It's a complex problem because there are feedback effects, but I think often that is a better decision for companies. Otherwise you end up with the situation where the people who are constantly threatening to leave get paid more, and the people who are spending their time doing actual work, rather than polishing their resumes and interviewing around, get paid less. This then incentivizes people who actually don't want to leave to go out and start collecting offers so they can argue better for a raise, which is a huge waste of their time and effort.
Taking one decision in isolation, it might be better to pay someone $10k more to keep them from leaving. But it might be better structurally to come up with a different policy for allocating raises than "allocate them to the people who negotiate most hardball". Unless, maybe, it's a sales job, where being good at negotiating is precisely the skill you want to reward.
I kinda meant negotiating a starting salary rather than a raise. I tend to have found in the past that raises happen with relative frequency when you're good at what you do, and I'm not the type to threaten to leave - if it's got that far I've made my decision.
Taking one decision in isolation, it might be better to pay someone $10k more to keep them from leaving. But it might be better structurally to come up with a different policy for allocating raises than "allocate them to the people who negotiate most hardball". Unless, maybe, it's a sales job, where being good at negotiating is precisely the skill you want to reward.