Payscale’s preview of its 2026 Compensation Best Practices Report shows median base-pay increases holding steady at 3.5% for 2026, unchanged from the prior year, even as a growing share of employers shift away from performance-differentiated raises towards broad, across-the-board increases often described as a “peanut butter” approach. The firm said fewer than half of organisations plan to tie increases to individual performance next cycle, while over forty percent are either using or considering a standardised increase model.

Speaking in the company announcement, Ruth Thomas, chief compensation strategist at Payscale, warned of potential trade-offs in the move to uniform increases: “Regardless of what the job market looks like, organisations can’t afford to lose their best talent,” she said, urging employers to align strategy with market and inflationary pressures while ensuring top performers remain motivated. Payscale recommended that firms adopting a peanut butter model consider alternative rewards such as bonuses, promotions, long-term incentives or structured pay‑band movements to recognise skill attainment.

The preview also highlights variation by employer size and sector. Smaller organisations appear to be using pay more aggressively to compete for talent, with firms of fewer than one hundred employees averaging larger increases than very large employers, which face structural and budgetary constraints. Certain industries where specialised skills are scarce reported above‑median increases, with Construction, Agencies & Consultancies and Technology among those granting larger raises.

Payscale and its earlier salary‑budget work frame the shift partly as a response to growing criticism that performance‑linked pay can be subjective and biased, and as a practical reaction to administrative strain when resources are tight. Previous survey data from the company also signalled employers’ concern about macroeconomic conditions as a reason for conservative salary budgets, and noted modest downward adjustment plans in some sectors. That context helps explain why some organisations prefer simplicity over differentiation even as they seek to preserve competitiveness.

Despite the move towards more standardised increases, most employers remain broadly confident in their pay strategies: roughly three in five said they were fairly or very confident that their planned increases would retain and engage talent. Payscale cautioned, however, that such confidence may mask retention risk if high performers perceive they are not being sufficiently recognised, underscoring the need for compensation plans that balance fairness, simplicity and performance differentiation.

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