I'm involved with hiring and retention (on a non-HR base) with my current company as a Manager. In our annual reviews, we look at market rate vs salary and try to bring underpaid people up as much as possible. The problem is we only get so much for raises so if we give someone 5+%, other people have to get under 2% to balance out.
We often promote people to new positions to get around that, but there's a limit there as well. I think the corp world is doing better with understanding there is a "cost" in replacing good people that you can avoid by being proactive, but it's nowhere near where it needs to be.
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