HR leaders: How is compensation planning changing in 2025? And why are more companies investing in compensation management software to stay ahead?

Aeqium’s 2025 Compensation Planning Trends Report reveals how:
- Companies are shifting to compensation planning software to reduce inefficiencies.
- Manual compensation management is causing costly delays & errors.
- Data-driven HR teams are prioritizing automation, performance-based pay, and equity adjustments.

In this article, we’ll explore:

• The latest compensation planning software trends
• Why companies are adopting compensation management platforms
• How HR leaders are improving pay equity & efficiency
• The role of AI-powered compensation planning tools

Compensation Planning Software Adoption is Growing

📊 Key Insight: 47% of companies still rely on HRIS modules or spreadsheets for compensation planning—but software adoption is rising fast.

Why This Matters:

• Compensation planning software helps HR teams streamline merit cycles, salary adjustments, and equity grants.
• Spreadsheets are error-prone and create compliance & data security risks.
• Cloud-based compensation planning tools provide real-time analytics & automation.

What HR Leaders Can Do:
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- Evaluate the best compensation planning software based on company needs.
- Compare compensation planning tools vs. spreadsheets for ROI analysis.
- Invest in automated compensation management software to scale HR efficiency.

Compensation Management is Becoming More Data-Driven

📊 Key Insight: 91% of HR leaders say they need better compensation analytics to make informed salary decisions.

Why This Matters:

• Compensation management software must offer real-time insights on pay equity, salary compression, and performance-based raises.
• Spreadsheets fail to provide accurate benchmarking for compensation cycles.
• AI-powered compensation planning tools can improve decision-making by analyzing compensation trends over time.

What HR Leaders Can Do:
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- Choose compensation management software with advanced analytics & pay equity tracking.
- Implement HR compensation dashboards to visualize salary data trends.
- Use AI-driven compensation planning tools to automate salary adjustments & equity grants.

The Shift Toward Compensation Planning Tools with AI & Automation

📊 Key Insight: HR teams using automated compensation planning tools reduce comp cycle times by 50%.

Why This Matters:

• HR teams spend weeks preparing for compensation reviews due to outdated manual processes.
• Compensation planning tools with automation eliminate human errors & inefficiencies.
• AI-driven compensation management software can optimize merit budgets & salary adjustments based on performance.

What HR Leaders Can Do:
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- Identify AI-powered compensation planning tools that integrate with HRIS & payroll.
- Automate merit increase tracking & salary adjustments inside compensation software.
- Use compensation management platforms to ensure pay equity & compliance.

Off-Cycle Pay Adjustments Are Increasing

📊 Key Insight: 85% of companies now allow off-cycle compensation adjustments.

Why?

• More companies are using off-cycle raises to retain top talent and combat attrition.
• HR teams are shifting from annual raises to more frequent pay evaluations.
• The challenge? Ensuring fairness & transparency in off-cycle salary adjustments.

What HR Leaders Can Do:
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- Implement clear guidelines for off-cycle pay adjustments.
- Use data-driven compensation planning tools to track & justify changes.
- Ensure pay adjustments align with market shifts & internal pay equity.

Compensation Planning Budgets Are Tightening

📊 Key Insight: Merit budgets are increasing, but at a slower rate than inflation.

What This Means for HR:

• Inflation-adjusted raises are harder to implement.
• Companies are prioritizing retention strategies over across-the-board salary hikes.
• Variable compensation (bonuses, equity) is playing a bigger role in total rewards.

What HR Leaders Can Do:
- Shift towards long-term retention incentives like equity & performance bonuses.
- Optimize merit increase models to balance cost & employee expectations.
- Use compensation analytics tools to forecast budget impact more effectively.

Conclusion: Get Ahead of Compensation Trends in 2025

HR teams must adapt their compensation strategies to stay competitive.

Key Takeaways:
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✅ Strategic compensation planning is more important than ever.
✅ Companies need to automate their compensation workflows.
✅ Pay-for-performance and off-cycle adjustments are shaping HR trends.
✅ Budget constraints require smarter, data-driven decisions.