Companies Are Standing Firm on Salaries

Why It Matters

The shift signals tighter payroll budgets and a strategic pivot toward performance‑based rewards, while AI skill scarcity forces companies to redesign compensation to stay competitive.

Key Takeaways

• 72% of firms expect bonuses at or above target in 2026
• Median base salary increase in US remains around 3% this year
• Only 35% plan raises for 95% of employees next year
• AI‑specialized roles command 10‑15% premium over peers
• Companies use sign‑on and retention bonuses to secure AI talent

Pulse Analysis

Employers are navigating a delicate balance between cost control and talent attraction as fixed salaries stall. The Korn Ferry survey shows a modest 3% median raise for U.S. employees, reflecting cautious outlooks on inflation and profit margins. Meanwhile, bonuses remain a primary lever, with nearly three‑quarters of organizations planning to meet or exceed target payouts. This divergence underscores a broader trend: companies are rewarding short‑term performance while limiting long‑term wage growth, a strategy that can preserve cash flow but risks eroding employee morale if not paired with clear career pathways.

The rapid rise of artificial‑intelligence capabilities is reshaping compensation dynamics. Demand for AI‑ready leaders and specialized engineers is outpacing supply, prompting firms to offer premiums of 10%‑15% above comparable roles. Such differentials are often delivered through sign‑on incentives, retention bonuses, or bespoke pay structures that decouple compensation from traditional grade bands. As AI projects become central to competitive advantage, organizations must anticipate a widening pay gap between core finance talent and AI‑focused staff, potentially sparking internal equity concerns and prompting the development of new, flexible remuneration models.

For senior leaders, the data signals a need to rethink talent‑management playbooks. While modest salary hikes may satisfy budget constraints, reliance on variable pay alone may not sustain long‑term engagement, especially for high‑value AI professionals. Companies should invest in transparent career ladders, upskilling programs, and hybrid compensation packages that blend base stability with performance bonuses and skill‑based premiums. By aligning pay with strategic priorities, firms can mitigate turnover risks, foster a culture of continuous learning, and ensure that compensation structures evolve in step with the accelerating pace of technological change.