I really like the way it's commonly done in German industry. You will typically see a union negotiated compensation table with a very wide range of set pay grad

I really like the way it's commonly done in German industry. You will typically see a union negotiated compensation table with a very wide range of set pay grades. The entire table (i.e. ever employee) gets a raise every year to stay competitive with the labor market. When you enter the company, you get assigned a grade appropriate for the position (plus whatever additional pay you negotiated). As your value to the company rises, you advance to higher grades. Actual promotions in the org chart are entirely seperate from that. This can and often does lead to situations where an average engineer makes more money than his team lead.