To emphasize: n=1, so I don't want to overgeneralize my experience, nor would I overgeneralize the OP's experience.
I had told him in the very beginning that my strategy is to hire people at a reasonable, but not out-of-the-world pay, and move them up fast if they prove their worth, and try hard to keep them for the long term (which I can only do if I am paying well, because the sector I am in is hot and our people do get a lot of recruiter calls).
The reason I do this is I want to send a clear signal to the people with me long term that I put their interests first, and I won't chase after the new-new-candidate with the best offers. This message is quite well known in the company, and when people have done their fact-checks on this, they know it to to be true: indeed, our long term people get the best pay.
After hearing all this, and after indicating he really wanted to work for me, he proceeded to negotiate hard, and at that point, I wasn't comfortable with him anymore. As I said, he is still chasing me (he has a job, but wants this job more) but I felt he revealed an aspect of himself that I am afraid may create a mis-fit between us - and this is a highly-paid executive management position.
I'm not making any judgements on you, but in my experience "not out-of-the-world pay, and move them up fast if they prove their worth" usually turns into "cannot afford significant/any increases/bonuses due to market conditions/losing major clients/my new boat".
Unless it's in writing, promises of large future adjustments are not really worth relying on. At best you might actually get what was promised, or you will end up feeling ripped off and mislead.
Do you put those growth expectations in writing? As in, do you say "here are the criteria you will be evaluated on in 6mo/1yr/18mo", and your promotions/raises will look like XYZ as a result"? And do you provide performance bonuses to true-up people who you have been under-compensating for their performance?
Because if not, its not clear that you're putting their interests first. You're trying to get work at potentially below market rate, and then perhaps raise them up to market rate. That's not putting their interests first, it's getting cheap labor for a few months. Why would that engender trust?
People do "fact checks" on if I am fair to them. Recruiters do call on a lot of our people often, and we do retain them.
People have reputations that spread in a company and among friends of employees. If I routinely exploited people with false promises, I will have to keep hiring new people to exploit and it becomes self-defeating.
A reputation for unfair dealing is toxic to morale too and morale is what dictates if people put in their best work or unwillingly put up with the job for a paycheck.
You went to a lot of effort to write a lot of things while explicitly avoiding actually answering any of my questions. This leads me to think that a simple "no" would have sufficed.
It's possible to treat people well enough that you can retain them while still not keeping promises and paying below market. There's a balance, and you can do a lot of "exploiting" before its enough of a nuisance to want to leave, and many fair things are also exploitative.
For example: refusing to hire someone because they attempted to negotiate a better offer for themselves is perfectly fair, but it also appears to be exploitative. It also becomes much easier to keep your promises when those promises are not explicit.
If no one asks for true-ups, you never need to promise them. But by not paying them, you are being exploitative. It's no different than contract-to-hire positions that exploitatively underpay people for months or years before bringing them on as full-time employees (or not doing so, for any of a variety of reasons).
EDIT: To add, since elsewhere, you explicitly mention that you undervalue new hires, the fact that you don't true-up candidates for overperformance of your (lowered) expectations is telling. Again, why would I, as a candidate, want to engage in a long term relationship with someone who doesn't put enough faith in me to pay what I'm worth, but who wants me to trust them that they'll eventually pay me what I'm worth? And who won't at least promise to make me whole during the vetting process? That to me implies two things:
1. They want me to trust them immediately, but don't want to trust me in return.
2. They won't fully compensate me for the work I'm doing.
Neither of those things make me want to trust you or form a long term relationship. If you want such a relationship, the trust goes both ways. You don't get to say "trust me that I'll eventually pay you what you're worth, but in the meantime I'll pay you less until things are verified." That's not a relationship. Its exploitation of a power imbalance.
It totally makes sense to reject a person who talks only about the salary/perks and in that way shows he's just looking for a cool job to satisfy himself.
Of course it doesn't mean that one should expect "Yes, I waited my whole life to join your company to change lives of your customers." attitude from everyone. There's a whole spectrum of people in between and each company has to find its own keyhole.
Aside from that. I never accept "start lower and re-evaluate each month, quarter, half a year" strategy. I'm pretty sure I'm going to bring 90% of my value during the first month and probably 100% the next one.
I'm glad to have one more interview, maybe a day with your team on site so you can be more sure if I'm a good fit. I also understand that there's a chance I might turn out to be a mis-hire for some reason and after a month or two it'll be clear that the initial expectations are not met on one or the other side. In that case I'm happy to re-evaluate which could also go both ways.
"I was hired as a software engineer but it turned out my experience with leading projects, working with product team on developing fresh ideas etc is extensively utilised on daily basis."
"You do have the skill but your work organisation and focus are a bit lacking which results in lower output compared to the other guys that are in your salary range. We need to work on that aspect or re-evaluate your compensation."
Both of those I'm fine with. I'm not fine with being under-compensated for half a year because you have too weak recruitment process.
You say you value the people yet get 'turned off' on someone negotiating for their pay? It seems you value being in control more, and dangling the carrot of 'if you do good you'll get more'. Maybe.
Again n=1. I value people who have been with me long term more than I value people who I am newly recruiting. That just seems like common sense to me.
It comes from the idea that we often over-value the worth of people we don't know and devalue the worth of people we know well; the magic always seems to be "somewhere else".
I had told him in the very beginning that my strategy is to hire people at a reasonable, but not out-of-the-world pay, and move them up fast if they prove their worth, and try hard to keep them for the long term (which I can only do if I am paying well, because the sector I am in is hot and our people do get a lot of recruiter calls).
The reason I do this is I want to send a clear signal to the people with me long term that I put their interests first, and I won't chase after the new-new-candidate with the best offers. This message is quite well known in the company, and when people have done their fact-checks on this, they know it to to be true: indeed, our long term people get the best pay.
After hearing all this, and after indicating he really wanted to work for me, he proceeded to negotiate hard, and at that point, I wasn't comfortable with him anymore. As I said, he is still chasing me (he has a job, but wants this job more) but I felt he revealed an aspect of himself that I am afraid may create a mis-fit between us - and this is a highly-paid executive management position.