The research comes exclusive to HR magazine from professional services firm Towers Watson.
Pay differentiation, the practice of varying pay awards, is common in 93% of all UK organisations, the survey found.
Chris Roebuck, professor of transformational leadership at Cass Business School and former global director of talent at investment bank UBS, said he believes pay differentiation of high performers works if you're in a sales-related role because you can measure your performance against a figure, but that this may not work in other jobs.
He told HR magazine: "Do you measure it in terms of figures, feedback, people around you? What is the benchmark for satisfactory performance and for the exceptional performance that gets extra money?
"Employees need crystal-clear criteria of how you can become a high performer, else the whole system will look unfair and 'favourites' can develop."
Joris Wonders, a director and rewards practice leader at Towers Watson, said the high number of companies that practise varying pay awards is not surprising. He told HR: "In the 1990s it became increasingly common practice, particularly for managerial and professional-level staff.
"It began to replace that approach of giving everyone a standard pay increase regardless of individual performance."
The research surveyed 124 UK employers in November 2012 and found individual performance was the overwhelming drive for differentiating pay. The second most important factor was market alignment, followed by internal consistency, key skills and potential. Detailed analysis of the results showed some surprising differences in approach. The survey found employers with low pay budgets (less than 2.5%) differentiate even further, offering high performers pay rises twice as large as their colleagues.
Employers with average or more generous pay budgets (3% or more) tend to single out high performers to a lesser extent, offering them 67% higher rises than the company average.
Chris Charman, a director and reward practice leader at Towers Watson, said it's a "very encouraging sign" that employers are continuing to reward high performance. "It's interesting to see this tendency increasingly pronounced the more a budget is squeezed," he said. "We were surprised to see that when budgets were more generous, the focus shifted to market alignment. Arguably, more value could be derived from retaining and engaging those with scarce and critical business skills or those who could potentially be tomorrow's leaders.
"We see leading reward functions collaborating more closely with colleagues in talent functions in determining the optimal use of these scarce resources. The results support our experience that reward and talent functions could be more joined-up in their approach."
Further findings from the report showed that line managers tend to drive the pay review process, typically within clear parameters set out by HR, but half the companies surveyed felt poor line-management skills had been a barrier due to an unwillingness to differentiate and 23% cited a lack of tools to identify talent.
Roebuck said: "A line manager should not be the only person involved in the process. But the wider you spread the net the more costly it becomes."
