2. That's how it should be in an ideal world but the reality is different and companies know through years of experience that the current system works better for them rather than the one you'd want.
Supposedly you can because you're offering them 10% more than the rest of your employees...
I hate this approach, but for most companies in Europe it's the reality that works in their favor.
- Worth is subjective. I'm sure we've all had conversations about someone where some view the person as great and others view the same person as meh or under performing. Value is also determined based on information, which usually people don't have the same amount of. So very possible the hiring person or committee sees different value in a person than fellow engineers or teammates.
- Value judgement, especially for hiring is also point in time. Could very well be the person as presented during interview is a rockstar, but after landing on the team doesn't perform well for whatever reason.
If you have established salary bands, then you cannot justify offering somebody something outside of that range. That defeats the entire purpose of having salary bands to begin with, and not complying with them would be lying to your employees. What salary bands are, is a levelling mechanism. The answer to “why does x get paid more than me?” should be “because for some particular reason we decided x was worth more to us than you”. With the levelling mechanism, you have less options for paying people what they’re worth, instead you simply decide that everybody will get paid +/- a few % of whatever the average value of an employee in that role is, regardless of their contribution.
2. If you don't want people to job-hop because they see what some new hire earns, then you're either overpaying the new one (and unnecessarily alienating your workers) or you're underpaying the current employees, and you should raise their salary or expect them to hop.