Microsoft engineer throwaway chiming in.

I think the parent emphasizes the wrong side of it, although I agree with them strongly that it is a damaging way to do things. Yes, you get slightly more upside on the top end, but it's more like 30% vs. 10% for an average performer, there's no 100% bonuses here unless you're in the "ruling class" (roughly VP and above).

The actual risk is that if you're on the downside of what they call "differentiation", if you're not the one who pushed above your peers, what used to be called meets expectation is now considered below expectations, and is a path towards pip and layoff. Lack of growth for non-terminal roles is also now identified as a path towards pip and layoff.

Microsoft is intentionally turning up the heat to thin the herd.