It's a good rule of thumb. If I'm going to work for less what I'm getting now, there should be a well articulated reason for it.
Now, that might be that I'm currently overpaid, but still looking to leave my job, or that the job is very very cool, or that I'm getting stock options that I'm really confident in - and of course, if I'm relocating to an area with a significantly different cost of living.
It's the fast and dirty way to establish the value of a person. If HR actually did their jobs, it wouldn't be happening or matter. A good HR staff would pinpoint the right candidates, fit them into the right group, and be able to negotiate them to maximize the company's budget.
"Oh so & so gave you that, we should do that too".
I understand why companies do it, but there has to be a better way. More incentives? More equity? Back end performance driven pay?
One data point does not equal market rate. And other factors: work hours, environment, benefits, perks, etc are just as important.
Has anyone else dealt with this at their company?