I think it's logical to pay staff more if they're performing well. But do such companies pay for better performance or just for better performance reviews? The problem is performance reviews are subject to office politics, subtle biases and sometimes even overt discrimination. If there was an objective way to measure performance then it would be reasonable to pay more for better performance... but I reckon neither badly-aligned KPIs nor capricious performance reviews are good enough measures.

So I reckon we should forget about paying for performance. Focus performance reviews on helping people perform better rather than calculating pay rises. Take the money out of the equation and leave more space for honest feedback and personal growth!