2025 Total Rewards Leaders Priorities & Predictions

The waves generated by hybrid work continue well beyond the post-pandemic period, challenging organizations to take a design thinking approach to Total Rewards—identifying employee needs, customizing rewards packages to align with individual and organizational goals, communicating effectively to ensure employees understand changes and the options available to them, monitoring and adjusting rewards programs based on feedback and results, and measuring impact.

A prevailing sentiment among i4cp’s Total Rewards Leader Board members is the belief that Total Rewards is (or can be) a significant source of competitive advantage for the organization, yet its full value is largely untapped. These leaders also believe their function must adjust to accommodate the rapidly shifting needs of the business. Technology will play a key role in achieving both.

Total Rewards leaders predict that among the most substantial changes to their function in 2025 and beyond will be the technology they will need to learn, adopt, and fully integrate into Total Rewards. This could potentially pose a challenge, as half of the board members surveyed said that they believe delivering on top priorities with insufficient technology will pose the biggest challenge for their function, complicated by (and echoing their peers) most (50%) rewards leaders anticipate that investment in their function will remain the same in fiscal year 2025.

Priorities

Improving total rewards communications—most (67%) Total Rewards leaders are focused on enhancing internal communication, which often falls short due to commonplace reasons, starting with the overuse of complex jargon and impersonal messaging. This missed connection makes it difficult for organizations to communicate the scope and worth of their employee offerings. Opening two-way communication channels that enable employees to ask questions and receive timely responses is something organizations are leveraging AI for—and with great results.

Identifying or optimizing the ROI of compensation and benefit strategies—this includes digging into quantitative and qualitative metrics that reflect employee satisfaction and utilization rates for specific benefits (e.g., tuition reimbursement, childcare, well-being, etc.) versus the cost of those benefits to determine which offerings are most valued and influential and maximize ROI.

Personalizing rewards and/or benefits offerings—five generations in the workforce requires flexible benefit packages, including providing menus of benefits (e.g., health plans, lifestyle-specific benefits, retirement plans, wellness stipends, etc.), and allowing employees to prioritize what matters most to them.

Incorporating AI for predictive analytics or personalization—the use of AI holds great promise for the personalization of Total Rewards. For example, by analyzing employee survey data to identify common themes in employee preferences and segment groups based on life stages, career goals, or well-being needs, they will be able to design targeted benefit offerings and communicate those options more effectively. Strong partnership with the People Analytics function will be important.

Aligning rewards to organizational objectives—ensuring that incentive structures drive meaningful contributions toward key business goals is essential. For example, Total Rewards leaders can work closely with performance management teams to link bonuses and merit-based raises to the achievement of specific KPIs, emphasizing individual and team contributions to broader organizational priorities. This alignment extends beyond performance metrics, rewarding leaders for embodying organizational values, such as fostering talent development and achieving desired employee outcomes. By strategically connecting rewards to both results and behaviors, organizations will ensure strong pipelines of leaders who drive the desired culture and deliver on key business and employee outcomes. 

“ Equity compensation, once a simple way to attract talent, is no longer seen as "free money" due to market volatility. Companies must rethink their strategies, balancing shareholder dilution with attractive compensation packages. Many are experimenting with new approaches to balance the expectations of employees, shareholders, and compensation committees. This trend highlights the shift toward more innovative equity practices, helping companies retain and reward talent in an increasingly unpredictable market."

Supriya Bahri VP, Global Total Rewards & People Operations Roblox

Total Rewards Leader Predictions

• Managing increases in healthcare expenditures due to macro factors will be a growing challenge—health care costs in the U.S. are predicted to rise by about 9% in 2025 (Aon, 2024). Controlling rising healthcare costs for employees, driven by economic, demographic, technological, regulatory, and other influences outside the organization’s direct control will require new strategies such as adjusting healthcare plan offerings and structures.
   
• Deploying new HR IT systems for compensation programs and integrating new technology will be game changers for total rewards—leaders believe that Total Rewards teams will soon need an enhanced skillset to perform the role, including the ability to script in SQL and Python to automate repetitive tasks, execute data analysis, and perform essential administrative functions.
   
• Auditing pay and enforcing transparency will come into sharper focus, driven by continuing demands for equity in the workplace, evolving regulations at local, state, and international levels, increased accountability and reporting, expectations of transparency, advancing technology and data capabilities, and more. The combination of these elements and how organizations confront them will likely become a factor in competitive business strategies and outcomes. This will also create an opportunity for more total rewards leaders to take an active role in educating managers on pay philosophy and how to have productive conversations with employees about pay.