2025 Compensation Trends: Survey Findings from 250 Industry Responses

The Great Compensation Disconnect: What Our Latest Research Reveals About Pay in 2025

In an era where talent retention has become a boardroom imperative, compensation remains one of the most critical, and misunderstood aspects of employee engagement. We recently asked 250 senior professionals across a range of industries about their views and experiences with compensation. Our goal was to understand the current state of compensation practices from the employee’s perspective. The findings point to a significant disconnect between how organisations think they’re managing pay and what employees are actually experiencing.

The Salary Stagnation Reality

Perhaps the most striking finding from our research is that 53% of respondents received no salary increase whatsoever in the past 12 months. Additionally, of those who did receive increases, 47% saw their pay rise below inflation which effectively results in a pay cut in real terms.

The implication is clear, nearly three-quarters of the talent pool may be feeling financially squeezed, regardless of their title or seniority.

Interestingly, our analysis shows that those receiving above-inflation increases were predominantly in C-level positions, VP roles, or specialist tech functions in high growth sectors such as Product Management, AI, and R&D. Meanwhile, functions including HR, Operations, and Marketing were disproportionately represented among those receiving below-inflation increases or no increases at all. This suggests a concerning trend where organisations may be undervaluing the very functions that enable business continuity and growth.

The Job-Hopping Reality Check

When we examined what drove salary increases, the results underscore a fundamental challenge in talent retention. Among those who did receive meaningful pay bumps, 41% achieved this by changing jobs entirely, while another 41% cited performance-related increases. Most tellingly, only 10% received increases through internal promotions.

This data points to a potential flaw in many organisations’ career development strategies. When external job changes are four times more likely to result in meaningful pay increases than internal progression, we’re essentially incentivising our best talent to leave. For leadership teams, this should serve as a reminder of the potential cost of inadequate internal mobility and compensation planning.

The Annual Review Illusion

While 74% of companies conduct annual compensation reviews, this apparent best practice masks deeper issues. When we dig into the data, we find that 17% of organisations only review compensation when employees actively push for it, which essentially places the burden of pay reviews on the individual rather than a robust HR process.

Perhaps more concerning is what’s happening during these annual reviews. Despite three-quarters of companies having formal review processes, over half of employees still consider their base salary the least competitive part of their package. This suggests that annual reviews may have become ineffective exercises rather than meaningful recalibrations of value and contribution.

The disconnect becomes even starker when we examine transparency. A staggering 65% of respondents report that their companies provide little to no clarity around how compensation is determined. Among these, 41% say there’s no transparency whatsoever, which should alarm any leader concerned about trust and engagement.

The Base Salary Crisis

Our research reveals that 56% of professionals view their base salary as the least attractive or competitive element of their own compensation package. This finding challenges the conventional wisdom that modern employees are primarily motivated by variable pay, equity, or benefits. In reality, the foundation of compensation, base salary, remains the primary concern.

This trend is particularly pronounced among non-technical and operational roles. While the tech sector has driven much of the conversation around equity and variable compensation, our data suggests that for most professionals, a competitive base salary remains paramount. This has significant implications for how organisations structure their total compensation philosophy.

Notably, only 13% of respondents cited equity or long-term incentives as their primary compensation concern, while 27% flagged bonuses and short-term incentives. This suggests that while the startup world’s equity-heavy compensation models make headlines, most professionals prefer the certainty and immediate value of competitive base salaries.

The Trust Deficit in Compensation

Perhaps the most concerning finding in our research relates to transparency. When 65% of employees don’t understand how their compensation is determined, we’re not just dealing with a communication problem – we’re facing a trust issue.

The lack of transparency cuts across all seniority levels. Senior leaders are just as likely as mid-level professionals to report poor visibility into compensation decisions. This suggests that the problem isn’t simply about access to information, but about organisational cultures that treat compensation as a black box rather than a strategic tool for engagement and retention.

For executive teams, this presents both a challenge and an opportunity. Organisations that can establish clear, transparent compensation frameworks will have a significant advantage in attracting and retaining talent. The investment in compensation transparency isn’t just about fairness, but also competitive differentiation.

Implications for Leadership

These findings point to several critical actions for senior leaders. First, the data suggests that many organisations are at risk of underinvesting in their existing talent while overpaying to acquire external hires.

Second, the emphasis on base salary competitiveness challenges leaders to reconsider their total compensation strategies. While variable pay and equity have their place, our research suggests that competitive base salaries remain the foundation of effective compensation.

Finally, the transparency deficit represents perhaps the biggest opportunity for improvement. Organisations that can clearly communicate their compensation philosophy and decision-making processes will likely see improvements in engagement, trust, and retention.

The path forward requires more than annual review processes and broad guidelines. It demands a fundamental rethinking of how we approach compensation as a strategic tool for organisational success. In a talent market where 53% of professionals received no salary increase last year, the organisations that get this right will have a decisive advantage.

The question for leaders isn’t whether they can afford to address these compensation challenges, but whether they can afford not to.

Insights from Chris Preston, CEO Zeren & Renoir. Chris leads the global teams at Zeren and Renoir, bringing over 20 years of experience building teams, brands, and businesses. He has partnered with clients around the world to deliver permanent, interim, and consulting solutions.

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