Key Points
The start of the 2025 fiscal year is a critical time to prepare for changes related to pay transparency and 2026 compensation policies. Companies must balance sustainable performance, pay equity, talent attraction, and control over compensation budgets. Changes to variable compensation,profit-sharing, and collective recognition programs are becoming a major driver of engagement amid pressure on fixed salaries. Preparing managers, annual compensation reviews (NAOs), and long-term compensation plans helps strengthen the consistency and competitiveness of the compensation strategy.
The start of the 2025 school year is unlike any other. Fixed salaries are still under pressure, but there is a growing demand for transparency, as the deadline for the European directive on remuneration transparency approaches, against a backdrop of an ongoing war for talent. General management and HR no longer have a choice: their compensation strategy must be robust, coherent and innovative.
The last quarter is a key time to prepare for the 2026 negotiations, strengthen commitment and consolidate competitiveness. Here are the key areas to work on right now.
Learn more about the Compensation Strategy
Reconciling sustainable performance and immediate recognition
- Variable compensation plans need to evolve: Too many successive additions to compensate for weaknesses and increased complexity due to lack of clarity and consistency.
- More and more companies are introducing qualitative indicators (customer loyalty, satisfaction, collective contribution) into their bonus schemes.
- For employees outside the sales force,profit-sharing and incentive schemes enable the entire organization to share in results. In times of wage restraint, these levers are essential.
Read the article: Profit sharing: how to turn it into a real lever for collective engagement
Putting CSR at the heart of our systems
CSR is no longer a peripheral issue: it is now an integral part of compensation plans.
- Emissions reduction targets, diversity, inclusion, workplace safety: these are just some of the criteria that can determine a portion of collective bonuses.
- For compensation committees, it's also a way of giving meaning and asserting a corporate identity that is attractive to new generations.
Discover the white paper on remuneration transparency
Discover the benefits of a transparent approach to talent attraction and retention, and how it can positively transform your corporate culture.
Anticipating transparency and pay equity
- The European directive on compensation transparency comes into force in 2026: salary ranges to be published, compulsory audits, communication on discrepancies.
- We urgently need to prepare our pay grids, weigh up positions, identify discrepancies and document our pay policy.
Read this article: https://www.mcr-groupe.com/remuneration/transparence-2025-enjeu-2025/
Training managers: an essential link
- Managers are on the front line when it comes to explaining salary decisions. But many are not trained to talk about compensation.
- Training them means giving them communication tools, pedagogical keys and a safe , reass uring posture .
- It's also a factor of commitment for employees: understanding why and how they are remunerated limits frustration.
Read this article: https: //www.mcr-groupe.com/remuneration/formation-remuneration-managers/
Develop NAO and social negotiations
- The NAO 2025 promises to be complex, with inflation returning in Europe (not yet in France), strong demands and expectations of fair pay.
- The key is to prepare the ground: solid market data, internal equity analyses, trade-off scenarios.
Expert support to secure the company's position
Mobilizing employee shareholding and long-term schemes
- In a context where cash flow is under pressure, companies are turning to deferred levers: bonus shares, stock options, phantom shares, LTIP (long term incentive plans).
- These mechanisms strengthen shareholder/employee alignment and help retain key talent, particularly in small and medium-sized companies and scale-ups.
Leveraging AI and digital tools
- AI now makes it possible to automate benchmarks, simulations and equity analyses.
- It also facilitates real-time monitoring of envelopes and decisions.
- But without solid HR governance, these tools can create bias: technology must remain a decision support tool, not a substitute for strategy.
See also this article: Slump or opportunity? Take advantage of the summer to audit your compensation systems
Compensation strategy: aligning performance, fairness, and attractiveness
Compensation has become a matter for senior management. It must balance budgetary constraints, transparency requirements, and talent expectations.
Audit, structuring, management, and support... let's build a consistent and effective compensation strategy.
FAQ
Why is the 2025 school year a strategic milestone for compensation policy?
The final quarter of 2025 provides an opportunity to prepare compensation decisions for 2026, anticipate salary transparency requirements, and lay the groundwork for future salary negotiations. Decisions made during this period have a lasting impact on employee engagement and retention.
What strategies should be prioritized when salary increases are limited?
Incentive plans, variable compensation, group benefits, and long-term compensation schemes can effectively complement salary increases. These tools help boost employee engagement while maintaining financial stability.
What role do managers play in compensation strategy?
Managers are the first point of contact for teams when it comes to salary decisions. Their ability to explain compensation decisions and answer employees’ questions is essential to maintaining trust and engagement.
How can we develop a compensation strategy tailored to the challenges of 2026?
An effective strategy combines pay transparency, internal equity, performance recognition, and talent attraction. MCR Rewards helps companies design comprehensive compensation policies that incorporate fixed and variable pay, profit-sharing, benefits, and long-term retention programs.
