By Robert Hermenze and Marc Roloson | July 3, 2025
When organizations moved past addressing a global pandemic, there likely was hope that a period of respite was coming. However, a highly competitive labor market, changes to the way we work and changing employee expectations continued to present challenges for organizations.
Today, organizations are facing the ripple effects of tariffs and policy changes. Through all of this, one thing remains clear: Compensation and HR leaders must stay on top of the latest design trends and insights to remain competitive employers — and ensure business success.
Once again, organizations are facing unprecedented challenges — this year in the form of U.S. federal policy shifts. To understand how organizations are responding real-time, WTW conducted a series of three, 48-hour pulse surveys of our North American clients in March and April. The majority of responding organizations (90%) were U.S.-based, with between 90 and more than 200 participants across all industries providing responses to the three surveys.
Most companies indicated they are preparing for economic impacts as a result of new tariffs and policy shifts. A significant 72% of respondents said they expect at least some negative effects on their financial conditions, including increased operational costs and supply-chain disruptions.
Industries that rely heavily on global trade (e.g., manufacturing, retail, agriculture) are particularly vulnerable to these impacts. Participants indicated that their companies are looking for ways to prioritize meeting the needs of their workforce while maintaining a disciplined approach to operating in a time of certainty.
Organizations are re-evaluating their compensation strategies to navigate economic uncertainty. According to the results:
21% of responding companies have already implemented changes to their executive pay programs, and 25% are considering further modifications. These changes have the potential to reduce payout volatility, including shifting toward more fixed compensation (i.e., de-risking the program), widening performance-goal ranges, revising long-term incentive metrics, and shortening long-term performance periods.
The results provide detailed insights into how tariffs and policy changes are affecting in-flight incentive plans and goalsetting. Respondents indicated no plans to modify their short-term incentive plans or to seek discretionary adjustments (Figure 1).
35% of respondents said they are considering discretionary adjustments at the end of the performance period or have already made changes; 14% intend to make changes, such as revising goals or adjusting performance ranges.
Companies reported being less likely to modify their long-term incentive (LTI) plans or seek discretionary adjustments (Figure 2). 19% are considering discretionary adjustments at the end of the performance period.
Organizations are adopting several key strategies to manage their workforce effectively amid policy shifts. Many organizations spent several years after the COVID-19 pandemic managing elevated turnover and challenges in attracting talent. Today, the data suggest that organizations are prioritizing investments in and use of their existing workforce.
HR leaders should prioritize clear communication with employees about the company’s financial health as well as any compensation program changes. Clear internal communications will help give employees clarity and faith in the business — and help prevent uncertainty-related turnover.
While there is an inclination to assume that labor market dynamics could shift, current actions being taken by organizations to invest in and leverage existing staff, plus low indications of planned reductions in force, suggest that the competitive labor market is here to stay.
Most organizations are taking a wait-and-see approach rather than making changes to executive compensation — particularly given the general expectation that policy changes and related uncertainty and volatility will continue in the near term. As compensation committees and boards of directors consider the current environment and how to respond, they should consider these guidelines:
The overall results of these pulse surveys reflect that compensation and talent challenges will persist. When organizations moved past addressing a global pandemic, there likely was hope that a period of respite was coming. However, a highly competitive labor market, changes to the way we work and changing employee expectations continued to present challenges for organizations.
Today, organizations are facing the ripple effects of tariffs and policy changes. Through all of this, one thing remains clear: Compensation and HR leaders must stay on top of the latest design trends and insights to remain competitive employers — and ensure business success.
This article was originally published by WorldatWork on June 19, 2025.
