Compensation matters. It plays a key role in a candidate’s decision to apply for a position, and it has an impact on a company’s ability to attract and retain top performing talent in their industry. It’s no secret that when companies don’t pay well, word gets around and they develop a reputation for being “cheap.”

In a time where transparency and equality are hot-button topics, it’s now more important than ever for companies to offer fair and equal compensation to their workers. recently released a research report about compensation best practices, Comp is Culture, 2017 Compensation Best Practices Report, and it’s no surprise that one of the key findings was that employers and employees do not see eye to eye about “fair pay.” The report found that while 44% of companies believe their employees are fairly paid, only 20% of employees agree.

To dig deeper into the impact of compensation and its impact on your company, employees, and ability to recruit and retain talent, we’ve put together some of the highlights from the PayScale report:

The State of Compensation


  • Executives care about compensation: 57% of organizational leaders agree that employee compensation is becoming more important to executives.
  • Organizations are working on being more transparent: 31% of organizations identify themselves as transparent when it comes to compensation; 49% aim to become transparent in 2017.
  • Pay increases are rising: In 2016, 34% of companies stated the highest pay increase they gave employees was 10% or more; 11% reported an average pay increase of 5%.


Base Pay Raises

A 3% increase has been the standard for years.As in prior years, the most typical amount budgeted was 3 percent. Three percent has been the magic number for years now. It is considered the pay path of least resistance,” according to the report. Here are the base pay increases for 2016:

  • Less than 1% increase: 3% of companies
  • 1-1.99%: 12% of companies
  • 2-2.99%: 29% of companies
  • 3%: 26% of companies
  • 01% – 3.99%: 9% of companies
  • 4-5%: 10% of companies
  • 5+%: 11% of companies


This means that 56% of companies gave at least the industry standard or higher base pay increase in 2016, with 30% giving more than the standard 3%. The technology industry (71% of tech companies) had the highest average increase, giving 3% or more.

Companies That Don’t Pay Competitively Receive Fewer Responses to Ads

If you want to win the talent war, you need to ensure your salary and pay increases are on par with the industry average. The report found a correlation between base pay increase and number of respondents to open positions:

  • Less than 1% increase, 1% response rate
  • 5-10% increase, 17-18% response rate
  • More than 10% increase, 34% response rate


Top Reasons for Raises

Pay Raise

The report also identified the main reasons for giving out raises. They include:

  • Performance (68%)
  • Retention (42%)
  • Market adjustment (37%)
  • Cost of living adjustment (34%)
  • Internal pay inequalities (26%)
  • Hot skills (23%)
  • Tenure (18%)
  • Compliance (12%)


What does this mean? Compensation is becoming a greater consideration for employees and something that companies need to review. Employees and job candidates desire transparent compensation information when making career decisions and expect to be compensated fairly based on industry averages.


IQ PARTNERS is an Executive Search & Recruitment firm supporting clients across the country. We help companies hire better, hire less & retain more. We have specialist teams of recruiters in Financial Services & Insurance, Marketing Communications & Media, Emerging Tech & Telecom, Consumer Goods & Retail, B2B & Industrial, Technology, Accounting & Finance, HR & Operations and Mining & Engineering. IQ PARTNERS has its head office in Toronto and operates internationally via Aravati Global Search Network. Click here to view current job openings and to register with us.

Bruce Powell Executive Search

Bruce Powell

Bruce co-founded IQ PARTNERS in 2001 and currently operates as Managing Partner. His personal background includes hands-on management experience in sales, marketing and marketing services. He has built management teams for a wide variety of marketing, communications, media and technology companies. He has also participated in several M&A transactions for service-based companies and is frequently called upon as a resource in the planning and negotiation of such deals.

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