Results of the July QuickPulse^® US Compensation Planning Survey

As summer comes to a close, you’re probably starting to lay out your priorities and plans for 2027. Up first—planning, managing, and administering the annual increase process and performance management reviews.

First, you’ve got to collect data that allows you to model merit increases, along with other increases that make up your total increase budget and develop a defensible proposed budget for approval from the leaders of your organization. A key input is the projected budgets that are collected and reported by other organizations.

Mercer recently released the results of the July 2026 US Compensation Planning Survey which includes projections from just over a thousand employers. It covers projected pay and merit increases but also promotions, off-cycle increases, salary structure adjustments, and a few hot topics. Let’s look at some of the findings. (Note: the survey is free to participants and we’d love to have you participate in the next installment, coming in October 2026. Sign up here to be notified.)

Merit and total increase budgets

For 2027, employers are predicting an average merit budget of 3.2% and a total increase budget of 3.5% (including zero increases). This marks the fourth year of consistently sized budgets, give or take a tenth of a percentage point. That’s certainly a good indicator of a more stable market than we experienced in the years immediately following the pandemic.

Keep in mind, at this time of year, 87% of the survey respondents told us that their budget projections are preliminary and that they are just starting to collect data. However, in our experience, the numbers stay pretty consistent right through April when we publish what was actually delivered to employees. With that said, budgets could shift a bit. You’ll want to participate in October’s Compensation Planning survey, when budgets are closer to being final, to receive the complimentary results.

As in prior years, there is some variability among industries. Healthcare and Retail are once again projecting the lowest budgets: merit of 3.0% and total increase budget of 3.2%. Notably, Consumer Goods has even lower projected budgets: merit of 2.9% and total increase budget of 3.1%.

How many employees will get promotions in 2027?

Employers are estimating that they will promote on average 8.4% of the employee population, with the fewest promotions expected among executives and the most among non-executive salaried professionals. Forty-one percent of employers report that they promote employees as needed, rather than at specific times during the year, and most commonly are initiating a promotion because the employee has either taken on additional/expanded responsibilities or had a job change, but in both cases the change includes a grade change. Several other promotion triggers were also reported.

Salary structure adjustments

Most survey respondents are managing pay with a formal salary structure which they adjust annually (75%). Typically, we see that the percent of salary structure adjustment is just a bit below the projected merit budget. This year is no exception. Employers are planning to adjust their salary structures, on average, by 2.6%.

Is the economy playing a role in 2027 budgets?

More than half of the organizations participating in the survey report that the economic environment will have a moderate (46%) to significant (11%) impact on their compensation decisions. Another 19% indicated they are unsure if economic factors will impact their compensation decisions.

When asked how their priorities are changing, they most commonly reported the increased importance of skill and talent development along with market competitiveness, and the decreased importance of hiring and promotions.

More information is available

The survey itself is rich with additional insights including variations in compensation planning by employee level and organization type, as well as details on off-cycle increases, and how compensation teams are using artificial intelligence. If you participated in the survey, you have access to the full survey results as of mid-August 2026.

Missed the participation period for this Compensation Planning Survey? Don’t miss out next time. Sign up to be notified when participation opens or reach out to our team for more information. A MARSH team member is waiting to speak with you at 855-286-5302 or via email at surveys@mercer.com.

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.