An argument for discrimination is that one then gets highly talented people from the discriminated-against class who stick upon their glass ceilings; I first heard this hypothesis as the British empire having been headed by English but run by Irish, Native, Scots, and Welsh administrators.
(alternative to avoid relying on discrimination: apply "up or out"?)
If someone has reached their level of incompetence, bump them back to the previous level with their current pay. Apparently they were excellent at that previous level, and don't have room to grow right now. So put them to use at that previous level.
What’s definitely true is that actual level / title don’t match perfectly with “competence” which itself is a nebulous concept in many companies.