the answer is that company policies like only small raises are dumb ass, and are clearly bad for the company. We all know if someone knowledgeable leaves, it will take time for the new hire to ramp up, and replace an existing good person. For that reason we should try harder to keep them. But higher up the ladder, people look at stats like average pay - it's much harder to measure productivity than average pay, that's why pay is used in stupid ways, in negative incentive ways.