Salary Growth After Five Years: Does Experience Slow Down Your Annual Raise?

"What is the typical annual increment for an employee who has been continuously working for five years? I've heard that as an employee's experience grows, their rate of salary growth tends to slow down. Is this true?"

Hi, Here, the number of years is not the primary criterion, but the performance of the employee for the period under review. An employee who has been working for more than five years, if not that productive or is an average performer, will not receive a good increment based on five years of service alone. What counts is the performance.

Another perspective is when the salary of an employee increases on a yearly basis, the percentage of the increment will go down compared to a junior's increment percentage, as their salary will be less compared to seniors.

Hi, The salary hikes mentioned above are company-specific. They depend on the performance of the company in comparison to the performance of individual employees. There is no fixed scale, but generally, employers aim to align with industry norms based on the projects or work at hand.

The annual increment for an employee, regardless of the number of years of service, is primarily based on performance rather than tenure. As per our company policy, salary hikes are directly linked to the Performance Management System (PMS) rating, ensuring that employees who consistently perform well are rewarded accordingly.

While experience and years of service are valued, they do not directly determine salary growth. However, we do recognize long service and loyalty through awards, such as a one-month gross or basic salary bonus, once a certain milestone in service is completed.

In short, salary progression is performance-driven, and tenure is rewarded through other recognition programs.

Typical Annual Increment Calculation

The best typical annual increment is based on the rate of inflation from the last year until now. The employer needs to calculate the percentage of inflation at a minimum and provide an additional amount based on the performance of the employee.

Please let me know if you need further assistance.

Dear Member,

Please do not assess the performance of your employees based on the views of forum members. Increment depends upon the performance of the employee as per your performance appraisal system, in line with industry standards. By the way, after completion of 5 years of service, employee output has decreased. Please do not use increment to address the issue of low performance. Are you an employer? Please reply.

Unlike the practices followed in government and quasi-government establishments, where there is a concept of an (automatic) annual increment system generally followed, the private and unorganized sectors differ. In government and quasi-government sectors, an employee is appointed to a post carrying a specific time-scale basic pay, which is well indicated along with other allowances. Except in rare cases where an employee's performance is found to be dismal, attendance issues arise, misconduct occurs, or disciplinary proceedings are underway, an annual increment of pre-fixed sums (usually from the date and month of joining) is typically authorized. An average or below-par performer could receive an increment.

On the other hand, it's not the same in the private and unorganized sectors, where well-established firms do not authorize automatic periodical increments to employees; it must be earned. Many follow their own 'performance appraisal'-based increment authorization systems. The periodicity and quantum vary among different firms. In this case, there is often a comparative study of peers across sectors.

At the same time, it's incorrect to conclude that the quantum of increment diminishes as employees rise in the hierarchy. While there may be some instances of a slowdown, it cannot be a general rule. In an era of CTC and the fact that employers nowadays offer 'stock options' to middle and upper-level cadres, it's only a myth to say that it slows down. These cadres are provided with various other forms of incentives too, which cannot be missed.

Understanding Annual Increments

The annual increment is not a charity that the company pays to its employees to balance the rate of inflation. Those who think an increment a company pays is for performance are on the dark side of business. The company has to offer the market value of the skills and positions offered by other companies in the same or similar business. It is not mandatory to pay matching maximum values because it all depends on the business and financial condition of the company.

Therefore, the company pays an increment equal to inflation from the last year to the current date. The employer needs to consider adding up the percentage of inflation at a minimum. The company may pay an additional amount to match the performance of the employee.