The problem with the raise is that you often end up getting hired into a role at the high end of the comp range for that level, since during the application you

The problem with the raise is that you often end up getting hired into a role at the high end of the comp range for that level, since during the application you have leverage. When getting promoted, you have less bargaining power - what are you going to do, refuse the raise because it's too small? So you get promoted out of highly paid senior into underpaid staff. If you really want to be staff, you can try interviewing elsewhere for that position, and negotiate to get the high end of that. When companies promote internally, they have a huge advantage against random employers on the market: There is vastly less uncertainty about the employee's value. The promotion you get has every reason to be competitive with open positions on the market. But they often seem to promote into underwhelming positions, perhaps they figure the employee would value staying at the same company.