Everyone loves a salary hike, but have you ever wondered how it works? Why do some people get a big raise while others get a small one?
And most importantly, how can you increase your chances of getting a good salary hike? Let’s break it down in simple words so that anyone can understand.
What is a Salary Hike?
A salary hike means an increase in your salary. It’s how companies reward employees for their hard work, experience, or inflation adjustments.
For example, if you earn ₹40,000 per month and get a 10% salary hike, your new salary will be ₹40,000 + 10% of ₹40,000 = ₹44,000 per month.
Why Do Companies Give a Salary Hike?
Not everyone gets a salary hike, and the percentage increase can vary. Here are the main reasons companies offer a raise.
Performance-Based Hike
If you do great work, meet targets, and help the company grow, you might get a higher hike.
Promotion Hike
When you move to a higher position, your salary increases along with new responsibilities.
Market Adjustment
If salaries in your industry increase, your company may adjust your pay to stay competitive.
Cost of Living Adjustment (Inflation Hike)
If inflation is rising, companies may increase salaries so that employees can afford daily expenses.
How is a Salary Hike Calculated?
There are three common ways a company calculates a salary hike.
Percentage-Based Hike (Most Common Method)
This is the most popular method where a percentage increase is applied to your current salary.
Example:
Your current salary is ₹50,000 per month
Hike is 10%
New salary = ₹50,000 + 10% of ₹50,000
New Salary = ₹55,000 per month
Formula:
New Salary = Current Salary × (1 + Hike %)
Fixed Amount Hike
Instead of a percentage, some companies add a fixed amount to your salary.
Example:
Your salary is ₹50,000 per month
Your company adds ₹5,000 as a hike
New Salary = ₹55,000 per month
Mixed Hike (Percentage + Fixed Amount)
Some companies combine both methods by giving a percentage hike along with a fixed bonus.
Example:
Your salary is ₹50,000 per month
10% hike = ₹5,000 increase
Fixed bonus = ₹3,000
New Salary = ₹58,000 per month
What Decides the Salary Hike Percentage?
Not everyone gets the same percentage hike. Here are some key factors that affect your salary increase.
Your Performance – High performers get a higher salary hike.
Company’s Profitability – If the company makes more money, it can offer better raises.
Industry Trends – If your job is in high demand, you may get a bigger hike.
Your Experience & Skills – More experience leads to better salary hikes.
Inflation Rate – If inflation is high, companies may increase salaries accordingly.
What’s the Average Salary Hike in India?
On average, salary hikes in India range from 5% to 15% per year.
Low performers – 2% to 5% hike
Average performers – 6% to 10% hike
Top performers – 12% to 25% hike
Job switchers – 30% to 50% hike (sometimes even more)
Switching jobs is often the fastest way to get a big salary hike.
How Can You Get a Higher Salary Hike?
If you want to maximize your salary hike, follow these simple tips.
Be a High Performer – Consistently deliver great results at work.
Learn New Skills – Stay updated with industry trends and improve your expertise.
Track Your Achievements – Keep a list of your contributions and successes.
Ask for a Raise Smartly – Timing matters. Request a raise during appraisals.
Change Jobs If Necessary – If your company isn’t paying well, switching jobs can give a bigger hike.
Conclusion
A salary hike is an essential part of career growth, and understanding how it works can help you negotiate better pay. Whether through performance, promotions, or job switches, knowing the factors behind salary hikes will help you plan your financial future wisely. Now that you know how salary hikes work, go out there and get that raise you deserve.
