my thoughts on this. warning: lots of assumptions, technicalities and anecdotal evidence following.

let's assume the reward we're talking about here and people are mostly after is financial (i.e. pay increase). so if you are after higher pay, a promotion "up the corporate ladder" is the natural way, as your wage would increase much more slowly if you stayed at the same job. this at least is even codified in most countries minimum wage laws.

but what about that ladder? why is it "moving up" (good) and "moving down" (bad)? software engineering is an interesting example here, as you can fill almost every available position with people whose skill can make a difference. an expert tester, an gifted community manager, UX designer or talented technical documentation writer might all have an impact on the product that's worth their weight in gold, even though the results might not be as obvious and tangible as those of, say, a project manager (who could convincingly claim the success of a project while this would be strange for a technical writer). compared to unskilled rote work where the worker mostly simply has to show up and do his/her job.

thus, the question is, why does someone "higher up" the ladder earn more than someone "lower down". obvious answers to this are workload, skill, responsibility and quantity.

as for workload: 1. being higher up the ladder doesn't automatically mean one is working more and harder than the people below one. 2. working more (hours) doesn't necessarily mean one's more effective. at some point effectiveness decreases due to stress, sleep deprivation, burn out.

as for skill: the peter principle itself and years of anecdotal evidence (through the media, not necessarily personal) have shown that moving up the ladder into different jobs doesn't necessarily equate with higher skill in the new position.

as for responsibility: 1. at least in software engineering, criminal prosecution for incompetence at the managerial/top level is rare (assumption). positions that require real personal responsibility (say, something where lives are on the line) aren't necessarily paid better. nurses or teachers aren't paid better than CFOs, they're much more at risk for prosecution in case of negligence or incompetence. 2. failure to do your managerial job in one company well doesn't necessarily prevent you from getting the same job in a different company, as much hinges on a personal network and it's usually easier to get exposure to potential future employers if you're regularly working with partners and customers instead of just interfacing with other people from the same company (assumption). 3. personal responsibility for your family and dependents: higher pay usually means more savings, which makes one less dependent on keeping the same job than someone with less pay and savings. this might be disputed as higher pay usually means a more lavish lifestyle and higher expenditures, but a loaf of bread costs the same for everyone, some costs are just fixed and the system is somewhat rigged to care for those at the top (anecdotal evidence).

as for quantity: this is what makes it a hierarchy. if there's one project manager for a project with, say, five developers, PM positions are obviously rarer than developer positions. i can't think of a reason why this should have an influence on reward though. managing people is a very different skill to writing code; there's technically less demand for it (as you only need one manager for N developers) but i'm not convinced that your skill here has a higher impact. while four good developers can make up for one bad developer and still keep the quality high, five good developers could also make up for one bad manager and still keep the quality high. the quality of the managerial work doesn't introduce a skill ceiling; i see it more as a multiplicator of the work of his/her teammates (and maybe a lower skill boundary, if a good manager can effectively handle sub-par actors). the other angle here is _availability_, but i'm not convinced it's harder to find a good PM than it's to find a good technical writer nowadays.

so, what i want to say is that the corporate ladder itself is a misguided, outdated construct and basing your wage on your position on it is actively harmful. it forces employees to abandon the work they're skilled and talented at for jobs that are rewarded better for worse quality and job satisfaction.

it should be seen as a graph where the node weight (pay) depends on effectiveness. which is hard compared to ladder position as the latter is trivial to assess, constant and traditionally socially accepted while the former is highly dependent on circumstances, hard to measure and introduces additional risks due to social dynamics.

i'm convinced the upsides of removing the pressure to "move up" the ladder/hierarchy for financial gain would greatly benefit a company - and society as a whole, if implemented universally -, but i'm not sure if people are ready for it and whether we have the tools and systems to implement it correctly.

i guess back then i thought google would be the company that finally broke the barrier back then when one of their mottos was that managers aren't more important than developers. not sure if that's still the case, ever was the case or whether they have reverted to a more traditional model.