Fewer chief financial officers plan to increase pay for employees this year, and average plans call for smaller increases, according to a survey of 300 CFOs by Gartner.

It found 61% of CFOs plan to increase average employee compensation this year. That’s down from 71% in 2024 and 86% in 2023.

“The slowdown in pay increases reflects falling rates of inflation and lower levels of voluntary employee attrition,” Randeep Rathindran, distinguished VP, research, in the Gartner Finance practice said in a press release. “However, even though the labor market is cooling, CFOs must balance the potential risks of attrition and low engagement, as employees still face stubbornly high costs for household necessities.”

Of CFOs planning increase, 11% plan to increase compensation by 10% or more. This is down from 13% who planned pay increases of 10% or more in 2024.

Half plan to increase compensation by between 4% and 9%. That’s down from 58% who planned the same in 2024 and 70% in 2023.

More than a third, 37%, plan for a nominal change, up from 26% in 2024.

Gartner advised CFOs to work with their chief human resource officers to develop differentiated compensation strategies to ensure compensation for critical talent remains competitive.

“CFOs who are significantly reducing employee wage increases should use leading indicators of employee engagement to fully understand the potential impact on talent attrition,” Rathindran said.