Well the manager could decide that the best performance is the people who does their work and don't make a fuss. Those who go to work even when they are sick, do a little extra without expecting compensation. If you reward those "performing" employees you get everyone trying to do the same. The reward then might even be very small but it would be presented as "this year the general pay increase will be 0.69%, but you have broken your back for the company so you will get almost double that, 1.18%". Just to create a divide and something to strive for. Im aware that this is the American Way and as a swede we value the collective more, as a culture. But a divide work force is an obedient work force.

If the management gets to decide who gets raises, why wouldn't they give it to themselves. You've never seen companies do layoffs right before the end of the quarter so management can get raises, and then immediately go on a hiring spree when the new quarter starts so they can get the work done again?