Agreed, but it was you who suggested better pay above. Actually I think the problem is simply accountability. I don't know if the other services use this phrase, but in the Air Force they talk about "Firewall 5's." As in, on the OPR/EPR scale of 1 to 5, everyone is a 5, because if you're not, you will almost certainly be passed over for promotions or sweet assignments. So mid-managers are afraid to put a realistic number on performance reviews because they don't want to screw people. I've known very few officers (commissioned and otherwise) who dared to challenge this hypocrisy.
Btw, this is also how the civil service works to a large degree. If you can't / won't fire people, you breed this culture of apathy. IMO at least.