Looking Ahead: Total Compensation Trends For 2026 and Beyond

As we close out the year, it’s the perfect time to reflect on how compensation strategies are evolving—and why they should be at the center of your strategic business priorities for the year ahead. Total compensation isn’t just about paychecks; it’s a critical tool for attracting, retaining, and engaging talent in an increasingly competitive market.

Our team has put together 5 key total compensation trends for consideration as you build your compensation strategy.

1. Pay transparency pressures are rising
   Even in states without legislation, employees expect clarity on how pay decisions are made. Transparency builds trust and reduces speculation.
2. Internal equity and compression challenges are present
   Competitive hiring often leaves long-tenured employees behind, creating equity gaps. Addressing this proactively is essential for overall morale and retention.
3. Retention requires more than base pay
   Health and wellness benefits, career development, and flexibility are becoming differentiators. Employees want holistic support, not just salary increases. For example, EAPs, retirement matches, and voluntary benefits are increasingly critical for attraction and retention.
4. It is important to align compensation with strategy and performance
   Linking pay directly to business outcomes is moving beyond executive levels and into broader employee populations. Aligning with measurable outcome ensures employees are rewarded for driving results rather than just tenure or job title.
5. There is growing emphasis on variable compensation 
   Top performers are increasingly attracted to roles that reward results with higher earning potential. They see compensation plans with significant variable elements as valuable opportunities, and this performance-driven motivation ultimately translates into measurable gains for the company’s bottom line.

Prioritizing compensation in 2026 and beyond will not only strengthen retention and reduce turnover but also enhance transparency, build trust, and maintain your competitive edge. This process also provides an opportunity to reflect on your overall talent strategy, both now and in the future.

So, as we approach a new year, our team is here to help you integrate compensation as a cornerstone of your strategy. Whether you need to increase transparency by developing a compensation philosophy and methodology, retaining and motivating key employees by creating new incentive plans, or understanding how current compensation compares to market standards by conducting a benchmarking study, FGP is here to support you as your compensation partner.   

With deep expertise across industries and professional certifications, including Certified Public Accountant (CPA) and Certified Compensation Professional (CCP), our FGP Consulting team brings a unique combination of technical rigor and market insight to every engagement. Contact us today to learn more!