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...