Market Competitive pay always doesn't work

It is not true that paying as much as the market will get a company the desired talent pool. Other factors does come into play. For a fresh joinee the pay packet can be a major deciding factor - e.g we have heard of BPO employees jumping from one company to another for a paltry 1000-2000 rupees hike. But pay packet ceases to be a deciding factor for mid level to senior level employees. Factors like the growth opportunities in the company, the position, the city of posting, working hours, amount of travelling involved or personal committment affects the decision. People often move from one job to another with a pay cut for any of the above mentioned reasons. Similarly people may not like to move to a small city even though they would be paid as much as if not more than what the market pays. So competitive pay necessarily doesn't deter attrition nor does it assures a company of right talent pool.