Internal politics is the proximal reason - raises come with levels, and have to be justified accordingly given the current level. A new hire has more flexibility wrt which level they end up in. But the point is that, if this system obviously translates to problem with retention, why is it in place? That is the policy that I'm questioning.

Regarding this:

> It's because they are unable to tell who is worth what. So they outsource it to the market. If you managed to pass the interviews and get hired at the other big tech company, that's proof of value.

They still hire people who do not come from other big tech, though, so there is a process in place that at least claims to tell who is worth what.

The other problem is that the filter is in practice not for competence but for tolerance of risk.