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Notes -
I can only speak to my own experience but I expect companies have a lot of incentive not to do this proactively (though it varies by company). The upside is increased retention of people who might have left for a better offer. The downside is paying a bunch more money to people who were not going to leave anyway. Depending on what your turnover looks like the balance could tip either way. Ideally companies would target these raises precisely to the people who would leave without them but identifying them is probably hard, unless they self identify by negotiating with you and another company at the same time. I got my largest raise ever doing something like that but it was definitely nerve wracking. Concerns about retaliation or adverse action even if I stayed. Would not be surprised if people just take outside offers and skip the further stress of negotiating.
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