4 Priorities for Total Rewards Leaders in 2026
For Total Rewards leaders, 2026 arrives amid intensifying pressure from nearly every direction. Rising healthcare costs, moderating pay growth, regulatory demands for transparency, and shifting workforce expectations are forcing organizations to rethink how rewards are designed, delivered, and justified.
In this environment, “competitive” is no longer enough. Reward strategies must be more precise, more personalized, and more tightly aligned to business and workforce needs than ever before.
“The next era of total rewards blends human judgment with machine intelligence. Our challenge isn’t replacing decisions—it’s amplifying them with data and integrity.”
— Nick Larson, VP of Compensation, T-Mobile
The Expanding Scope of Total Rewards
Total rewards has evolved well beyond salary and standard benefits. Today’s rewards portfolio includes pay, benefits, well-being, flexibility, recognition, and career opportunity—elements that collectively shape attraction, engagement, and retention.
At the same time, organizations face real constraints. Core benefits can represent a significant percentage of total compensation, while merit increases have moderated from post-pandemic highs. Employees increasingly expect personalized reward experiences, yet most organizations still rely on one-size-fits-all designs.
This tension defines the challenge for Total Rewards leaders in 2026: delivering meaningful value while managing cost, complexity, and scrutiny.
2026 Total Rewards Priorities:
Members of i4cp’s Total Rewards Leader Board identified four priorities shaping the function’s agenda for the coming year.
- Evaluating healthcare coverage to reflect rising costs (88%)
Healthcare costs continue to climb, making this the most urgent priority for Total Rewards leaders. Organizations are re-evaluating plan design, network strategies, and incentives to manage cost while supporting employee well-being.
For many, this evaluation is no longer just a financial exercise. Health benefits strategy is increasingly linked to talent attraction, retention, and employer brand—requiring closer alignment between rewards, workforce strategy, and organizational values.
- Implementing AI technology or services (50%)
AI represents a significant opportunity for Total Rewards functions, but adoption remains early-stage. While interest is high, relatively few organizations are using AI for core compensation planning or rewards design today.
The promise lies in analytics and decision support: forecasting cost impacts, identifying equity issues, personalizing reward recommendations, and modeling different reward scenarios. As expectations rise, AI-enabled capabilities will increasingly differentiate rewards teams that move from administration to strategic value creation.
- Restructuring the total rewards function to align with business needs (50%)
As expectations expand, many organizations are rethinking how the Total Rewards function is structured. New capabilities—analytics, technology enablement, data governance, and design thinking—are becoming essential.
In some organizations, rewards teams are being more closely integrated with HR strategy or people analytics to improve responsiveness and insight. This evolution reflects a broader expectation: Total Rewards must operate as a proactive, business-aligned function rather than a standalone silo.
- Aligning rewards to organizational objectives (50%)
Aligning rewards to strategy delivers the highest impact. Rather than benchmarking solely against peers, leading organizations are asking a more strategic question: what reward investments will drive the behaviors and outcomes we need?
This might include incentives tied to innovation, recognition that reinforces collaboration, or reward structures that support internal mobility and skill development. The focus shifts from matching the market to shaping performance.
2026 Total Rewards Predictions:
Looking ahead, Total Rewards leaders shared several predictions that reflect how the function will continue to evolve.
- Personalized, data-driven rewards accelerate.
One-size-fits-all designs will give way to more tailored experiences enabled by analytics, segmentation, and choice.
- AI shifts rewards from reactive to proactive.
Advanced modeling and decision support will allow rewards teams to forecast impact, test scenarios, and guide strategy in real time.
- Greater scrutiny on ROI and alignment.
Reward investments will increasingly be evaluated on their contribution to retention, productivity, mobility, and business performance—not just competitiveness.
- Demographic and career shifts reshape rewards models.
Longer careers, multi-generational workforces, and hybrid models will require more flexible, modular reward architectures.
In 2026, Total Rewards leaders will be expected to act as strategists—balancing cost discipline with meaningful employee value, and aligning rewards investments with organizational priorities.
Those who succeed will move beyond benchmarking to build reward systems that are dynamic, data-informed, and closely tied to how the organization creates value. In an increasingly complex talent landscape, the ability to design rewards that support agility, equity, and performance will be a defining capability.
To read the full perspectives of CHROs and senior HR leaders who serve on one of i4cp’s executive Boards, download i4cp's 2026 Priorities & Predictions report.
