Compensation and benefits design is undergoing a transformation. Employers are reimagining reward systems to entice and retain top talent, and cultivate environments where employees feel appreciated and motivated to contribute. Equally, current and prospective employees are analysing the benefits of their current and prospective employers to ensure they are aligned with their current and future requirements and resonate with their personal values.
As Nick Tsimogiannis, Head of Reward at G4S has so aptly said:
The future of reward is shaped by a rapidly transforming structure of socioeconomic needs.
At ChapmanCG, we have tapped our extensive network for insights into these transformations happening in the HR space.
Personalisation and Flexibility: Shaping Reward Packages
Today's workforce is marked by its demand for more than the conventional one-size-fits-all compensation model. As Senior Reward Manager at Burberry Gerardo Rueda points out, “Personalisation and flexibility are essential to modern reward strategies”. Organisations are finding innovative ways to tailor benefits to match individual employee preferences and needs, all the while still retaining the company values and proposition underlying it all.
Nick Tsimogiannis envisions that insured benefits will soon expand to cover gender reassignment, fertility treatments, and mental health well-being. Connor Sullivan, Ex-Head of Reward at Jupiter Asset Management, echoes this sentiment, observing, “We are already starting to see an increased demand for personalisation and flexibility, particularly in benefit programmes for the wider workforce. The historic ‘one size fits all’ model is no longer fit for purpose as firms consider how to tailor reward and benefits to suit each employee’s unique needs.”
This demand signals a shift towards crafting benefits that resonate deeply with unique employee requirements and preferences. Rob Gosney, VP Total Reward at HP, shared that they “use technology to identify risk in the workforce and tailor proactive and personalised reward interventions to reduce turnover.”
Larger organisations will always have the challenge of global vs local. Anton Henriksen, Performance and Reward Manager EMEA at Orica, has emphasised the importance of developing a comprehensive policy that determines the level of coverage to be offered while allowing for flexibility and adaptation to local market practices. Each country will have its own regulations, norms, and employee expectations, necessitating a tailored approach to benefits programs. By bearing this in mind, benefits are relevant and competitive in each specific market, thereby enhancing employee satisfaction, retention and attraction across different regions.
ChapmanCG has seen organisations create in-house tools or use several apps to create a bespoke and personalised offering. These organisations are using the technology to gain insights into what employees really want, which leads to more targeted and personalised interventions.
Embracing Mental Health and Well-Being in Benefits Programmes
The focus on mental health and well-being within benefits programmes remains a focal point. Nick Tsimogiannis anticipates “an increasing focus on widening the scope of insured benefits to include well-structured and diverse mental and emotional health support.” Connor Sullivan adds, “There is a shifting focus towards greater choice on benefits and well-being, and I think we will start to see Reward directly connecting with other areas of HR such as L&D and well-being.”
These insights suggest a more integrated approach to workplace wellness, acknowledging the critical role of mental well-being in overall productivity. Rob Gosney adds that a flexible benefits program that uses apps and is integrated with a robust EAP program will make a positive impact. Although we see that many organisations are offering access to counselling services, mental health days and mindfulness programs beyond physical health, organisations are providing benefits that cover financial wellness (financial planning services), emotional well-being (therapy sessions) and even social wellness (retreats and social activities).
Navigating Technological Advancements in Reward
The digital revolution is not just changing jobs but also reshaping compensation management.
"Technology serves as a vital bridge to developing efficient and personalised reward systems," says Cristina Buonocore, CHRO, Edenred Paytech. With AI and automation, organisations can manage costs more effectively while customising compensation offerings. Nick Tsimogiannis notes that these technological advancements enable “a better understanding of reward programmes and measurement of their ROI." Meanwhile, Connor Sullivan’s view is that "AI and automation will allow Reward/HR teams to spend even less time on the administrative burden and more time on value-added structuring and strategy." This progress allows HR teams to focus more on strategic planning and less on administrative tasks.
Many organisations are adopting digital tools that allow employees to access and manage their benefits easily. This includes apps for tracking wellness activities and participating in reward programs. AI and analytics are used to personalise rewards and optimise benefit offerings based on employee preferences and behaviours. AI can help identify patterns that lead to higher engagement and retention, allowing HR to target awards better.
The application of technology will also pose risks. Rob Gosney says that following the data too closely and not listening to our managers can be risky. He says, “A holistic approach, taking both a human-centred and technology lens, will drive the right outcomes.”
Sustainability and Social Responsibility in Rewards
Aligning reward systems with sustainability and social responsibility is becoming increasingly important. According to Mercer’s 2024 Global Trends report, 99% of employees expect their employer to pursue a sustainability agenda. Moreover, two-thirds of employees are more inclined to apply to and accept positions in companies that illustrate a commitment to environmental sustainability. This underscores the importance of aligning organisational values with those of employees, especially regarding sustainability and social contributions.
In Europe, the EU Corporate Sustainability Reporting Directive is impacting transparent reward practices, and Connor Sullivan has shared that the integration of ESG-related targets, particularly for senior staff, is becoming a part of performance conditions and balanced scorecards for short- and long-term incentives.
Many organisations are suggesting that their ranking on the sustainability index is taking prime real estate in their reward and benefits communications. At ChapmanCG, we observe talent wanting to see that a company’s mission and values are lived through tangible rewards and benefits regarding their sustainability and social responsibility track record. These insights highlight a movement towards embedding ethical commitments in reward strategies.
Experiential and Lifestyle Benefits
Beyond traditional incentives, employees now seek experiential and lifestyle benefits that enhance their personal lives. These include flexibility in work arrangements, additional holiday days, or opportunities for personal development through sabbaticals, and reflect a company's commitment to the holistic well-being of its workforce. This approach not only enriches the employee experience but aligns benefits more closely with individual lifestyles and preferences. We are seeing organisations offer flexible benefits that employees can dip in and out of, depending on their life circumstances. Employees may opt into childcare subsidy, then shift to mortgage subsidy, and then shift again to paid professional development, depending on their circumstances and commitments.
Having a system in place to deal with this flexibility may prove a challenge but having it as an option in the first place will show current and prospective employees that the organisation is there for the long term for that individual and that rewards can be adjusted to fit their requirements today and in the future. This becomes an integral part of the talent retention strategy.
Agile and Real-Time Recognition
Emerging trends show a shift towards more agile and real-time performance recognition systems. Employers are moving away from annual performance reviews in favour of continuous feedback and rewards in real time. Employers leverage data and AI to understand employee preferences, monitor engagement with benefits programs, and adjust offerings in real-time. This agile approach to recognition can boost employee morale and encourage ongoing improvement by acknowledging achievements as they happen.
Rewarding agile working models requires recognising the core principles and behaviours that make agile work effective: collaboration, flexibility, innovation and continuous improvement. These organisations recognise individual contributions that advance the team’s goals. They will use bonuses tied to sprint completions, project milestones, or achieving specific goals to incentivise high performance. By aligning rewards with these principles, organisations motivate teams to adopt and embrace agile practices and ensure the working environment is dynamic, responsive and focused on growth and improvement.
Conclusion: Adapting to an Evolving Landscape
Adaptability remains key for organisations to thrive in an evolving landscape of compensation and benefits. By integrating trends such as personalisation, mental and financial well-being, technological advancements, experiential benefits, and sustainability, companies can ensure their reward systems remain relevant and effective.
As our HR leaders have shared with us, there are several areas that are vital:
- The importance of transparency and communication
- The challenges in maintaining competitive pay structures
- The importance of aligning reward and benefits to company values and diversity, equity and inclusion principles
For multinational organisations, offering benefits that work across different countries and cultures has become crucial. This could mean offering region-specific healthcare plans in emerging countries. Offering global benefits that are localised to meet the legal, cultural and economic conditions of different regions is crucial.
With a focus on curating a message that speaks to multi-generations and all cohorts of the workforce, reward and benefits experts will need to collaborate within HR and cross-functionally. Key to success is to co-create reimagined reward and benefits strategies that not only reflect modern-day values but also provide a strategic edge in talent acquisition and retention.
Organisations are evolving their rewards and benefits programs to be more flexible, inclusive and personalised to meet the diverse needs of the modern workforce. Employees are increasingly looking for benefits beyond traditional salary and performance incentives, with a strong emphasis on well-being, lifestyle and social responsibility.
The key to success for companies is to understand the evolving expectations of their workforce and build benefits packages that support both the personal and professional needs of their employees. With technology enabling more personalised offerings and data-driven insights, organisations can more effectively design rewards programs that motivate and retain talent while aligning with evolving employee expectations.
