Results of the October 2025 QuickPulse™ Compensation Planning Survey

It’s that time of year again — the big push for annual budget planning, just as we’re all ramping up our holiday planning and end-of-year activities. It’s a busy time of year, for sure!

In October, just over a thousand organizations took the time to answer questions about annual increase budgets, promotions, salary structure adjustments, and a variety of hot topics, including how companies are adjusting to AI.

What did these companies have to say? Let’s take a look!

Increase budgets firming up

Just over 60% of organizations have either presented their 2026 budget recommendations to leadership for approval or have already secured approval. That is likely an indicator that the 3.2% average merit increase budget (including zero increases) and 3.5% average total increase budget is pretty close to final for 2026. This represents a continued downward trend from prior years, as well as a return to pre-pandemic budget levels.

Total increase budgets include merit increases, promotional increases, cost-of-living increases, across-the-board increases, minimum wage adjustments, off-cycle increases, etc.

High Tech is leading the pack in merit increases, with the average merit budget projected at 3.4%. Insurance/Reinsurance, Other Non-Manufacturing, and Energy are all planning higher merit budgets. with projected average increases of 3.3%. Health Care Services and Retail/Wholesale continue to project lower-than-average merit budgets, with projected increases at 2.9%, as well as lower-than-average budgets for total increases, at 3.4% and 3.3%, respectively.

Planned promotions

Organizations plan to promote around 9% of their population in 2026, which is similar to prior years. It used to be pretty standard compensation practice that a typical pay increase for one-level promotion was around 10%. However, the average pay increase that organizations purportedly plan to provide for a one-level promotion is now 8.7%, down from 9.3% reported this time last year. For the organizations that do budget for promotions separately, the amount has remained consistent at around 1% to 1.1% of the base salary budget for promotions.

Handling hot topics

In Mercer QuickPulse® Compensation Planning Surveys, in addition to salary increase, promotion, and salary structure questions, we always include questions about several topics that we suspect are presenting challenges or opportunities for employers now.

In the October edition we asked about the hourly workforce, AI’s influence on work, as well as the perceived economic impact.

Hourly, front-line, and skilled trades

In the salary surveys and < a href="https://www.imercer.com/ca/ca-policies-practices">policies and practices guidance. We can even help you identify your priorities for 2026 and develop a customized plan that will set you up for success in the new year.

Connect with a Mercer specialist via email at surveys@Mercer.com surveys@Mercer.com or give us a call at 855-286-5302.

About the author

Rebecca Hall, Principal

Rebecca spent much of her career working in compensation in various corporate roles then transitioning to consulting with Mercer. Her current role, as the Content Leader for imercer.com, allows her to leverage her knowledge of human resources and talent strategy to create materials supporting Mercer’s Products & Services in North America.