CFOs plan smaller pay raises this year

Fewer CFOs expect to give out pay increases to employees in 2025 and the raises are likely to be smaller, according to a new survey from Gartner.

The research firm polled 300 CFOs and finance leaders last October and found only 61% of CFOs are planning to increase average employee compensation in 2025, compared to 71% in 2024 and 86% in 2023. The proportion of CFOs planning to boost average employee compensation by 10% or more fell from 16% in 2023 to 11% in 2025. While 79% of respondents planned increases of 4% to 9% in 2023, only 50% are planning the same in 2025.

"The slowdown in pay increases reflects falling rates of inflation and lower levels of voluntary employee attrition," said Randeep Rathindran, distinguished vice president of research in the Gartner finance practice, in a statement Monday. "However, even though the labor market is cooling, CFOs must balance the potential risks of attrition and low engagement as employees still face stubbornly high costs for household necessities. There has been a shift toward smaller pay increases."

Gartner suggests CFOs should work with the chief human resources officer at their organization to develop a differentiated compensation strategy to make sure pay packages for critical talent and key roles remain competitive in the market.

"CFOs who are significantly reducing employee wage increases should use leading indicators of employee engagement to fully understand the potential impact on talent attrition," said Rathindran.