Signs point to a tough year ahead for staffing firm salaries. Margins remain compressed and client demand continues to face cost pressures, according to SIA analysts. Sure, for top performers, some salary increases may occur — but they’re expected to be less than the year before, according to SIA data.

The result? Staffing leaders may be white-knuckle-gripping their office chairs as they prepare for performance reviews. Few industries know better than staffing how challenging it is to retain competent talent.

Luckily, my decades advising staffing leaders have shown me something important about the psychology of pay: Compensation and salary can — and should — be two different things. Businesses that build a broad definition of compensation beyond just salary face fewer retention downsides when market swings require salary freezes or cuts.

Take for example Randstad’s recent Workforce Monitor report. For the first time in its 22-year history, this survey of over 25,000 people worldwide found that work-life balance is now more important than pay. So yes, salaries matter, but they are not the only way to compensate, retain and reward your staff.

Define Compensation Bountifully

Compensation should include a variety of workplace perks and opportunities, from flexible hours and annual raises to learning and community engagement. A strong compensation package requires clear communication from the start. Employees need to understand from day one that the company will provide an ecosystem of benefits, but those benefits will be adjusted for economic realities, business performance and individual achievement. 

As a business owner myself, I consider professional growth opportunities a key part of our greater compensation package. It’s a practice I learned as an upstart marketer in the IT staffing space.

Back then, I was invited to sit in on a three-day executive retreat for rising leaders. The added cost of including me was negligible, but the opportunity was a career-changing reward. I had the chance to engage with C-level executive leaders, attend advanced training and get an in-person crash course on how a Fortune 500 company worked. Leaders I met at the meeting became mentors, and I was put on a fast track to career advancement. To this day, I see that moment as a pivotal investment in my career growth, and I work to replicate those kinds of compensation opportunities every chance I get.

Salary Bump Alternatives

Whether 2025 proves to be another challenging year for salaries or not, businesses have plenty of levers they can pull in the compensation arena:

• Time bonuses. Time off and flexibility have great value in this modern life. Find ways to reward employees with more time to manage and enjoy their lives.
• Professional growth and development. Provide opportunities for your team members to enhance their skills and advance their careers through access to industry-related training, certifications, workshops and mentorship programs.
• Internal cross training. Build cross-training programs inside your organization where employees can broaden their expertise, skill set and knowledge by experiencing different roles and departments.
• Spot bonuses. Offer unexpected bonuses, large or small, for exceptional work when possible. These small, unexpected delights can have a lasting impact on loyalty and engagement.
• Team-building activities. Organize team outings, retreats and bonding activities to strengthen culture and get people away from their desks.
• Learning stipends. Provide employees a learning stipend for books, courses or even professional conferences for career development.
• Volunteer days. Allow employees to take time off to volunteer for causes they care about.

Communicate Your Breadth of Compensation

People may argue that today’s workers only see dollar signs, but that’s simply not true. The evidence of employees seeking rewards beyond their paycheck is showing up in the data, from the Randstad survey to the growing numbers of workers taking pay cuts so they can work remotely.

For employers, this is a reminder that compensation conversations and definitions need to be robust and full of variety. Salary will always matter, but it should never be the only lever a business can pull. Have a variety of ways to reward great work and retain hard workers, and you gain another tool for weathering the ups and downs that shape the employment space.