Payscale Inc., the leading provider of compensation data, software and services, has officially published results from its flagship report named the 2025 Compensation Best Practices Report (CBPR).
In case you weren’t aware; Payscale’s sixteenth comprehensive annual report is designed to touch upon the latest workplace and compensation trends, all for the purpose of analyzing data and insights from industry professionals and HR leaders amidst DEI backlash, labor tensions, and broadening pay transparency legislation.
“2025 could bring a clash between employers tightening budgets and employees advocating for fair pay and better working conditions,” said Lexi Clarke, Payscale’s Chief People Officer. “In this environment, listening to employees and leading with fairness isn’t just the right thing to do—it’s a competitive advantage. A cooling labor market, rising pay transparency and the potential for an economic rebound could reignite the battle for top talent. Companies that invest in compensation strategy and prioritize equitable practices will be best positioned to attract, retain, and empower their workforce.”
Talk about the given report on a slightly deeper level, we begin from the aspect related to labor tensions, pay increases, and remote work, where it was discovered that organizations across the board are planning to give a 3.5% pay increase in base salary during 2025. This marks a downturn from last year’s 3.8%.
Next up, Payscale’s report digs into how compensation remains the most challenging HR activity for organizations, exceeding recruiting and retention in both 2024 (50%) and 2025 (44%), despite having dropped a few percentage points.
An estimated 31% of organizations also identified unfair pay as the primary reason for losing talent, highlighting the damaging impact of pay inequity.
Turning our attention towards the topic of DEI and pay equity, even though recent times have brought backlash against DEI, the surveyed employers reinforced support for DEI initiatives. This was especially applicable for pay equity.
We get to say so because no more than 11% said they planned to pull back on DEI, whereas on the other hand, 28% revealed their intention to increase investment in the same.
Growing investment in pay equity emerged as another big trend, with the component in question going up by 19% since 2020. For the near term, too, investment in pay equity is likely to remain a focus for over 57% organizations.
Beyond that, we must mention that, despite the role of equity in DEI initiatives being up for debate, 66% organizations continue to feel that it should remain a core component.
Payscale’s report also covered the pay transparency element, where the amount of companies, who publicly post pay ranges in job ads, was gauged as lower 2025 (56%) than what was observed during 2024 (60%). Having said so, this has become far more prevalent since pay transparency regulations were introduced.
Markedly enough, the strong pay transparency footprint would also make employees communicate more about compensation practices (31%), followed by investment in compensation data (24%), and adjustment of compensation strategies and structures (22%).
Complementing this would be a particular finding, which claims that nearly 72% of HR professionals want to share pay ranges at least on the individual level, compared to 52% who already do so.
Among other things, we must also mention how almost half of all organizations are optimistic regarding AI’s role in compensation management. The said factor is specifically relevant for pay equity monitoring (48%), compliance enforcement (45%), and policy documentation, pay education, and communication (46%).
To expand upon that, while 47% use AI for job descriptions, the most advanced strategies actually combine it with existing software (32%).
Payscale’s report also learnt that most organizations (52%) are not planning for AI to replace human workers. You see, a meager 18% said they were actively replacing certain human jobs with AI.
“Navigating the complexities of compensation management remains a top challenge for employers today, particularly as they strive to balance fair pay strategies with evolving employee expectations, economic uncertainty, and the rise of AI,” said Ruth Thomas, pay equity strategist at Payscale. “While political pressures are making companies more cautious, maintaining pay equity is essential for attracting and retaining top talent.”
