Why Do Companies Offer Higher Hikes to New Employees Than Existing Ones?
We often see viral posts on LinkedIn criticizing companies for offering X% salary hikes to new hires while giving less than X/2% to existing employees. These posts always get instant engagement—because they tap into a common frustration.
But, let’s pause for a moment. Is it really that simple?
Why Existing Employees Often Get Lower Increments
1️⃣ Comfort Zone Factor – Many existing employees, even after getting an increment, don’t add anything significantly new. Their work stabilizes, and their efforts often plateau.
2️⃣ Perceived Value vs. New Contribution – A new employee is bringing in fresh energy, new ideas, and often an updated skillset. An existing employee is often seen as maintaining the status quo.
3️⃣ Negotiation vs. Retention – A new hire negotiates their salary upfront, based on the market. Existing employees, if they aren’t actively looking elsewhere, rarely negotiate and are more likely to accept what is offered.
4️⃣ Market Adjustments – Industries evolve. If a company hired employees at a lower salary band years ago and the market rate has increased, new hires will naturally come in at higher packages.
5️⃣ Seniority ≠ Growth – Just because someone has been in a company for years doesn’t always mean they have upgraded their skills or increased their impact proportionally.
Why New Employees Get Higher Hikes?
✅ They Bring Fresh Perspectives – Companies value fresh minds who can see things differently and challenge existing ways of working.
✅ They Are More Driven to Prove Themselves – A new hire knows that they have to justify their higher pay, so they usually put in extra effort, learn quickly, and contribute proactively.
✅ They Have Current Market Skills – Technology, industry standards, and best practices change over time. New hires often come with the latest knowledge and trends, making them more valuable from day one.
✅ They Are Harder to Acquire – Attracting new talent in a competitive job market requires companies to offer better-than-average salaries.
What Should Existing Employees Do?
Instead of just complaining about salary hikes, focus on these strategies:
✔ Keep Learning & Upgrading Skills – The more valuable you become, the harder it is for the company to replace you.
✔ Take on New Responsibilities – Show that you are growing beyond your job description.
✔ Negotiate Proactively – Don’t just wait for the annual review. If you feel undervalued, present your case with market data and results.
✔ Be Open to Change – If your current company doesn’t recognize your worth, the market will. Stay updated on industry trends, and be ready to explore better opportunities.
Final Thought:
💡 Loyalty is important, but growth is even more important.
If you feel stuck, undervalued, or underpaid, ask yourself: Have I grown? Have I added value? Have I updated my skills?
The market doesn’t reward stagnation. Companies pay for impact, not tenure.
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