Despite competition for top talent heating up, new research from Aon Hewitt, the global talent, retirement and health solutions business of Aon plc, shows U.S. employers aren’t planning to spend more on compensation budgets for 2017 — which may likely create a stumbling block for employers when it comes to attracting and retaining high performers.

As noted in a press release, Aon Hewitt’s 2016 U.S. Salary Increase Survey of 1,074 U.S. companies projects base pay is expected to be 3.0% in 2017, up slightly from 2.8% in 2016. Spending on variable pay is expected to be 12.8% of payroll—unchanged from 2016.

“Challenging business conditions and strong global competition this year means many companies are holding the line on compensation spending in the year ahead,” explained Ken Abosch, broad-based compensation leader at Aon Hewitt. “However, as the job market continues to improve, stagnant compensation spending could leave many companies in a difficult position in the war for top talent. Organizations may need to either re-think their compensation strategy, or emphasize the other benefits and perks they provide as a way to attract and retain the best workers.” Read More