If a good employee wants to leave because of a good offer she has received and to retain her you match the offer, should you also match the salaries of old, incompetent employees?
No.
Be firm. You may be afraid that they will leave. Don’t worry.
The incompetent will not get a similar job anywhere else with similar remuneration and benefits. The good ones will get it easily.
So, it is not wise to increase salaries of your incompetent, old employees only to match it with the good ones.
That is a way to reinforce quality in your team.
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