how to budget employee compensation with the 2026 salary guide.

The world economy is in a state of flux, creating enormous variability in global labor markets. Naturally, the U.S. labor market is not immune to today’s talent enigma. Companies and job seekers, alike, have clasped AI and automation with an unparalleled commitment. That being the case, your employee compensation strategy moves past just the salary package.

This digital leadership ushers in an era connecting priceless human components with AI’s workplace reign. For instance, human ingenuity and empathy remain unscathed even after AI becomes the new entrant of your workplace.

However, your compensation strategy encompasses new building blocks slowly becoming essential elements in the way you structure it. For this reason, you must factor in employee wellbeing, flexible work and workforce upskilling as part of your compensation blueprint.

Furthermore, mapping out a compensation structure appealing to all employees, no matter their diversity, is principal to amplified talent retention. Your employee compensation plan should systematically be part of this annual evaluation process. This will allow you to determine whether adjustments are necessary to remain competitive and attract new talent in the coming year.

how to build a competent employee compensation plan?

While outlining your employee compensation plan, your journey will be typical with a diverse set of workplace obstacles. Have a breather to take stock of your current and future business needs. See how they align with the capabilities and challenges of your workforce.

Here is a compilation of best practices when designing your compensation framework:

• ​Evaluate the cost of hiring new staff and managing employee compensation.
• ​Conduct a skills gap analysis to develop a tailored training plan.
• Leverage market data to inform your compensation decisions.

build a robust forecast framework

Talent forecasting is evolving rapidly as inflation and rising housing costs influence your data significantly. Our 2025 salary guide predicts higher inflation and housing costs in the U.S. for 2025. Approach your planning from a broad perspective and then focus on the specifics.

As inflation grows, employees will expect better salaries to cover increased living costs. Plus, with Baby Boomers approaching retirement and Generation Z entering the workforce, your employee compensation framework adapt to meet the strikingly new expectations of younger generations.

Aligning your approach with industry-specific trends adds precision to your talent forecast. Adjust your forecast to address competitive talent markets and roles to ensure comprehensiveness. Keep these factors in mind when preparing your talent budget for 2025.

Before determining your employee compensation framework, address these key factors to develop your talent budget:

• What existing positions will continue into the new year, and how many people will occupy each role?
• To meet your business goals, how many new hires are necessary for each current position, and when should they start?
• Are there new roles required to meet your business objectives?

Tap into our 2025 salary guide data to build your 2025 talent forecast and an employee compensation plan that aligns with your growth strategy and caters to your workforce's diverse needs.

how salary benchmarking enhances employee retention

Leveraging salary benchmarking to refine your compensation strategy can lead to higher retention rates and a stronger employer brand. This approach underscores the principle of ‘performance through people’ and is crucial in a crowded talent market where a compelling compensation plan is vital to attract top talent.

strategize your employee compensation plan

Now, it’s time for the numbers. Determine the additional headcount required and their cost. Justify this expense by illustrating how new employees will result in future savings and increased revenues. Adjust workforce budgets to tap into new opportunities.

With all your calculations and strategies in place, prepare a detailed compensation plan that includes pay raises, new hires, and hiring-related expenses. Equipped with this comprehensive plan, you’re ready to secure leadership buy-in or lead your organization confidently into 2o25.

Unlock detailed insights into the current talent market and sector-specific compensation trends by connecting with our expert consultants. Enhance your talent strategy with their expertise.

observe emerging talent patterns in 2026.

The U.S. economy is absorbing a moment of truth. Digital disruption, demographic transition and emerging workforce expectations are fundamentally changing the way you do business, the set of skills declared sought-after and where talent prospects take root.

These fresh influences possess the power to dictate your employee compensation strategy. AI is morphing from a being a rising technology star to an indispensable platform to accelerate task delivery. What does this mean for your talent story?

Entry-level worker displacement will become the second nature of your business vision. Why? You no longer seek generic skills. You require deep expertise; one that’s elusive and hidden. This upswing in subject matter expertise will become the new basis for your talent management blueprint.

What’s the broader relevance of this observation? Let’s crunch some numbers. Our 2026 salary guide cites that 78% of the U.S. workforce feel confident in AI literacy. This trends signals the need for you to nourish value-driven AI implementations in-house.

build a reliable forecasting model.

Talent forecasting is fast-developing into a business priority, compelled by inflation and rising cost of living. Today’s job seekers are pressed with an ever-evolving economic turmoil, escalated financial strain and demanding care work for aging parents and young children.

That being the case, the current talent market is impelled to challenge traditional career progression models. How does this alter your approach to talent forecasting? Your forecasting methodology must factor in angles such as:

• Adapting cross-generational workforce.
• Understanding the new talent wave and their sensibilities.
• Processing the merge of workplace productivity and flexibility.

Next, integrate your approach with industry benchmarks. This is notably effective for structuring your compensation plan cleverly. Plus, allowing cross-generational thinking in your workplace culture can preserve valuable knowledge banks, helping your vision to steer clear of loss of data and experience.

Be mindful of these shifting for your 2026 employee compensation plan.

• What existing positions will continue into the new year, and how many people will occupy each role?
• To meet your business goals, how many new hires are necessary for each current position, and when should they start?
• Are there new roles required to meet your business objectives?

salary benchmarking transcends employee compensation.

The modern workforce strategy surpasses a mere paycheck. Work today is about alignment, autonomy and community. Our 2025 Workmonitor report notes: 85% of the U.S. workforce prefer to work with organizations that can foster a sense of community.

What insight does this statistic provide? You, as an employer, must look for ways to provide a personalized workplace experience for every member of your team. The broader narrative is: you must tailor your workplace strategy specific to everyone contributing to business growth.

Fostering community and connection is not good, just for talent; but for your business vision, too. Why? Talent communities are the bedrock upon which talent pipelines thrive. They’re the basis for designing a well-informed employee compensation framework. Because, they’re evidence stores offering you a wealth of talent data.

You could harness this network to recalibrate your existing salary and benefits structure, re-align business and talent priorities and build an employee compensation framework that’s futuristic, accommodative and adaptable to talent and market volatility.

take stock of the national growth rate.

Amidst a steep workplace transformation, the U.S. seems to be slumping in 2025. However, the American economy is setting stage for a more comprehensive recovery, according to our 2026 salary guide report. The report further states, the U.S. growth rate is expected to recover to 2%.

As business optimism in markets kicks in, talent recruitment is anticipated to flourish sustainably. Nonetheless, organizations aspiring to stay competitive in a ruthless business ecosystem, must rethink their employee compensation framework, employment policy and workforce management plan.

craft a clever compensation plan with salary guide.

In effect, you must renew efforts to foster trust and equity to sustain a coarse business and talent economy. Determine how the national growth rate, workforce expectations and your business priorities intersect.

Assess your cost infrastructure in the current stubbornly flat recruitment environment. Evaluate how your employee compensation plan should be re-adjusted to thin the gap between employee goals and your growth priorities.

Is your train of thought still open to questions? Start a conversation with our talent experts to structure a well-informed compensation framework, fitting your immediate and future business growth objectives.