To conduct a successful salary review, it’s crucial to understand current market trends. This often requires analyzing various and inconsistent data sources, which can mean a lot of work, especially when planning a salary review.
Here are some key insights and practical tips based on current market data.
Current Trends in the European Tech Sector
The European tech sector has cooled significantly after years of record growth:
- Hiring rates have decreased by 15% year-over-year, from 34% to 29%.
- Non-promotion salary increases at growth and late-stage companies have dropped to 5% and 4.9% respectively.
- Attrition rates have fallen by 33% compared to the previous year
Planning Salary Increases
When planning salary increases for the coming year, companies should consider the following:
- The majority of companies are planning salary increases of 3-5%.
- 41% of respondents plan performance-based adjustments, while 38% aim to consider both inflation and performance.
- Non-monetary compensation is gaining importance, as 61% of companies face difficulties in retaining talent through cash compensation
Practical Tips for a Successful Salary Review
- Analyze market data: Use current salary surveys and industry reports to gain a clear picture of market trends
- Ensure internal equity: Review salaries within your company to identify and correct discrepancies between similar positions
- Incorporate performance evaluations: Take employees’ individual performance into account when determining salary increases
- Set a budget: Define a clear budget for salary increases that considers both company goals and market conditions
- Improve communication: Ensure the process is transparent and clearly communicate the criteria for salary increases
- Explore alternative forms of compensation: Consider non-monetary benefits such as improved training opportunities or more flexible working conditions
By taking these factors into account and planning carefully, companies can conduct a fair and effective salary review that supports both employee satisfaction and company goals.
Conclusion
The 2025 compensation review comes at a time of economic uncertainty and rising employee expectations. Companies that make data-driven decisions, ensure internal fairness, and explore alternative forms of compensation beyond cash will gain a clear advantage. Combining pay transparency with strategic planning not only builds trust but also strengthens employee retention and long-term competitiveness.