2025 pay trends
Among private equity firms, we have seen base salary increases fluctuating among the investment team for the past three years. This has been in response to business conditions as well as economic volatility.
Employee pay isn’t only important to employees. Organizations also rely on compensation programs to support many objectives. In 2024, private equity firms around the world saw higher salary increases targeted toward more junior positions.
Additionally, there was a reduction in overall bonuses specifically in North America, the United Kingdom and France. These changes likely were a consequence of reduced deal volumes in the previous year.
Inflationary pressure, concerns related to cost management and an anticipated recession or decline in business results are among the top factors influencing 2025 budget plans. This is a departure from the prevalent concerns of recent years when business leaders were contending with tight labor markets and evolving employee expectations. As a result, many organizations are preparing for 2025 budget increases that are slightly lower than that of recent years but more in line with the actual spend made in 2024.
A competitive recruitment market in the private equity sector for entry-level talent has revealed higher increases directed at lower employee levels. 2024 salary increases are seemingly being shifted to roles for which firms need to attract and retain key talent. Pay packages are competitive in comparison to the broader financial services sector, with more firms offering carried interest to associate-level roles, enhancing overall earnings.
| Location | Forecasted percent increase |
|---|---|
| Luxembourg | 3.0% |
| Canada | 3.5% |
| France | 3.5% |
| United States | 3.7% |
| Germany | 3.7% |
| Netherlands | 3.9% |
| Belgium | 4.0% |
| United Kingdom | 4.0% |
| Hong Kong SAR | 4.0% |
| Singapore | 4.0% |
In the United Kingdom, base salaries have not grown at the same rate as the general market (4.0%), generally for executive/senior management positions. However, this is not a significant issue because of the high levels of bonus and carried interest in the pay mix for these positions. It also is consistent with the broader financial services industry in the United Kingdom, where salary increases focused at lower levels with more conservative increases for executives.
Globally, we see the highest percentage increases year-on-year in base salary for incumbent professionals, in the roles of corporate social responsibility director, manager and professional, as well as senior investor relations professional and junior investment relations manager.
Employee attraction and retention is one of six core objectives for pay programs in organizations around the world, especially as employees are most likely to say pay is a driver of attraction and retention, according to WTW’s 2024 Global Benefits Attitudes Survey.
| Driver | Percent | |
|---|---|---|
| Attraction | Pay (including bonus) | 56% |
| Job security | 34% | |
| Flexible work arrangements (e.g., working remotely, flexible work hours) | 32% | |
| Retention | Pay (including bonus) | 43% |
| Job security | 39% | |
| Working environment (e.g., location, facilities) | 32% |
Our analysis of prevalent roles confirms a continued expected focus on key roles among investment teams, especially at the analyst and associate levels.
We also see in-demand roles in key infrastructure and operations functions that are vital for the firm’s success:
Many of these roles also are attracting the highest salary increases in major North American and European markets, further highlighting how in-demand these roles are.
Skills that we find most prevalent and sought after in private equity include those that ensure smooth running of the fund and organization:
Our research revealed a set of key skills emerging in the private equity sector. We expect future demand for those in innovative, data-focused and technical fields, with skills related to:
The most prevalent soft skills for employees in private equity include effective communication, attention to detail and commercial negotiation. We expect to see more demand for incumbents with critical thinking, persuasion, trust building and problem-solving skills. These will enhance what private equity firms already offer to their clients and investors, as well as portfolio companies.
Two-thirds of organizations around the world are already or are planning / considering communicating pay rate or pay range information to job candidates, according to our 2024 Pay Transparency Survey’s global results.
70% of organizations plan to or are considering communicating:
40% - 70% of organizations plan to or are considering communicating:
20% - 40% of organizations plan to or are considering communicating:
Multiple factors are encouraging increased levels of pay program communication within organizations.
| Pay program communication drivers | Percent |
|---|---|
| Increasing regulatory requirements | 64% |
| Company values and culture | 51% |
| Environmental, social and governance / diversity, equity and inclusion agenda | 51% |
| Employee expectations | 46% |
| HR’s confidence in pay programs | 42% |
| Leadership’s confidence in pay programs | 38% |
International and global organizations generally approach the way they communicate pay program information on an organization-wide basis, with local variation where required.
01
Organizations will be thinking differently about ways to attract and retain critical talent as well as broadly define the roles and skills required for the organization to prosper. There will be continual movement to embrace digital skills and roles to ensure business needs are met. We expect to see an increased focus on operational improvements and strategic movement, making use of reliable rewards data to generate greater returns.
02
There will be a shift to offering carried interest more widely to back-office and junior roles, encouraging all to share in the firm’s / fund’s successes.
03
In 2025, private equity firms may be more careful about how they spend on human capital to ensure that employees are paid equitably and fairly, with increases tailored toward key roles that need to be retained.
04
Keeping abreast of HR trends will be vital for private equity firms holding portfolio companies.
