Korn Ferry Survey Highlights How TR Leaders Are Responding to Change

From artificial intelligence (AI) to workforce expectations, Korn Ferry’s latest Global Total Rewards Pulse Survey offers a window into how organizations are responding to the shifting rewards landscape.

Conducted in October 2025, the consulting firm’s survey reflects insights and responses from nearly 8,000 global organizations and highlights both near-term reward outlooks and longer-term strategic implications. 

Key findings include:

• Only 24% of surveyed organizations provide meaningful detail on the intent, design and execution of their reward programs.
• 86% of organizations said their reward strategy is not well known externally and just 8% of people managers believe the reward strategy is effectively communicated.
• Emerging regulations in North America and Europe are driving organizations to revisit their reward strategy, with 65% of participants identifying pay transparency as one of the primary drivers of change over the next two years.
• 2026 salary predictions include that most organizations expect to pay bonuses comparable to 2025.

Workspan Daily (WD) interviewed Korn Ferry senior client partner and North America total rewards expertise group lead Tom McMullen about what their research could mean for total rewards (TR) professionals as they prepare their future rewards strategies.

Tom McMullen, senior client partner and North America total rewards expertise group lead, Korn Ferry

WD: What are some key findings you can share from the report?

McMullen: A majority of organizations operate with high-level, market-norm reward philosophies rather than differentiated reward strategies aligned to business and talent needs. For instance, reward strategy communication is a major gap: three-quarters of organizations either do not communicate their strategy or only share generic philosophy statements. Regulated pay transparency, cost pressures and return-on-investment (ROI) scrutiny are forcing organizations to rethink reward design, governance and communication. Also, AI is emerging as a key enabler of reward benchmarking, pay equity analysis and communications — but HR capability gaps remain significant.

WD: What does this report reveal about global 2026 base salary increase projections?

McMullen: Salary increase projections for 2026 are broadly stable or slightly down versus 2025 in most markets. In the U.S., projected median 2025 and 2026 salary increases are 3.5%. In most major markets, median increases differ by only about 0.1% year-over-year, indicating limited inflationary or competitive pressure changes. There is little variation in salary increase projections across employee groups, from clerical roles to executives.

Most surveyed organizations will continue broad-based increases:

• 51% plan to grant increases to 95% or more of their employees in 2026.
• 78% will grant increases to at least 80% of employees.

The implication is salary budgets will remain predictable, reinforcing the need for differentiation via pay mix, skills, incentives and nonmonetary rewards rather than base pay alone.

WD: What about bonus and incentive payments?

McMullen: Most surveyed organizations paid bonuses at or above target in the prior fiscal year. A majority also expect to pay at or above target again, though optimism has softened slightly compared to mid-2025 results. The outlook suggests continued performance alignment, but with increasing scrutiny on affordability and ROI. This suggests incentives will remain a critical lever, but organizations may face pressure to sharpen performance measures and payout calibration.

WD: Which pay models could impact rewards strategies in the future?

McMullen: The report highlights emerging models likely to gain traction over the next three to five years, including:

• Skills-based pay (chosen by 54% of respondents), rewarding scarce or critical capabilities; and,
• Performance-based pay (44%), increasingly balanced between:
  • Individual performance;
  • Organizational performance; and,
  • Pay-mix segmentation, differentiated by employee personas, roles and workforce segments.

This indicates generic, static, one-size-fits-all pay structures will be inadequate to support future talent strategies.

WD: What factors will cause organizations to revisit their reward strategy in the next few years?

McMullen: Key drivers over the next few years include:

• Pay transparency regulations (chosen by 65% of organizations), particularly in North America and Europe;
• Labor cost pressure and ROI expectations (51%);
• Increasing competition for critical skills;
• Growing risk of employee trust erosion due to lack of clarity and involvement; and,
• The shift toward more dynamic, data-driven reward architectures.

WD: The report found most organizations do not communicate their reward strategy well. How can organizations close this communication gap?

McMullen: Given that only 24% of surveyed organizations meaningfully communicate reward strategy, organizations can close the gap by:

• Translating reward philosophy into clear “why, what and how” narratives;
• Equipping managers with simple, consistent messaging tools to reinforce intent;
• Using pay transparency requirements as a catalyst, not a compliance exercise;
• Leveraging AI-enabled personalization to tailor reward communication by audience; and,
• Actively incorporating employee input beyond engagement surveys.

WD: Based on the research, in what ways will AI impact reward processes?

McMullen: AI is expected to accelerate and enhance reward management in several areas:

• Reward benchmarking (chosen by 58% of respondents);
• Reward communications (42%);
• Data integration across HR platforms (42%); and,
• Pay equity monitoring and transparency (50%).

However, 65% of surveyed organizations acknowledge HR skill gaps in effectively using AI. Trust, explainability and governance will be essential to successful adoption.

WD: Looking ahead, what are some next steps organizations can consider as they evaluate their reward programs?

McMullen: Based on the research, organizations should consider:

• Reassessing reward strategy alignment with business and talent priorities;
• Moving beyond generic market positioning toward intentional differentiation;
• Preparing for transparency by strengthening reward narratives and governance;
• Piloting skills-based and segmented pay approaches;
• Building HR capability in analytics and AI-enabled reward tools; and,
• Treating communication as a core design element, not an afterthought.

While reward outcomes (pay increases and incentives) appear stable, the strategy, design and communication of rewards are not fit for future challenges. Organizations that invest now in differentiation, transparency, AI capability and communication will be far better positioned to compete for talent in the years ahead.

Editor’s Note: Additional Content

For more information and resources related to this article, see the pages below, which offer quick access to all WorldatWork content on these topics:

• Employee Compensation
• Finance and Budgeting
• Total Rewards