> If a developer of a certain caliber is able to demand a given salary on the open market, why isn’t their existing company paying them that very same amount?
One possibility would be it's because of the price point that the manager has in his head for that individual. I don't remember the actual term from Dan Ariely's book, but it was about becoming attached to the first price you hear. So if you know the current salary of employee X, and they want more, you could be reluctant. But an unknown person that you want to hire will ask for more, and that might be fine.
Another possibility is that the management doesn't always know who they should keep, or simply they have a different perspective on who or what is valuable. So a regular employee might wonder that they let a person go, but their contributions were maybe either unknown or not as valued by the management.
One possibility would be it's because of the price point that the manager has in his head for that individual. I don't remember the actual term from Dan Ariely's book, but it was about becoming attached to the first price you hear. So if you know the current salary of employee X, and they want more, you could be reluctant. But an unknown person that you want to hire will ask for more, and that might be fine.
Another possibility is that the management doesn't always know who they should keep, or simply they have a different perspective on who or what is valuable. So a regular employee might wonder that they let a person go, but their contributions were maybe either unknown or not as valued by the management.