Companies aim for more ‘strategic’ pay increases: WTW report
Executive Take
HR and finance leaders should rework compensation planning now to build differentiated pay pools rather than defaulting to uniform merit increases, since flat budget growth means retention dollars must be concentrated on critical talent.
Executive Summary
WTW projects salary budgets will increase 3.4% in 2027. The report finds employers are shifting away from broad-based, across-the-board pay increases toward more targeted raises and spot bonus awards aimed at specific employees or roles.
Why It Matters
HR leaders need this to plan 2027 compensation budgets and merit-cycle design, since a shift toward targeted increases and spot awards changes how retention and pay-equity strategies must be structured.
Bizquad Perspective
Targeted pay increases will widen internal pay-equity gaps faster than most HR teams' current transparency and audit processes can handle, setting up compliance friction down the line.