Pay allocation isn't rational from the ICs point of view. For handwavy business reasons that sound stupid and no one cares about, you have things like separate budgets for "extra money spent due to promotion" vs "extra money spent due to retention raises" so if you want to retain someone and can't get sufficient money from the retention pot, you are forced to dip into the promotion pot.
From an ICs perspective, I think the takeaway is that getting promoted is almost never the wrong move and should be done as soon and as aggressively as possible, otherwise you're probably leaving money on the table.
Even in the rare event that you manage to get promoted beyond your level of competence and are now struggling to avoid being fired for performance, you just move to another company with your shiny new title and enjoy a higher total comp there than you would have gotten without promotion anyway. It's pretty hard to go wrong.
From an ICs perspective, I think the takeaway is that getting promoted is almost never the wrong move and should be done as soon and as aggressively as possible, otherwise you're probably leaving money on the table.
Even in the rare event that you manage to get promoted beyond your level of competence and are now struggling to avoid being fired for performance, you just move to another company with your shiny new title and enjoy a higher total comp there than you would have gotten without promotion anyway. It's pretty hard to go wrong.