Another way to say that is it's lame to give a someone a promotion to a role they are already doing, because it's the easiest way to communicate that they've been underpaid for way too long.
This is only true if the only way to get compensation increases is via a promotion. Granted at many companies this is true, but it probably isn't true at Square.
If you get promoted to Senior level, the assumption is that you're getting paid what a senior should be. If then, you take on additional responsibility above and beyond what a Senior is doing, you get merit increases up to some higher point. That is, a Senior who is getting 5/5 performance ratings probably makes more than a Senior with a 3/5. Eventually, that 5/5 person might get promoted (I say might because an exceptional Senior might not make a great Staff engineer. Someone really good at implementing things quickly, but with terrible design sense won't make it to Senior in a lot of orgs, for example, even though they might be a very strongly performing Engineer) to the next level, at which point the process starts again.
