Cracking the Total Rewards code: What HR leaders need to know

Would you trade a pay cut for a four-day workweek? What about career growth over a bigger bonus? Employees have begun redefining what ‘rewarding work’ really stands for and leaders are scrambling to keep up. A PwC study reveals that only 60% of employees consider compensation a top priority in Total Rewards, while the rest prioritise benefits and work-life balance. 

This shift highlights its growing complexity, making it essential for organisations to reassess their total rewards strategy. To remain competitive and attuned to evolving workforce expectations, organisations must rethink their approach toward the evolving rewards landscape. 

The shifting paradigm of Total Rewards

Once an undisputed priority, compensation now shares its spotlight with benefits, flexibility, rewards, and well-being. Employees are no longer solely driven by pay—they seek a more holistic value proposition—one that aligns with their personal and professional ambitions. Research by People Matters and ADP reveals that around 46% of organisations posit financial well-being as a priority for 2025, reflecting a strong focus on employee well-being amid economic uncertainties.

This shift in employee expectations is further magnified by regulatory shifts, economic volatility, and the advent of the multigenerational workforce. Organisations that fail to adapt risk losing their best talent to employers who offer perks beyond paychecks. In this context, organisations must reflect on the pressing challenges and the viable solutions that surround the rewards landscape. 

Unpacking the five most relevant challenges in total rewards

To understand the future of Total Rewards, we unravel the five areas that redefine its core.

Personalising benefits without adding complexity

A study shows that around 54% of employees have an inclination for personalised benefit recommendations. A one-size-fits-all approach does not cater to employees’ diverse needs—from childcare facilities to repayment of student loans. Managing personalisation at scale can strain resources and affect administrative efficiency.

A modular benefits approach, enabling employees to choose from a range of benefits can be executed—this gives greater autonomy to employees while also keeping costs predictable. Regular surveys and data analytics should inform benefit design to ensure offerings remain relevant and valued.

Balancing competitive pay with budget constraints

As rising inflation and talent shortages are pushing salary expectations higher, organisations face financial limitations. Striking the right balance between offering competitive compensation and cost control is a persistent challenge for organisations. 

A data-driven strategy, leveraging industry benchmarks and internal pay equity analysis can optimise salary structures. Additionally, offering variable pay structures such as performance-based incentives can help maintain financial flexibility while aligning compensation with long-term business objectives.

Aligning total rewards with remote and hybrid workforces

Traditional compensations and benefits models resonate more effectively with office-based workforces, but with remote and hybrid employees, organisations must rethink their approach for a distributed workforce. Employees working remotely may feel disconnected from company culture, impacting engagement and retention.

Organisations must adapt their Total Rewards approach by offering location-agnostic compensation, stipends for home office setups, and virtual wellness benefits. Implementing digital recognition platforms can help foster inclusivity and engagement among remote employees.

Addressing pay equity and fairness

Pay gaps–whether based on gender, race, or varied demographics, continue to be a persistent challenge, instigating employee dissatisfaction and legal risks. Without a comprehensive and clear pay equity strategy in place, organisations can struggle with maintaining workforce morale and harbouring trust.

Conducting regular pay audits to identify and correct discrepancies, ensuring that compensation decisions are based on merit and performance rather than bias can instil trust and boost employee morale. Transparent salary bands and clear promotion criteria can reinforce fairness and improve engagement.

Communicating total rewards effectively to employees

Even the most meticulously crafted Total Rewards programs can fall short if employees fail to recognise their full value. A lack of clear communication often results in benefits being overlooked or underutilised, dwindling their intended impact and leaving employees feeling undervalued.

A strategic, multi-channel approach to Total Rewards communication, ensuring clarity, accessibility, and engagement would be an effective course of action. Personalised total rewards statements, interactive benefits platforms, and targeted education initiatives can enable employees to make more informed decisions.