Chief financial officers are looking into smaller pay increases for employees in 2025, the third consecutive year, according to a survey by Gartner, Inc.
The survey, which polled 300 CFOs and finance leaders, revealed that while compensation remains a top area for budget boosts, second only to enterprise technology spending, pay increases have been slowing down for three years in a row.
Gartner found that only 61% of CFOs are planning to increase average employee compensation in 2025, compared to 71% in 2024 and 86% in 2023.
“The slowdown in pay increases reflects falling rates of inflation and lower levels of voluntary employee attrition,” says Randeep Rathindran, Distinguished VP, Research in the Gartner Finance practice.
“However, even though the labor market is cooling, CFOs must balance the potential risks of attrition and low engagement as employees still face stubbornly high costs for household necessities.”
Rathindran notes that there has been a shift toward smaller pay increases.
“The proportion of CFOs planning to boost average employee compensation by 10% or more fell from 16% in 2023 to 11% in 2025. While 79% of respondents planned increases of 4% to 9% in 2023, only 50% are planning the same in 2025.”
Planned Changes to Average Employee Compensation in 2025, 2024 and 2023
Gartner experts advise CFOs to work with their CHRO to develop a differentiated compensation strategy that ensures packages for critical talent, and that key roles remain competitive as the market evolves.
“CFOs who are significantly reducing employee wage increases should use leading indicators of employee engagement to fully understand the potential impact on talent attrition,” says Rathindran.
