What's on Tap for Comp Teams in 2025

Well, it’s that time of year again: the holidays are well behind us and the reality of a new year has settled in. But what can we expect from 2025? How will the world of compensation change - or stay the same - as the year progresses?
Before looking ahead to 2025, I reflected on my 2024 predictions and rated their accuracy:

Overall, my predictions for 2024 held up pretty well under late-year scrutiny with an average of a 3.7 star rating. ⭐ Despite last year’s success, I won’t claim to be the Nostradamus of comp. That said, I have some thoughts about what the world of compensation will look like in 2025.

Inflation Holds & the Economy Keeps Chugging

Over the past several years, the economy has occupied a major place in the comp world’s collective mind. The post-COVID-19 pandemic years saw inflation skyrocket which, in part, drove that nightmare time that still haunts HR leaders, the great resignation. Combine inflation with quarterly threats of recession, and the result is business leaders (and their comp teams) warily watching the economy like most of us are watching for winter storm predictions on our weather apps. 
While the Fed has done its work to cool inflation, it seems to have found its level and is remaining steady, if slightly high. Those promised recessions never quite materialized either. I anticipate that, at least in the U.S., things will keep moving along in the same way they have for the past year or so.

Pay Transparency Goes Global

As you may have heard, a new administration recently took up residence in Washington D.C. For pay transparency advocates, that means that even though many states have opted to enact their own requirements, the likelihood of national legislation or direction on pay transparency is at least four years away. Meanwhile, countries in the European Union (EU) are beginning to roll out their action plans related to the EU’s pay transparency directive.

This murkiness adds a further layer of complexity to an already fragmented landscape. While US-based companies will still have to contend with the variety of regulations - from municipal to state-wide - and the growing expectations of employees and job seekers related to pay transparency and equity, companies with employees outside the US are contending with an even larger patchwork of regulations. If you need help with this, our friends at Syndio created a resource hub for understanding the variety of regulations across the globe.

The Demand for More and More Varied Market Data Stays Hot 

Comp pros have always lived by their data. That’s not changing, but I’ve seen a trend toward companies increasing the volume and variety of data they use in their compensation processes. 
Comp teams are not only purchasing more surveys, but are increasingly supplementing their survey data with alternative data sources like Compa’s offers data, scraped job posting data, and even aggregate data sources. 
At BetterComp, we’re working to support our customers in both the quantity and variety of data they use. In addition to our Prime Market Data, Powered by Mercer, which offers a reliable dataset to companies with fewer than 1000 employees, we recently announced our integration with Compa that seamlessly brings offers data into customers’ market pricing processes.

Spike in Mergers and Acquisitions - in Comp and Beyond 

We’ve already seen movement in the M&A space this year. The incoming administration promises to be friendly to M&A with a light regulatory touch. In addition, the continued (however slow) lowering of interest rates and expected $3 Trillion in uncommitted capital indicate a high likelihood of more M&A.
In the comp & HR arena, Deel’s recent acquisition of Assemble’s innovative team is a harbinger of things to come for comp and HR teams. Moreover, many companies in the comp and HR space are owned by private equity or other holding companies, providing fertile ground for transition of ownership. Late stage private equity is not known for investing in the hottest trends or innovation, so while M&A activity is likely to spike in 2025, that won’t necessarily mean a huge leap forward for technology.

The Hybrid Work Hype Takes a Back Seat

The past year saw a lot of movement in the world of flex work. Return-to-office (RTO) mandates took center stage as high-profile companies like Amazon and JPMorgan began bringing their teams back full-time.
By this point, most companies have found the work style that suits them. Many companies (like BetterComp) remain committed to a fully distributed workforce, while more are embracing a hybrid approach, with a few outliers mandating exclusively in-office work.
Comp teams are used to conversations and negotiations, but in 2025, discussions on work locations will be straight to the point as most companies have settled into a system that works for their company’s goals and needs.

The Comp Market Hits a Reset Point

The past four years have been quite a ride for comp teams. From the pandemic (which now somehow feels like ancient history), the great resignation, and spiking inflation and economic uncertainty, to advances in technology including the huge leaps forward in AI, comp teams have had to deal with a LOT. And that included some major shifts in how - and how much - companies were paying.
At this point, the wild fluctuations that characterized the early 20s have calmed and pay is leveling off to a more reasonable, steady rate that matches the more subdued levels of inflation we’re also seeing. While this is a much needed reprieve for comp teams, it also comes with challenges - specifically, how to handle top talent that’s come to expect regular 5-10% increases or managing talent acquisition when people coming in are paid above where the market is today. Recent years’ salary jumps created a group of candidates who saw huge compensation increases when accepting new positions, which as a result, left them earning salaries that exceed market range. In 2025, we will see a new reality set in where salaries for new positions may be closer to candidates’ current compensation.

What’s Next for BetterComp?

2024 was a banner year for us at BetterComp, and we’re expecting great things for this year, as well. In 2025, BetterComp customers will be seeing new features and functionality designed to make job pricing easier and faster. We’re also expanding data capabilities including faster survey loading, market pricing at scale and growing the variety of data sources comp pros can use directly in BetterComp.

The new year will almost certainly be filled with unexpected twists and turns, but I’m bullish on a great year for comp - and for BetterComp.

Keep an eye on 2025's compensation trends and news by following BetterComp on LinkedIn