Planning for 2026 Salary Increases: Start Your Compensation Review Now
- Lauren Lyman
- Jul 17
- 3 min read
Updated: Sep 8
Looking ahead in the 2026 job market, businesses face pressure to offer competitive salary increases in order to retain top tier talent and stay current among the changes across the industry. That’s why companies should begin their compensation review and services now. Not only will they retain more valuable employees, but also boost productivity, enhance their reputation, create internal equity, and provide long-term financial sustainability.
Compensation reviews are important especially since salary data is easier to access for potential candidates than ever before. Platforms like Salary.com, PayScale, and Glassdoor provide salary data and comparisons among various job positions.
Your organization will want to set the tone for your compensation strategies and policies to get ahead and meet your goals. Here’s what you need to know as you plan.
The Importance of Early Salary Analysis
In terms of inflation and competition for talent in 2026, companies must get an early start on analyzing pay structure, restructuring compensation policies, and performing compliance review.
Pay compression, specifically, uses data-driven insights to close pay gaps among different roles and experience levels across the organization.
When adjusting pricing and analyzing the job market, it involves utilizing current, reliable surveys and relevant source data to define the value of your jobs in the marketplace.
A compensation analysis also entails a compliance test to ensure that your compensation packages are abiding by federal and local laws.
If your company waits too long to undergo these processes, it can backfire. When employees feel underpaid, they grow disengaged or leave for competitors — especially when they know they can command better pay elsewhere. The cost of replacing them can far exceed the cost of making timely, market-based salary increases.
Additionally, it is a serious liability if your organization fails to do a compensation compliance review. It can lead to legal exposure, costly financial impacts, employee retention problems, and reputational harm — all of which are avoidable with regular, proactive reviews.
Steps to Conduct an Effective Compensation Review
Here are actionable steps your company can take to perform a compensation review before implementing salary increases for 2026:
Market Analysis: Review labor market shifts, such as salary increases tied to inflation or rising demand for specialized skills.
Compensation Benchmarking: Compare your organization’s compensation practices, including salaries, bonuses, and benefits, against industry standards and competitor data.
Internal Equity: Evaluate pay equity to ensure fair increases across the board.
Performance-based Pay: Offer competitive salary increases that reflect both the role and the individual’s contributions.
Cost of Living Adjustments (COLA): Research the cost of living among various locations for small, medium, and large organizations while considering salary increases for your employees.
How to Determine Appropriate 2026 Increases
After considering all the factors above and conducting the initial steps in your compensation review, now you can take into account the types of salary increases needed in your organization:
Market Adjustment Increase: needing to align salaries with the current industry market rates
Equity Adjustment Increase: correcting internal pay inequities to ensure there is no discrimination or disparity based on gender, race, or other characteristics
Merit-Based Increase: an increase based on work performance, skill growth, or achievements
Promotional Increase: given to employees when they move to a higher position with more responsibilities
Cost-of-Living Adjustment Increase: typically a flat percentage increase given to all employees to keep up with inflation and cost of living according to location
Getting Expert Help with Premier HR Solutions Compensation Services
Using compensation benchmarking platforms can be incredibly helpful—but also complex and confusing if not navigated correctly. Many of these tools require in-depth knowledge to interpret the data accurately, and without the proper expertise, it's easy to pull incorrect or misleading information.
That’s why it's essential to work with someone who is well-versed in compensation analysis and skilled in accurately matching jobs to the right data sources. Most organizations, especially smaller ones, don’t have a dedicated compensation analyst on staff. In such cases, outsourcing to a qualified expert can be a smart move.
The investment in professional compensation support often offsets the costly risks of getting it wrong—such as losing a valuable employee due to underpayment or overpaying a new hire beyond the market rate.
To support your business goals, assist with compensation analysis, and plan for 2026 salary increases, Premier HR Solutions offers Compensation Services.
We craft competitive pay structures, conduct pay equity reviews, and create salary strategies that attract and retain top talent for organizations. With our Compensation Services, you can also build out your philosophy and strategy, structure your policies and procedures, and take advantage of our other tools that will help make your company successful.
Begin your compensation review early to stay competitive in 2026!