I agree that it is a bad idea, as you optimize for "shopping around" behavior. You should optimize for "I enjoy working here, and will do a good job because I

I agree that it is a bad idea, as you optimize for "shopping around" behavior. You should optimize for "I enjoy working here, and will do a good job because I want to" which is somewhat harder. Two things spring to mind: Make sure to automatically increase salary with time, at least to match inflation, but more to match what an employee shopping around could expect. - Why switch to a new job with a slightly higher pay, if you're reasonable sure of stable increases where you are now? As far as you can, try to increase pay more for people who do a good/over average job. Make it known during onboarding, that pay increases with time. This won't entirely discourage "shopping around" and there are lots of average/below-average types who base their entire career on jobhopping, let them leave, you don't want them anyway.