Differentiations in pay should only be made when they are clearly ________ and worth the potential tradeoffs.

The focus on making differentiations in pay rests on the concept of being defensible. This means that any variations in compensation should have sound justification based on objective criteria, such as performance, skills, or market value. When pay differences can be clearly justified and defended, it allows organizations to maintain fairness and equity within the workforce. This defensibility is crucial in minimizing potential backlash from employees who may perceive pay equity issues. It implies that organizations have criteria in place that are transparent and understood by employees, reinforcing trust and morale.

In terms of the other options, while negotiable pay structures could facilitate discussions about compensation, they don't inherently provide a basis for differentiation. Similarly, what might seem obvious to one person may not be evident to all, leading to potential disputes about fairness. Lastly, while beneficial outcomes of differentiated pay can be important for performance motivation, the primary concern should be whether these differentiations can be substantiated and justified to all stakeholders involved. Thus, a defensible approach to pay differentiation ensures that organizations can rationalize their compensation strategies effectively.