Solving your payroll and HR issues with insights, answers, and action.

  • Startup
  • Payroll/Taxes
  • Human Resources
  • Employee Benefits
  • Business Insurance
  • Compliance
  • Marketing
  • Funding
  • Accounting
  • Management
  • Finance
  • Payment Processing
  • Taxes
  • Overtime
  • Outsourcing
  • Time & Attendance
  • Analytics
  • PEO
  • Outsourcing
  • HCM
  • Hiring
  • Onboarding
  • Recruiting
  • Retirement
  • Group Health
  • Individual Insurance
  • Health Care
  • Employment Law
  • Tax Reform

Compensation and Benefits Trends for 2016: What Businesses Need to Know


As 2015 ends and businesses begin to prepare for the New Year, employees may have many questions and concerns related to compensation trends. Can employees expect large salary increases, higher starting compensation, and bonuses, or are compensation levels expected to stagnate? Here is some of the latest research published by the Society for Human Resource Management (SHRM) to help break down key trends that business leaders should be aware of when planning compensation for 2016.

Modest Economic Growth, Modest Wage Increases

According to SHRM, there's some good news for employees who may have experienced salary freezes or minimal increases in recent years. Modest economic growth will enable employers in general to offer modest wage increases of approximately 3.1 percent in 2016. However, despite growth in the market, there hasn't been the massive upward pressure on compensation that talent wars tend to inspire. The research goes on to reveal that performance is a major differentiator, with 4.1 percent projected for high performers and just 0.6 percent for low performers. Companies thinking about salary increases next year will weigh both market factors and individual performance when developing a plan.

Benefits Play a Major Role in Compensation

Today's employees are looking beyond base salary to total compensation, including the value of benefits, when judging how they're paid. As a result, SHRM predicts that 2016 will see some key changes in how employers approach benefits, including:

  • An increased focus on encouraging employees to control or manage their own medical costs with high deductible health plans and health savings accounts;
  • Increased transparency tools to help consumers compare the cost and quality-of-care markers for different healthcare facilities prior to buying;
  • Improved analytics through investments in HR technology, to better understand employee needs, utilization, and areas for savings and improvement that HR teams can access and act upon.

Customization Receives More Focus

Companies are recognizing the power of offering customized and voluntary benefits for employees at group rates that they can opt into based on their needs. Young professionals, staff with growing families, or those approaching retirement may have different profiles and benefits needs. The availability of products like optional life insurance, disability coverage, legal services, pet insurance, and financial advising such as retirement planning or student loan repayment support lets employees opt into the benefits that have the most value for them. By offering customized benefits and compensation options, companies can meet the needs of a wider range of employees while controlling costs.

2016 promises to be a year of growth and change. Make sure your company is prepared for these compensation and benefits trends with a focus on meeting employee needs for benefits, rewarding high performers, and keeping a conservative eye on the bottom line.


This website contains articles posted for informational and educational value. Paychex is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, Paychex. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant.
View More in HCMView All Categories