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Part 3: What comp teams should do when the market moves
Compensation

Part 3: What comp teams should do when the market moves

3

June 23, 2026

Ashley Case

Director of Insights

Bree Linck

Compensation Program Manager

‍Part 2 of the market moves blog series was about planning when to act in the market. This piece is about how to respond, and the tricky case when a market falls.

Using live market data, you identified that backend engineering pay has increased 9% across your two largest hiring markets over the last quarter. Not a two-week spike on a thin sample, but a sustained move backed by enough data to trust it.

In Part 2 of this blog series, we covered the importance of setting thresholds in advance so you spend less time debating whether to act and instead are prepared to make a move. By being prepared, you transition from a reactive to proactive solution before you feel the impact of increased turnover or slowed hiring. 

So the conversation moves to the next question: What should we do about it?

Match the response to the move in the market

There is no single answer to "the market moved, so we adjust." There are a variety of responses, ranging from broad to targeted, and the right choice depends on three things:

  1. The magnitude and scope of the shift
  2. Your compensation philosophy
  3. Your budget

Start broad and narrow from there.

Off-cycle market adjustments

Best used when:

  • The range is still defensible, but employees are falling behind.
  • Ranges are shared across multiple areas and only one area is experiencing a change.
  • High-leverage critical roles.

This is the targeted version of a range update. You're not rewriting the structure; you're fixing the individuals the structure left exposed.

Retention awards

Best used when:

  • The market change is specific to a narrow subset of employees, roles, or skills.
  • The trend is emerging but not yet sustained.
  • You don’t have the budget for widespread changes.
  • You have a group of critical or high-performing individuals.

This is the right response when you need an immediate or lower-cost response. You're not paying the market. You're paying to keep specific people through a specific window. We dug into the mechanics of designing these in an earlier blog here.

The trigger for a retention award is a tight squeeze, not a broad lift or a permanent solution.

New-hire premiums / Higher range for job postings

Best used when:

  • You need more time to review and get approval for widespread changes.
  • Your compensation approach is heavily anchored to a midpoint which is materially lagging market.

Exception management

Best used when:

  • Low-volume or highly specific market moves.
  • Weak or emerging market signal.

Not every confirmed market shift deserves a structural response.

A role that spikes once, in one geography, with limited data behind it may be better managed as a handful of well-documented exceptions than a permanent change to your compensation structure.

How to plan for a volatile market 

Most compensation conversations assume the market is heating up. 

Real operating models plan for the other direction too, because cooling markets are where philosophy gets tested, and where doing nothing is a decision.

When live-market data suggests compensation is declining you have options, and again philosophy drives the choice you make.

Here are 4 tips to help guide your decisions:

Hold ranges and let compa-ratios rise

Do nothing to the ranges and let your existing employees sit above the new market. You absorb the gap as a retention investment. This is the easiest to communicate and the most common default, and for many teams it’s the right call. It is still a choice, and it costs money, so make it on purpose.

Hold for current employees, lower for new hires

Keep existing pay intact while bringing acquisition cost down to the new market. This protects internal trust, but it creates the mirror image of the new-hire premium problem: people doing the same job at different rates. Manageable, but only if you are managing it.

Lower ranges in a sustained downturn

Rare, occasionally warranted, and almost always applied to the ranges rather than to existing employees' pay. Cutting what people already earn is a different and far more damaging act than resetting the band new hires come in against. Reserve this for moves that are clearly deep and clearly durable.

Adjust other pay elements

Base pay is the hardest to change. When markets have materially slowed, consider changes to incentive targets or equity awards.


Two principles hold across all of it:

#1 Asymmetry is normal. Most companies move ranges up faster than they move them down, and that’s a defensible choice. The problem is making it by default instead of on purpose. Decide your asymmetry.

#2 Communication is an underrated variable. A pause or a freeze with a clear rationale is better for employee engagement than an identical decision delivered opaquely. The underlying math is the same. What employees remember is whether anyone explained it. 

The teams that weather a down market are usually not the ones with a clever structure. They are the ones who said out loud what they were doing and why. Employees appreciate that transparency especially when combined with an explanation that the pause or the freeze helps avoid or minimize reductions in force.

Compensation decisions are only as good as your judgment

Compa will tell you when the market moves.

Your expertise and judgment are required for the response. Choosing a range update over a retention award, holding the line in a downturn versus resetting new-hire ranges, owning your asymmetry rather than drifting into it: that’s the judgment the rest of the system exists to serve.

Across the three parts of this series, the throughline is the same:

Build the operating model, set the triggers, and match the response. The market will continue to shift faster than any annual cycle was built to handle. What you can control is whether the next time it moves, you already know what you're going to do.

Read more

Compensation

Setting Compensation Triggers: When to Act on Market Pay Changes

Compensation

The Market Moved. You Just Don't Know It Yet.

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