New Data: Salary Budget Stagnate – Except for AI – Bonuses Rise

If you’re working on your salary budget for the coming year, you’ll want to know what your peers are doing with their budgets so you can justify your recommendations.

And if you’re thinking, “Hold tight on salaries, raise the stakes on bonuses,” you aren’t alone. It might be THE budgeting plan of the year, according to Korn Ferry’s most recent Global Total Rewards Pulse Survey, which included responses from more than 4,252 organizations across 133 countries.

Salary Budgets Stagnate, Despite Positive Outlook

Business leaders in the survey remained positive about revenue expectations, saying technology and AI investment would be the key drivers of growth. They anticipate those will support productivity improvements and digital transformation initiatives in their orgs.

Nearly two-thirds of organizations expect moderate-to-rapid growth this year, which is nearly consistent with last year’s expectations. Most of those organizations anticipating growth expect revenue to increase 5-15%.

Why not more growth? Here are the external factors business leaders cited that will affect growth:

• Geopolitical uncertainty and conflicts (59%)
• Strong global competition (58%)
• Global economic slowdown (50%)
• Technology disruption (39%)
• Commodity prices and availability (32%)
• Supply chain disruptions (22%)
• Sticky inflation (21%), and
• Talent shortage (13%)

And the internal factors:

• Strategy transformation/re-organization (63%)
• Merger and acquisition (40%)
• Culture transformation (39%)
• Business operating model (38%)
• Change of senior leadership (30%)
• Digital transformation/inability to keep up (26%)
• High labor cost (23%), and
• Talent shortage/lack of high-potential talent (16%)

Slight Decrease in Salary Budget

Despite the optimism, there’s a slight decrease in the 2026 total salary increases compared to the previous year. Researchers hadn’t anticipated the conservative view on boosting fixed compensation costs.

But where there are increases, they’ll generally be spread across the board: 35% of orgs plan to give salary increases — no matter how minor — to 95% of employees; 75% anticipate giving raises to at least 80% of their people.

“While an environment of political and economic uncertainty continues, business, employment and reward prospects are somewhat stable for a majority of global participants,” the researchers noted. “However, this uncertainty presents challenges in organizations’ planning and allocation of financial resources. As such, planning and budgeting processes are likely to become more dynamic than typical.”

Potential for Growth: Incentive Payouts

Here’s where businesses are stretching their salary budget: bonuses.

“Most organizations anticipate bonus payouts at or above targets, reflecting relatively stable business performance,” the researchers noted.

In fact, 57% paid bonuses at or above target last year and 72% already anticipate doing so this year.

The biggest reason: “Organizations continue to use incentive compensation to reinforce performance at enterprise, team and individual levels,” according to researchers. “Incentives are a key lever in talent retention.”

1 Area Employers Ready to Increase Salary: AI

While most organizations don’t plan to increase the salary budget, there is one area where they will make room to expand: AI talent. Specifically, they’re willing to broaden their salary and search for AI-ready leadership roles.

How? Finance leaders agree or strongly agree that to manage compensation for AI-ready leaders, they’d:

• Increase sign-on bonuses, spike base salaries and/or create retention programs (43%)
• Reshape short- and long-term incentive scorecards so they drive innovation while hitting aggressive financial goals (37%), and
• Create new and differentiated compensation strategies to distinguish AI-ready leadership (34%).

But it’s not just AI leadership roles, your fellow finance pros have their eyes on when it comes to how AI will impact salary budgets.

When it comes to other, non-leadership AI-impacted roles, they agree or strongly agree that to manage compensation, they’d:

• Re-evaluate job architecture and re-level roles (50%)
• Use required AI skills more directly in role leveling decisions (48%)
• Provide AI skills premiums due to supply-demand gaps (42%)
• Use formal skills validation processes for roles and employees (40%)
• Use retention bonuses (39%)
• Allow new hire compensation to be positioned high in the salary range (37%)
• Offer outcome-based bonuses for successful AI-transformation outcomes (37%)
• Use sign-on bonuses (36%)
• Offer outcome-based bonuses for AI-driven business results (35%)
• Use project bonuses (34%), and
• Protect base pay for roles with displaced tasks due to reskilling (33%).

Additional Resource for Budget Salary Planning

For additional help to inform your salary increase budget decisions, check out ResourcefulFinancePro‘s on-demand webinar “Modernizing Your Benefits: Competitive Compensation to Attract & Retain Talent.”