You always have tradeoffs. Which tradeoffs make sense depend on the culture you want to foster, the size of your company, and probably a hundred other factors.

You always have tradeoffs. Which tradeoffs make sense depend on the culture you want to foster, the size of your company, and probably a hundred other factors. Transparent criteria for salary mean that you avoid the politics associated with salary negotiations. And making even a single exception typically breaks that, meaning that now everyone at the company is incentivized to get higher-paying offers and bring to you, asking for more money. Ben Horowitz wrote a great post on this: http://bhorowitz.com/2010/08/23/how-to-minimize-politics-in-your-company/ http://bhorowitz.com/2010/08/23/how-to-minimize-politics-in-... Personally I would say that you should avoid ad-hoc raises. I really like the idea of matching salaries to titles and matching title changes to a bi-annual performance review (for companies over a certain size.) And it gets a lot of the advantages you want-transparent compensation, no incentives for politicking, ability to pay people differently, and the ability to adjust the pay for the role according to market rates. Edit: Fog Creek's compensation system is a good example. http://www.joelonsoftware.com/articles/fog0000000038.html http://www.joelonsoftware.com/articles/fog0000000038.html