Two widely cited compensation surveys appear to tell very different stories about how organizations position pay relative to market. Payscale’s 2026 Compensation Best Practices Report indicates that 45% of respondents target the 50th percentile, with an additional 17% targeting above market. By contrast, WorldatWork’s 2025–2026 Salary Budget Survey reports that approximately 84% of organizations target the 50th percentile for non-executive roles.
Two surveys measuring a similar concept report materially different results. That divergence warrants closer examination.
What’s Driving the Discrepancy?
It’s notable that Payscale’s data includes a larger share of small and mid-sized organizations, while WorldatWork’s sample represents larger employers. One plausible explanation is that smaller organizations more frequently target a higher market position to remain competitive with larger employers.
Traditional compensation guidance recommends limiting comparisons to similarly sized peers, as these organizations tend to have comparable financial resources and, often, similar levels of organizational complexity.
However, size-based peer grouping can narrow the definition of “market.” Certain functions — particularly specialized, technical, or leadership roles — compete in broader, cross-industry labor markets where larger employers may set prevailing pay levels due to greater capacity to pay.
This dynamic may help explain why smaller and mid-sized organizations more frequently report a market-lead orientation. In many cases, this may not reflect a broad-based strategy, but rather a response to competitive pressure for specific roles where the relevant labor market extends beyond the selected peer group.
Implications for Compensation Strategy
For organizations evaluating their market pricing approach, the more consequential question may not be where they target relative to market, but how the market itself is defined. Targeting the 50th percentile of a broader market may result in higher pay levels than targeting the 75th percentile of a narrower one.
As a result, organizations should consider how market definitions align with actual talent competitors, while balancing stakeholder expectations, internal equity, and financial sustainability.
From Insight to Action With CBIZ
Organizations that take a more disciplined approach to defining their labor market are likely to be better positioned to make pay decisions that are both competitive and sustainable. This often requires a clear understanding of where critical talent is sourced, how roles truly compete in the market, and how compensation strategy aligns with broader business objectives.
CBIZ Compensation Consulting works with organizations to bring this clarity, helping leaders translate complex market data into practical, defensible pay strategies that support long-term performance.
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