded as though performing well (i.e. raise at or above inflation).
In the former case, my intuition is that your point is probably correct. If I know I'm going to be treated as though I'm the worst employee in the building, I might stop trying after a while.
In the latter case, my intuition is that you are probably wrong. Just because the worst employee is being rewarded as well as I am, it doesn't mean I'll sink to that level.
The intrinsic motivation to do well, improve, and learn all outweigh anything to with competition, and it's a pretty unhealthy culture that relies on the employees competing with their team mates to get them to do their jobs. However, that intrinsic motivation can only go so far when faced with an ever falling budget to maintain your lifestyle.
When all are treated the same, regardless of performance, there are two possible situations - either all are rewarded as though underperforming (i.e. raise below inflation), or all are rewarded as though performing well (i.e. raise at or above inflation).
In the former case, my intuition is that your point is probably correct. If I know I'm going to be treated as though I'm the worst employee in the building, I might stop trying after a while.
In the latter case, my intuition is that you are probably wrong. Just because the worst employee is being rewarded as well as I am, it doesn't mean I'll sink to that level.
The intrinsic motivation to do well, improve, and learn all outweigh anything to with competition, and it's a pretty unhealthy culture that relies on the employees competing with their team mates to get them to do their jobs. However, that intrinsic motivation can only go so far when faced with an ever falling budget to maintain your lifestyle.