As we near the end of the calendar year, the question on everyone’s mind is: will we see salary increases in 2025? With economic uncertainty lingering, it’s tough to gauge what’s ahead for compensation budgets. To help us cut through the noise, I spoke with Tom McMullen, Senior Client Partner at Korn Ferry, who specializes in rewards. If anyone can give us the lowdown on what to expect, it’s Tom.
Around this time each year, most companies start the process of budgeting for next year’s salary increases. According to Tom, this involves a lot of data gathering, usually facilitated professional associations and consulting firms (like Korn Ferry). “Organizations are really keen to know what others are planning in terms of salary increases,” Tom explained. “We’ve been collecting and analyzing this data for decades—it’s a staple of the HR toolkit.”
So, here’s the big question: are we getting raises next year? The good news is that most employees can expect an increase, albeit a more modest one relative to the past couple of years. Tom shared that the forecasted salary increase budget this year is around 3.5% at the median. “It doesn’t mean everyone gets exactly that—it’s the typical increase someone will receive,” he said. Some people will see less, others might get more, especially if they’re being promoted. But overall, it’s a sign that companies are still investing in their people, even if they’re cautious about their fixed costs.
For years, it’s been conventional wisdom that switching jobs can lead to a bigger pay bump than staying put. Is that still the case? According to Tom, the basic rule still applies, even if the numbers have shifted a bit. “If I’m not getting the pay I think I deserve here, I’m going to look elsewhere,” he said. While internal promotions might offer a 10% increase, switching jobs can still command a bigger raise. The takeaway? If you’re staying, it’s worth making the case for your value; if you’re moving, expect a bit of a premium.
CEOs are under pressure to deliver results, and that includes making tough calls on levels of compensation investment. There’s always a tension between wanting to control costs and ensuring that employees feel valued and motivated. Tom describes this as a delicate balancing act. “You can’t freeze pay, or people will leave, but you can’t go overboard either,” he noted. “Leaders need to find that sweet spot where pay is fair, competitive, enables profitability, and doesn’t become a distraction.”
My advice? Don’t peanut butter spread your 3.5% budget. Listen and act on what your top performers say they need and play to averages with everyone else.
And remember, salary isn’t everything. Tom emphasized that companies that get it right think beyond just the paycheck. They focus on the full employee experience, including non-financial rewards like meaningful work, recognition, career development opportunities, and a positive work environment. “It’s about creating the right employee-employer contract,” Tom explained. “Companies that think seriously and holistically about what they offer tend to do better at keeping their people engaged and motivated.”
And when those other things aren’t great, compensation can help with retention while you get your culture straight.
Fun insider baseball story for you. I know of a Finance Controller who quit a small tech company for another opportunity in the middle of the company sale process. The CEO offered him $150,000 cash that day to stay and another $100k bonus if they closed on the sale. The guy took the deal.
As we look ahead to 2025, the key takeaway is clear: organizations need to craft compensation strategies that balance business needs with the evolving expectations of their workforce.
So as you plan for next year, keep in mind that compensation is more than just a budget line item. It’s a strategic tool for building a culture where people want to stick around, put in the effort, and do their best work. Because at the end of the day, the best investment any company can make is in its people.
The findings from the LeanIn.org and McKinsey & Company report highlight a significant issue in workplace culture: the persistent gap in leadership opportunities between men and women. Despite progress over the past decade, women, particularly women of color, continue to face substantial barriers in achieving parity at senior levels. This disparity is a stark reminder that change management in organizations must prioritize not just the appearance of progress, but the deep, structural shifts needed to create equitable pathways for all employees. When companies fail to address the “broken rung” at the first step into management roles, they not only limit the potential of talented women but also hinder their own performance. Culture truly drives results, and the data shows that organizations with diverse leadership teams experience stronger performance and healthier cultures. Therefore, fostering a culture where women can equally ascend into leadership roles is not just a social imperative—it’s a business strategy that directly correlates with success.
To close the gender gap in leadership, companies must embrace change management practices that go beyond surface-level diversity initiatives. This means re-evaluating hiring practices, promotions, and everyday managerial support to ensure they genuinely foster an inclusive culture where all employees can thrive. The report’s finding that fewer companies prioritize gender and racial diversity today compared to a few years ago is concerning, as it suggests a possible regression in corporate commitment to equality. Leaders must hold themselves accountable for creating workplaces that not only support but actively promote the advancement of women into leadership. After all, culture is not just about the environment—it’s about results. By prioritizing equitable opportunities and investing in robust support systems, companies can drive meaningful change, ultimately benefiting from the innovation and performance gains that come with diverse leadership.
I work at Amazon, and I plan on ‘coffee badging’ instead of working from the office 5 days a week
It seems that “coffee badging” — the practice of swiping into the office and leaving shortly afterward — is here to stay, as highlighted by this Amazon employee’s experience. We discussed this months ago, and it reflects a larger issue of trust and transparency in workplace culture. When leadership enforces return-to-office mandates without taking employee feedback into account, it erodes the sense of connection and belonging that is crucial for culture. This Amazon worker’s feelings of betrayal and the loss of trust point to the core idea we always emphasize: culture drives results. If employees feel disconnected from leadership, their engagement and productivity will inevitably suffer.
Change management plays a critical role here. The mandate is not just about where employees work; it’s about how the company navigates the shift in expectations and maintains employee trust through the process. For Amazon, enforcing strict office attendance might seem like a short-term solution, but without addressing the underlying cultural impact, it risks losing top talent and driving a wedge between leadership and employees. As the article suggests, many Amazon workers are already considering leaving, and that could spell long-term trouble for their results if culture continues to take a backseat to control.