SINGAPORE: Top-performing employees may have less to celebrate this year with a new research by PayScale revealing that 44% of organisations are planning to introduce so-called “peanut butter” raises in 2026.
This is a system where pay increases are distributed evenly across employees rather than being tied to individual performance or merit-based reviews.
In other words, everyone is going to get the same piece this time. No extra dollop for effort. No bonus crunch for going above and beyond.
While the approach may sound controversial, it is not entirely new. According to the report, 9% of organisations have already adopted this method, with Starbucks standing out as one of the most prominent examples.
Last year, the coffee chain opted to standardise pay increases for its North American corporate workforce.
Instead of issuing merit-based awards, Starbucks handed out a flat 2% raise across the board, a move first reported by The Wall Street Journal.
Why the sudden change?
According to the report, many employers are stepping away from traditional merit-based pay systems after facing mounting criticism over the years.
It’s “subjective, bias-prone, and administratively complex”, the report stated.
There is also the small matter of the economy. With inflation still hanging around and budgets under pressure, companies are watching their spending more closely.
Moreover, there’s a safety net aspect to it. Wayne Hochwarter, a senior professor at Florida State University’s College of Business, notes that this approach ensures every employee receives at least a small increase, even those who might normally be overlooked.
In theory, it helps everyone keep up, or at least not fall too far behind, as living costs rise.
So how much are companies actually giving?
The report states that organisations planned to give out median base pay raises of 3.5%, which is basically the same as last year.
Some employers, however, are willing to go a little higher. Smaller companies with between one and 99 employees are expecting to offer average increases of around 4%, while larger organisations with 5,000 to 9,999 staff are planning raises closer to 3%.
Certain industries are also being more generous. Construction firms are leading the way with planned raises of about 5%, followed by technology companies at roughly 4%.
As for whether these increases are enough to keep employees happy and in their seats, opinions are mixed. About 60% of organisations said they were confident their pay rises would remain competitive. Another 25% felt neutral, while 15% admitted they were not confident at all.
Despite the growing interest in evenly spread raises, performance based pay has not disappeared. Around 48% of organisations say they still plan to link pay increases to performance, while 8% remain undecided about whether they will adopt the approach.
And how are employees taking it?
Not especially well.
After a Fortune article titled ‘In 2026, many employers are ditching merit-based pay bumps in favour of peanut butter raises’ was shared on Reddit, employees were quick to voice their frustration.
“That’s how you bleed top performers,” one remarked, while another commented, “This is basically companies admitting they don’t know how to measure individual performance, so they’re giving up trying.”
“The problem is your top performers already know they’re carrying the team, and a flat raise just confirms what they suspected—that showing up and doing the bare minimum pays the same as going above and beyond. Great way to retain your worst employees and lose your best ones.”
A third user suggested companies are pushing ahead with this approach because the hiring market is currently weak.
“The companies think they have the leverage to underpay high performers because they are less concerned with losing them,” they said. “And if this type of strategy is highly publicised and shared in board rooms etc it becomes a form of collusion that’s super hard to prove but will depress total wages across the board.”
A fourth added, “I’m not mad at the idea of flat raises for everyone and promotions for high performers. Certainly would work out better for me than the situation at most of my jobs where I’ve been lucky if I get a raise that doesn’t even make up for inflation.”
What can employees do if they’re not satisfied?
Hochwarter says that employees who believe their pay rise is disproportionate to the results they delivered over the past year may choose to seek alternatives.
Rather than focusing solely on salary, they could negotiate for other forms of compensation, such as additional paid leave, more flexible working arrangements, opportunities to work on high-profile projects, or even a promotion.
