What is the largest morale killer in human resources?
Answer: Overpaying. It happens so often that it is good for the compensation consulting business. Usually starts simply, company needs to fill a position, the candidate wants more money than the current incumbents are paid so an exception is made. If the person is superstar (most are not) you might get away with it but the top performers will complain and look for a job elsewhere even the good performers will wonder why you are paying more for a new, inexperienced performer than someone who knows the job and the company. Every person in your company benchmarks their value to the company against someone else. The easiest benchmark is someone in the same job. That kind of data is usually the most accurate. If new hire pay or overpaid poor performers are not addressed morale will decline, people will leave or, worse, adjust their work effort to match the pay you are giving them.
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