What’s Coming for Compensation in 2026

Hello, 2026! Here at Bettercomp, our year is already off to an exciting start. New lookOpens in a new tab, new partnershipOpens in a new tab, and more to come! At the end of last year, when I started seeing meeting invites popping up for early 2026, I realized I had a feeling of anticipation like I was a kid preparing for the first day of school. This year is going to be a big one — I could feel it at the end of last year.

Before sharing what I think is coming for compensation this year, I reflected on my 2025 predictionsOpens in a new tab. Not to brag, but they came to be pretty accurate.

2026 Comp Predictions

1. A move from "AI additions" to "AI impact-makers."

In 2025, most people used AI to summarize meeting notes and draft content. The world of compensation heard lots of chatter about AI, but when putting it to the test, many legacy comptech providers were found to have just added AI onto outdated structures, hoping the addition would make a difference. That approach is like putting a Band-Aid on a broken leg.

In 2026, I’m predicting that we’ll see AI features that actually make a difference. I expect to see AI that moves past showing data to actually acting on it. AI in comptech will move away from "responses" and toward "outcomes." This shift will require comp pros to serve as the judge for what AI brings to the table, review proposed outcomes, and use AI as a resource to find the answers they need.

At Bettercomp, we are focused on AI that is built on your unique comp philosophy. To summarize my thoughts on 2026, if AI isn't proactively identifying and offering solutions to issues, it’s already obsolete.

2. The rise of skill-based pay 2.0.

The 2025 "reset" stabilized base salaries, but it created a massive divergence in value. My prediction for this year is that we will see the death of the "standard merit increase." Instead of a flat 3.5% across the board, 2026 will be the year of “skills-based comp: the sequel.” Talent with skills in high demand (primarily those who can build, manage, and audit AI workflows) will command premiums over traditional peers. Our partner WTW makes a great point: new AI-driven analyses will bring opportunities to be more strategic in how niche skills are compensatedOpens in a new tab. Skill-based payOpens in a new tab isn’t a new concept, but in 2026 we’ll see a resurgence of factoring specific skills into pay bands like we’ve focused on titles and job architecture in recent years.

3. The "EU Effect" drives a total rewards revamp.

With the June 2026 deadline for the EU Pay Transparency Directive, global companies can no longer hide behind "regional variations." I’m predicting that the "burden of proof" shift in Europe will force U.S. companies to adopt global pay transparency standards to avoid a two-tier culture. By the end of this year, I’m expecting transparency scores to become a differentiator. Candidates won't just look at the salary, they’ll look at a company's audited equity gap before they even apply. 2026 is calling for salary ranges and compensation decisions companies confidently (and publicly) stand behind.

4. The "Post-RTO" reset.

Last year’s Return-to-Office mandates were the "stick." While some companies (like Bettercomp) remain fully remote, my prediction is that this year will provide the "carrot" for employees who returned to office. Now that companies have settled into their work styles, I’m thinking we will see a sophisticated recalibration of in-person premiums. Companies will stop using broad national averages and start using hyper-local data to pay a 10-15% commuter premium for high-collateral, in-office roles, while finally standardizing digital nomad rates for the remaining distributed workforce.

I think the era of paying San Francisco wages to someone in rural Idaho is officially over. This new era of comp is about surgical geographic precision and mixing data sources to find the right pay range, ensuring organizations pay for the balance of experience, skills, and location.

5. Continued consolidation, often driven by private equity.

My final prediction for this year is built on last year’s 5 star prediction about mergers and acquisitions. We saw 2025 set the stage for a resurgence in deal-making (like Deel’s acquisition of AssembleOpens in a new tab) and I’m expecting 2026 to be the year where the Compensation and HR Tech landscape experiences aggressive consolidation. The momentum we saw building last year has shifted from a "spike" into a sustained period of market maturation, driven primarily by private equity firms looking to capitalize on stable, cash-flow-positive assets.

The trend of "buying innovation" to patch product gaps has become the standard operating procedure. We are no longer just seeing startups merge for survival, we are seeing legacy giants move to protect their moats. A prime example of this is ADP’s recent acquisition of PequityOpens in a new tab, a move that signals how incumbents are aiming to own the full lifecycle of their respective area.

This year’s continued consolidation will be largely fueled by private equity. As these firms seek to roll up smaller players into comprehensive "super-platforms," the mid-market HR tech space is becoming increasingly crowded with PE-backed entities. However, the caveat remains the same: while these acquisitions streamline workflows for HR teams, the heavy involvement of late-stage private equity often prioritizes market share and integration over raw technological breakthroughs.

2026 is off to the races, and while I don’t have a crystal ball, I am predicting a big year for comp pros, employees, and Bettercomp.