Companies big enough to need real HR departments typically prescribe "pay bands" for every job position, e.g., a "Software Engineer II" might have a band between $100kpa and $130kpa, and to go above that band an employee either has to be promoted or receive a special exemption. Typically the midpoint of these bands (e.g., $115kpa in my example) are targeted to some percentile of one or more salary surveys done by companies like Aon. Those surveys are what set the "market rate", generally. At least for non-FAANG companies, though I imagine FAANG companies use them as well, but with (much) higher multiples.