That's just bullshit rationalization why they don't want to raise pay. Profits come first for most modern companies, and the rationale for action trickles down from that basic driving force.
Best engineers are coin operated and problem focused. If they get an offer, say, 20% better than their current package with the roughly same job otherwise, they would be blind fools not to leave. Talking in the general Big Co. environment, that is. In smaller companies with stronger ties other dynamics might kick in.
And, there is the situation of the gimme-more-money-or-I'm-gone bluff, of course.
I don't think there is any rational reason not to give a counteroffer to a solid contributor - if the offer is real and he's worth it. Political reasons might of course kick in, like a corporate policy, that have nothing to do with the individual contributors motivation or output.
If the employee already starts looking for another job without even trying to get more money in his current position, there is no reason to try and convince him to stay.
No. The calculus is different. If it's a raise, it merely increases the cost of an employee. A counteroffer on the other hand counters several costs and risks. Hiring, training, loss of knowledge etc.
"If the employee already starts looking for another job without even trying to get more money in his current position"
Why do you presume that is the general case? I.e. does not ask for money or that they sought for another job.
Best talent tries to get compensation their worth. They probably ask for raises - but they are probably also sought by recruitment consultants. If a raise is not coming, and a consultant asks for what they would be willing to work for - well, it's simply not a case of trying to leave.
Most of the time I will get a standard small raise, if I take the same list out to the market and get an offer suddenly I qualify for higher raises. Overall businesses are not pro-active at all about retaining talent until push comes to shove.
Whatever your thoughts on the suitability of a workplace like this, know that the most time/effort efficient way to get a raise can legitimately be to show up with an offer which demonstrates a higher market value than current salary to justify an emergency retention pay adjustment
OBVIOUSLY we're all talking about different corporate cultures and you have to play whatever strategy is best for your environment.
Engineering in the large is a profit generating endeavour. Therefore, when an engineer reviews his revenue stream, what he is doing is evaluating the worth of his contribution to society based on one heuristic variable.
Sure, it's never clear cut, but putting it as bluntly as I did underlines the fact that pecuniary compensation can be viewed as a form of just reward and not just profit seeking (which some consider immoral).