Why Corporate Companies Are Not Giving Hikes to Current Employees: A 2024 Perspective

In the ever-evolving landscape of corporate employment, the disparity between salary hikes for existing employees and new joiners has become a hot topic. As we step into 2024, it's crucial to understand the underlying dynamics driving this trend. Let's delve into the reasons behind this phenomenon and explore realistic solutions.

The New Hire Advantage

1. Talent Acquisition and Market Competition

Corporate companies are fiercely competing for top talent. The war for skilled professionals has intensified, especially in the IT sector. New joiners often receive higher offers to attract them away from rival firms. Companies fear losing out on potential game-changers if they don't sweeten the deal.

2. Fresh Perspectives and Skillsets

New employees bring fresh perspectives, cutting-edge skills, and innovative ideas. They inject vitality into teams, driving growth and transformation. Employers recognize this value and are willing to invest more in these promising additions.

3. Budget Constraints and Legacy Commitments

Existing employees are part of the company's legacy. Their salaries are often tied to historical decisions, annual increments, and budget constraints. Adjusting these figures can be challenging due to contractual obligations and financial planning.

The Current Employee Conundrum

1. Inertia and Status Quo

Companies tend to maintain the status quo when it comes to existing employees. Increment percentages may be conservative, leading to dissatisfaction. Employees who have been with the organization for years may feel undervalued.

2. Change Fatigue and Risk Aversion

CIOs and HR departments face change fatigue. Implementing significant salary hikes for current employees requires navigating internal processes, approvals, and potential backlash. Risk aversion often prevails, leading to incremental adjustments.

3. Perception and Retention

Companies fear that disproportionately high raises for existing staff might create resentment among new joiners. Striking a balance is essential to retain both talent pools. However, this delicate dance can leave current employees feeling overlooked.

Navigating the Divide

1. Transparent Communication

Companies should communicate openly about their compensation policies. Employees appreciate transparency. Explain the rationale behind salary decisions, emphasizing long-term growth prospects.

2. Skill-Based Appraisals

Shift from tenure-based increments to skill-based appraisals. Recognize and reward expertise, certifications, and continuous learning. This approach ensures that deserving employees receive their due.

3. Bridge the Gap Gradually

Rather than sudden jumps, consider gradual adjustments. Regular conversations about career progression and personalized development plans can motivate employees. Show them a clear path to growth.

Conclusion

In 2024, corporate companies face a delicate balancing act. While enticing new talent is essential, retaining and motivating existing employees is equally critical. By fostering a culture of fairness, transparency, and skill recognition, organizations can bridge the gap and create a win-win scenario for everyone involved.

Remember, it's not just about numbers; it's about nurturing a thriving workforce that propels the company toward success.