Preparing for 2027 Benefits & Compensation Planning: What Employers Should Do Now

people solutions hub
Aug 7
4 min read

It may seem early to think about 2027.

After all, you're still navigating the second half of 2026.

But if you've ever found yourself scrambling during open enrollment, rushing compensation decisions in December, or trying to fit salary increases into a budget that was already finalized, you know one thing is true:

The best compensation and benefits decisions aren't made at the end of the year, they're planned months in advance.

August is the ideal time to begin preparing for your 2027 benefits and compensation strategy. With several months remaining in the year, you have time to evaluate your workforce, gather data, explore options, and make thoughtful decisions that support both your employees and your business goals.

Why Planning Early Matters

Compensation and benefits are often one of the largest investments a business makes.

They directly influence:

Recruitment
Employee retention
Engagement
Financial planning
Long-term business growth

Waiting until the last quarter of the year often leads to reactive decisions based on limited time and incomplete information.

Starting in August allows you to evaluate your options instead of feeling pressured into quick decisions.

Start with Your Business Goals

Before discussing salaries or benefit plans, ask yourself:

Where is the business headed in 2027?
Are you planning to grow your team?
Will you expand into new markets?
Are there leadership positions you'll need to fill?
Are there roles becoming increasingly difficult to recruit?

Your compensation strategy should support your business strategy.

For example, if growth is a priority, you'll need a budget that reflects competitive hiring and retention efforts, not just cost containment.

Review Your Current Compensation Structure

Many businesses increase wages over time without evaluating the overall structure.

That can create challenges like:

Pay compression
Inconsistent salary decisions
Internal equity concerns
Difficulty explaining compensation decisions to employees

August is a great time to ask:

Do we have salary ranges for every position?
Are similar roles paid consistently?
Are we competitive in today's market?
Have responsibilities changed since these roles were created?

A structured compensation review now makes year-end decisions much easier.

Evaluate Your Benefits Package

Benefits have become an increasingly important part of the employee experience.

While health insurance is often the first thing employers think about, employees also value:

Retirement plans
Paid time off
Flexible work arrangements
Professional development opportunities
Wellness benefits
Employee assistance programs

Review your current offerings and ask:

Which benefits are employees using?
What questions are employees asking?
Are there gaps compared to your competitors?
Are your benefits aligned with your workforce demographics?

Sometimes small improvements have a greater impact than expensive additions.

Understand Upcoming Compliance Changes

Planning ahead also means staying aware of changing employment laws and regulations.

Depending on where your employees work, this could include changes related to:

Paid leave requirements
Wage transparency laws
Minimum wage updates
Benefits administration requirements

For Minnesota employers, 2027 will also be the first full year of operating under the state's Paid Family and Medical Leave program. Organizations should use this planning cycle to evaluate how the program is affecting staffing, leave coordination, payroll processes, and employee communication.

Compliance planning should be part of your budgeting process, not an afterthought.

Budget Beyond Salaries

When creating your HR budget, remember that compensation is only one piece of the investment.

Consider budgeting for:

Leadership development
Manager training
Recruiting expenses
HR technology
Employee recognition programs
Compliance support
Professional development
Employee engagement initiatives

Investing in your people isn't just about paying them competitively.

It's about giving them the resources to succeed.

Involve Leadership Early

Compensation and benefits decisions shouldn't happen in isolation.

Include department leaders in conversations about:

Staffing needs
Retention challenges
Hard-to-fill positions
Skills gaps
Future workforce planning

Leaders closest to the work often have valuable insights that improve budgeting accuracy.

Questions to Ask Before Budget Season Begins

As you begin preparing for 2027, consider:

✔ Are our compensation ranges still competitive?

✔ Have we experienced pay compression in key roles?

✔ Are our benefits meeting employee needs?

✔ What positions are most critical to recruit or retain next year?

✔ What compliance changes could impact our HR budget?

✔ Are we investing enough in leadership and employee development?

Answering these questions now gives you time to make strategic decisions instead of reactive ones.

Budgeting for benefits and compensation isn't simply about controlling costs.

It's about investing wisely in the people who help your business grow.

Organizations that begin planning in August have more flexibility, better information, and stronger outcomes than those waiting until year-end.

Whether you're reviewing compensation structures, evaluating benefits, or preparing your overall people strategy for 2027, People Solutions Hub partners with growing businesses to build practical HR strategies that balance compliance, competitiveness, and long-term growth.

The best budgets don't just fund your business.

They invest in your people.

Contact People Solutions Hub to learn more or schedule a conversation.

About People Solutions Hub

People Solutions Hub was founded by Nicki Leritz, an HR leader committed to giving small and mid-sized businesses clear, practical, and compliant people operations. After years of watching employers struggle with shifting laws, confusing deadlines, and inconsistent HR support, Nicki built PSH to bridge the gap between what teams need and what real-world businesses can actually manage. Today, our team helps Minnesota employers navigate everything from PFML compliance, employee handbooks, and HR audits to pay transparency, wage notices,

and leave management.

We believe HR shouldn’t feel overwhelming, it should feel supportive and built for long-term stability.

At People Solutions Hub, we partner with business owners, managers, and growing teams to simplify compliance, strengthen workplace culture, and build people systems that actually work.

📩 Reach out at info@peoplesolutionshub.co

🌐 Visit www.peoplesolutionshub.co