Do skills really reflect salary?

On my first real job interview, the CEO of the company asked me “how much you made on your last job?” and based on my answer he gave me his offer. We had 3-4 developers with almost the same degrees and skills set, but with different pay rates. So it’s all about how you negotiate your salary and not only your skills set.

Working in management position at my current job, I consistently struggle with the salary issue, what is fair pay? Do we go by industry standards? Do we go by employees job skills and negotiation skills?

I came across few employees who are getting paid less than what they should only because they didn’t have the right negotiation skills at the time they were interviewed; they have excellent job skills.

I know there is no simple answer to this issue, but I know one thing for sure, don’t hire an employee or give him/her a job offer depending on how much they made on their last job.